⭐ Professional sub-rental: don't make these mistakes when making your prices
I have observed some recurring errors when professional sub-renters determine their sales price on AIRBNB or BOOKING. So I'm sharing them with you to save you from doing them.
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Hello, and welcome to the “J’poster Complet” channel, the channel which helps seasonal rental owners and asset managers in seasonal rentals, whether you are a professional sub-let, a concierge, or a real estate agent, to become serene and ultra-profitable entrepreneurs thanks to revenue management methods. I realize that I never introduce myself in YouTube videos. If you don't know me, which is entirely possible, my name is Élise Ripoche, and I worked for ten years in large tourism groups, in a profession called revenue management. I was responsible for maximizing turnover, alone, or with my team, on a certain number of units: hotels or holiday villages at Club Med. And it is in light of this, by becoming a seasonal rental owner, that I said to myself that it was necessary to transmit these methods to the field of seasonal rental, to help you become, precisely, this serene and ultra profitable entrepreneur , who no longer stresses about not having reservations for next week.
Today, we are going to talk about a subject which will mainly concern professional sub-renters. I noticed that when you are a professional sublet, you can have certain reflexes about online pricing, whether it is Airbnb or booking. These are certain reflexes which are specific to this mode of exploitation, and I would like to talk to you about them today to avoid these pitfalls. So, if you are a professional sublet or if you are considering becoming a professional sublet, well stay with me, because I think it will help you.
We're live right now. If you come live with me, feel free to say hello. It's always a pleasure to be back live. So, there you go, feel free to say hello. Excuse me, you must see my eyes going everywhere. I'm trying to manage my screens. There you go, that's it. Excuse me, I had a small technical problem. But here I am. I see that many of you are already with me.
− Hello, Charles, I hope you are well. Welcome.
− Hello Gîtes du Bulz. Welcome to you. How are you ? I mention the name of your gîte, which is a magnificent gîte. Don't hesitate to check out his site, and you'll see, it's a gem. It's really a very beautiful place.
− Hello Romain. Welcome. I hope you're well.
− Hello Pierre. Welcome back. We talked this morning. Hello again, and welcome.
− Hello Yvon. It's Marie-Jo. Hello, Marie-Jo, who still uses her husband's account, I think. It's nice of you to sign, that way I know I'm not wrong.
I see there are many of you on Instagram too. We can follow the live from YouTube, like a number of you. If you wish, you can subscribe by clicking on the bell so you can be alerted when I go live. You can also follow the live from our Facebook group. It's a group of entrepreneurs who, like you, want to become serene and ultra-profitable. Don't hesitate to register. Upon registration, you receive a welcome gift: the six mistakes not to make when determining your prices. So, I think this might help you if you have any doubts about this. And now you can also follow from Instagram.
We have Cathy who joined us.
− Welcome Cathy.
− DBC Marco, welcome to you.
− Mélanie, welcome.
− The dovecote guesthouse, welcome.
A quick reminder, if you are completely unfamiliar with subletting. It can be an opportunity to discover, and to say to yourself: “Ah, hey! It's nice. That interests me. » Subletting is a method of setting up a seasonal rental activity which does not require investing in premises, if you do not have, for many excellent reasons, the possibility of get into debt, or invest in buildings. You can still become a seasonal renter, with a subletting system. That is to say that you will rent the property, rent the walls with the authorization to re-rent it for a short period. So, it's a special lease contract. There are leases that are more recommended as derogatory commercial leases. I know that Dimitri Bougeard, who is the investor lawyer with whom we work a lot, recommends a civil lease. I hope I'm not talking nonsense. In any case, on the legal side, I'm not the most knowledgeable on this subject. Don’t hesitate to get help from professionals on this. Still, there are legal legal models that allow you to do that, to sublet, and as a result, to be able to carry out a seasonal rental activity without needing to go into debt, or invest on the walls.
