Rent out your property in the short term
Renting out your flat while you're away on holiday can be lucrative - if you're careful, Shirley Lau writes
Sandy Mok loves taking mini breaks outside Hong Kong during public holidays. She's dubbed "the big spender" by her travel companions, always wining and dining at swanky restaurants and visiting luxury spas. But somehow, the 34-year-old career coach manages to spend less than her friends on the same trip.
No, she doesn't have a rich dad or a generous husband. She just happens to have an alternative source of income when on holiday: renting out her flat on short-term rental websites.
"I charge a daily rent of HK$850 and always find someone to rent my apartment when I'm away," says Mok, who owns a stylish 550 sq ft two-bedroom flat on Caine Road, in Mid-Levels. "That's enough to offset 20 to 50 per cent of my holiday spending."
This deal is straightforward: Mok puts up pictures and essential details of her residence on rental websites; the interested traveller makes an online booking and, on the day of check-in, picks up the door key from Mok's neighbour. The rent, minus a small fee (usually 3 per cent of the rent) charged by the related website, will arrive in Mok's Paypal account hours after the guest has checked in. The guest has to pay the website a fee, ranging from 6 per cent to 12 per cent of the rent.
These internet booking engines are creating a burgeoning peer-to-peer marketplace. The websites feature spare rooms, entire apartments, villas, yachts or even tree houses that can be rented for one day to months.
At the forefront of this boom is Airbnb. Since its inception in 2008, the San Francisco-based company has spawned several copycats in Europe and North America, including 9flats, Wimdu, OneFineStay and iStopOver, which was acquired by 9flats in August. In June, Singapore-based Travelmob joined the game, setting its sights on the Asia-Pacific region.
The meteoric rise of this "unhotel" market is due to an increasingly mobile workforce and a rising enthusiasm for a "real" travel experience. Airbnb and its peers are a growing threat to hotels, embraced by holidaymakers and frequent out-of-towners. With the click of a mouse, travellers can find cheap, fully furnished accommodation.
Tenants and homeowners such as Mok can have an alternative source of income when out of town or if they have a big home and fancy sharing it from time to time.
Some people even rely on this form of short-term lease to earn rental income or make mortgage payments, not least because the rent charged on a daily basis may exceed a regular monthly rent from a long-term tenant.
Websites such as AsiaXPAT, Craigslist and Gumtree have been offering space for renters to put up sublet ads, but none is as systematic as the peer-to-peer rental sites in pairing hosts and guests.
Charlene Choi, CEO of Hong Kong-based Wimdu, says local residences that attract the most travellers are in busy areas near MTR stations, including Central, Causeway Bay, Wan Chai and Mong Kok. Up-and-coming areas such as NoHo and Kennedy Town are also hot picks for overseas travellers; remote areas such as Lamma Island barely get noticed. Most travellers are from Europe, the US and Australia, says Choi.
Martin Hadfield, 36, a health-food company owner from Australia who frequently comes to Hong Kong for business, recently decided to ditch local hotels in favour of a private home stay. On his latest trip, he found through Airbnb a one-bedroom apartment in Kennedy Town a few bus stops away from his workplace on Bonham Strand. The rent was HK$680 a night.
"When you have to travel frequently, lodging in an ordinary hotel can get terribly boring and it leaves you with little to remember. Also, Hong Kong hotels are not cheap," he says. "Staying in a private home is the opposite. There is a personal touch, and you get to know the local culture better. And these websites have a wide enough range of choices for you to find a nice, inexpensive place."
To make one's residence attractive to lure travellers, Choi says good pictures are essential. "The pictures you post are the most direct way for strangers miles away to form an immediate impression of your home. It's worth making an effort to take some good shots," she says. Wimdu and Airbnb offer a free professional photoshoot to help renters' listings look more fetching.
Mok, who has used the service, says she had about 30 per cent more guest inquiries and bookings since the photoshoot. This growth in rental income has, in turn, provided her extra funds to enhance home security, which she says is a must when it comes to a short-term let.
"You can ask a guest his background and the nature of his visit beforehand, but there's only so much you can know. It makes sense to store away valuable items or private things. I have bought a small safe, and I always demand a security deposit from guests," she says.
Indeed, despite its popularity, the home-stay business has been somewhat undermined by security concerns of late. Last summer, a San Francisco woman who rented her home out for a week through Airbnb had most of her personal possessions stolen or destroyed by a guest. In August this year, two young women in Stockholm, Sweden, who returned home from a month-long holiday were shocked to find that their apartment, also rented through Airbnb, had been used by Irish prostitutes as a temporary brothel.
To remedy its reputation, Airbnb launched a host guarantee service providing damage coverage of up to US$50,000 per booking. The amount was raised to US$1 million a few months ago. But at present the policy applies to only 16 countries, and Hong Kong is not included. Wimdu employs agents who can check in and check out a guest on a host's behalf, making sure they leave the apartment in good condition. It charges an extra 7 per cent of total rent for this service.
Another hosting issue concerns renters who sublet their apartments. A host risks getting into trouble if the tenancy contract contains a clause prohibiting the tenant from subletting the flat. Apparently, this is not yet a big issue in the nascent peer-to-peer home vacation market in Hong Kong, but in New York, an Airbnb host was recently served a restraining order filed by his landlord requiring him to kick out his guests immediately. A state law also went into effect last year to make it illegal to rent certain residential space in the Big Apple for less than 30 days.
Also, be advised: according to Hong Kong law, a place rented for less than 28 days needs a hotel licence. The government is not too vigilant about enforcing this law, but it exists.
To be sure, these issues do not makes things easier for renters, but they haven't put a damper on this unique rental market, either. As Mok reckons: "This is a lucrative market. And in a property-obsessed city like Hong Kong, nothing can stop people from seeking to make quick money with their properties - as long as they know the money is there."