Once you have launched your seasonal rental activity, there is this subject of pricing. How do I optimize the marketing of the apartment or house that I rented as a professional sub-let? On that, concretely, marketing is done in the same way, whether you bought the house or sublet it. It's exactly the same thing. We get on Airbnb, booking. We have a channel manager, we set our prices correctly. In traveler vision, it is completely transparent. Nothing shows through. And even for your team, if you are helped by people who take care of arrivals, departures, or cleaning, in the same way, it changes absolutely nothing. The only thing I observe about the determination of the price is that it is linked to the way in which we finance the sublet, and that is where it has an impact. And I found it interesting to talk about it to avoid falling into this somewhat usual habit.
The first point that I often see when we are a professional sublet is to think in terms of the rent that we ourselves will owe to the owners. In fact, it's true that the sub-lessor has a certain amount of pressure, because he absolutely has to pay his owner, otherwise he is ejected. So, you have to pay the rent to the landlord. But seasonal rentals, like everyone else, fluctuate in terms of income. So, it still gives a certain pressure. In this regard, some professional sub-renters react by saying to themselves: “I am calculating how much I have to give as a minimum, and I am going to put that as the price”, or even “This is going to be my minimum price below which not to go down. » In fact, it's detrimental to think like that, because the seasonal rental market can be totally unrelated to that. And sometimes – these are the extreme cases – it is better for you to say to yourself: “I have analyzed the market, I have analyzed my history, and I see that I will have to rent for 40 euros per night, so that my floor was 45 euros per night. » In reality, sometimes it is better to agree to do that, because you may, in fact, have a small amount that will have to be taken out of your pocket, or in any case taken out of the treasury, you are not going to maybe not being 100% balanced for that month, but it's still less worse than staying stuck on 45 euros, and therefore remaining empty. Because there, you will miss out on entire nights of reservations. So doing your pricing, even as a professional sublet, should not correlate at all to the amount of rent you owe your landlord. You really need to be in line with the market potential of your apartment in the city, to really get the maximum possible turnover from it, and accept that there is perhaps one month in the year on which it will perhaps be a little below, but it is the price to pay so that on the one hand, you can, the rest of the year, have a good cash flow, and on the other hand, that on that month, you limit the damage.
Another point is to be satisfied with low profitability. I tend to see some seasonal rental companies — not all, obviously — who say to themselves: “I'm self-financing, so it's okay. » The difficulty, when you are a seasonal renter... there are plenty of positive points about being a seasonal renter, I have the impression that I am only saying negative things, but there are plenty of positive points. On the one hand, it is much more profitable than concierge services. I made a video, in fact, about this. I think it was last week. If you want, don’t hesitate to go see her: “between subletting and concierge service”. There are plenty of positive points in favor of subletting, but here, as we are talking about the mistakes not to make, I am talking about negative things. The second point that I wanted to share with you is precisely not to be satisfied with a certain profitability. Sometimes I hear subletters tell me: “I'm self-financing anyway, so it's good. » In reality, you really have to have an ambition to go higher than self-financing. Really higher. For what ? Because when you are a professional sublet, you take greater financial risks. If one day anything happens, if we have a problem in the apartment, if we have to close it for three weeks, the rent will remain your responsibility. So, more than ever, you need to be an excellent manager of your cash flow as a professional sublet to ensure that you are strong enough to deal with the unexpected. Confinement, for example, we hear a lot about at the moment. During confinement, we are still able to rent as seasonal renters, and work with longer stays. But if, for example, you have damage inside the apartment, you have to close for three weeks, you will owe your rent to the landlord. It is really important that you have a cash advance, that you are an excellent manager of your cash flow, so as to have a sustainable and solid activity over time, and which will not collapse like a house of cards. So, for that, you have to measure your expenses, make sure you don't spend too much, but you also have to take care to have the highest possible turnover. And that’s really important. So don't be satisfied with just a balance. And this point is also true when you are deciding whether to invest in subletting. When you invest in a sublet, you invest a lot of time, and even money, because you have to furnish. And in these cases, really make sure you choose properties that have the potential to have huge profitability. The highest possible, so as to ensure cash flow sustainability, financial sustainability.
Another point that I see a lot, which is also true for concierge services, but which is really true for subletting, is not to make a margin on cleaning costs. For concierge services, a small nuance. I was talking about margin in relation to the owners, and with, in view, the display which can be more or more, or lower, but not to margin in relation to the owners. In subletting there is no relationship with the owner on this subject, so it is more in relation to the platforms. Do not just put the cost price, for one of the good reasons that I also gave for concierge services. This is because when we start to have a revenue management logic, and we make the prices of the stay fluctuate, it is really more peaceful to say, from a profitability point of view, that the cleaning costs with a bonus, which will take care of the platform costs in particular, because the platforms take a percentage on the cleaning costs, so that you have cleaning costs which are in reality inflated on the platforms. This will guarantee you peace of mind on this charge, and that moreover, on the price of your stay, you can fluctuate the prices, really seeing what you are going to receive. Because if your cleaning costs are underestimated on the platforms or just on the dot, the problem is that in fact, you will receive a little less, because there are platform fees. And as a result, it will eat into the profitability of the price per night. So, it's really important, put cleaning fees — I hope I'm not making a mistake between the words, I hope I said the right words between platform fees and cleaning fees — a little overestimated , taking into account in particular the costs that Airbnb and booking will incur, to have the security that these costs are covered, and that this does not jeopardize the overall profitability of your activity.
And then, a fourth point that I wanted to share with you is the fact of slashing prices at the last minute. More than ever, when you are a seasonal rental company, you have to have a cool head. As a sub-lessor, it is essential to have a cool head. For what ? Because we're stressed, because we have rent to pay at the end of the month. So, if we have overnight stays that are empty for next week, we may be more inclined to say to ourselves: “Okay, come on. I'm going to go and cut prices, because I'm afraid I won't make enough money to pay my rent this month. » More than ever, you have to keep a cool head, and not have this dynamic of setting high prices to try your luck upstream, and then breaking them when time passes. It is really better to have an anticipation strategy, to build your revenue management strategy upstream with prices adapted by type of period, really more attractive prices in periods of low demand, higher prices in periods of high demand. , carefully study the calendar, the events, study the potential of your apartment. Have you done any pricing tests? How did it work? And there you have it. And with that, having a good, solid revenue management strategy, which will allow you to have a cool head for the rest of the year, by carrying out recurring monitoring, but with peace of mind, without going to slash your prices at the last minute.
These are the points that I found really very present in the population of professional sub-renters that I wanted to share with you precisely to avoid them, and to ensure that you do not fall into these pitfalls. All this for what? For better financial profitability. And that’s really important for the sustainability of your business.
I see I have messages. There is Gîtes du Bulz which says to me: “thank you. »
− Please.
− Hi Laetitia. Welcome.
We have BFB…
− Forgive me, I will say anything if I read your nickname. You really have to apologize. Welcome to you. And you say to me: “Thank you”. With great pleasure.
I see that on Instagram, I don't have any questions either. Many of you have also joined on Instagram. If we don't have any more questions than that today, in any case, I'm at your disposal. Whether in the comments of the video, whether on YouTube, whether on Facebook, don't hesitate to ask me your questions. It's always a pleasure to be able to discuss and answer your questions. So on that, don't hesitate, whether it concerns subletting, concierge services, or seasonal rentals, and even a completely classic apartment, or the management of a gîte, a guest house. So don't hesitate. It will really be a pleasure.
Charles said to me: “Hello Élise. Thank you for this direct. »
− With great pleasure.
I'll see you Thursday for the next live video at noon. So, we find ourselves either on the YouTube channel, or on Facebook, or on Instagram. I wish you a very good day. Take care of yourself, and I'll see you Thursday.