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Bed Spacers in the Philippines
No … not as a form of cheap accommodation. I suppose it would be cheap but I would not recommend it to any expat.
The reason I mention Bed Spacers is that it is one of five top business ideas for expats living in the Philippines who need to derive local income.
Personally we will not bother. The wife has much grander ideas along the lines of a boutique Hotel run to five star standards. I am not keen on that either.
I will write further about my ideas on investing and doing business in the Philippines later but right now here is the Bed Spacer business idea reproduced from one of the StreetWise Philippine Dreams newsletters.
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BED SPACERS!
THAT’S THE BUSINESS FOR ME!
I will soon be releasing my StreetWise Business In The Philippines Guide and looking at the FIVE most successful businesses for Expats to engage in after relocation or retirement here. Each one of these businesses are proven performers with success stories and anecdotes given for each of the five.
My personal favourite, once you move away from the province and piggies, is the Bed Spacer! I love this business opportunity and I know several expats who will be miffed for me bringing it to the attention of the world at large but that’s what happens when you make your living providing information on viable businesses rather than working them! Actually, as we go to press I am in the throes of creating a Bed Spacer business exactly as I suggest in the Guide. This is the proven formula for success here in the Philippines and while I don’t want to kill sales of the Guide, I will pass on some of the formula here, for FREE!
Firstly, what is a Bed Spacer? Good question. A bed spacer is a person who rents a bed space. Originally it was simply a space, a place to lay a mat down and sleep upon it. Over time it has evolved to mean more than just that, although there are still many places that offer little more than a roof over your head and a guranteed piece of floor big enough to spread the bamboo mat upon!
Some bed spaces are shared rooms or cubicles, others are single, private spaces that offer a modicum of privacy and the illusion of security. Many include electricity and water, which usually means a tap from which you can obtain water for you hand laundry and also a light, perhaps a power point for a fan. More upmarket places may also offer a fan, aircon (very rare) and TV, usually shared in a common area. Luckily Filipinos like to be in groups and so communal living of this sort is preferred over the western style of single people living by themselves in single apartments and rooms. Depending where you are and what social strata you are supplying, bed spaces can be basic or quite comfortable.
The business end of providing bed spaces to bed spacers is simple. If you have a bed room you can often partition it and put in bunks and provide accommodation for, say four people. Each pays P1000 a month and you make P4000 for hiring out a room. If you were to rent the entire house you might make that much, maybe less in some places.
If you have several rooms you can partition and rent out, then you multiply the income. But wait, there is another secret which lets you make three times as much per person from the same space! I’ll keep that one for the StreetWise Business In The Philippines Guide, but it is a genuine proposition that is neither illegal nor immoral!
The ideal bed space business would have a small apartment block type building holding at least 20 bed spacers. Each pay P1000-P1500 per month for their room and light and water. There is a laundry area for them to use and a small kitchen facility shared among the tenants. You also add value and incerease returns by offering them food from your small carenderia and bbq stand. As well, there is a sari sari store that sells them their toiletries and other consumables.
The smart thing is to set up near a college, hospital or major factory so that there is a need for accommodation in your area. Position, position, position! A vital factor to any business and no surprise to anyone who has given the subject even a passing thought. Find the right location, not the right building. You can always knock it down and rebuild for a fraction of what it would cost to entice a major factory to set up next door to your perfect apartment complex!
You should also look at providing a jeepney with a regular schedule to take them to and from the college or factory. Not only does this increase income, but it increases their dependance upon you. No matter who takes their peso, they will have to spend money each month on room, food, personal things and transportation. If you can package them up and offer them at a competitive rate, then why not get every peso they have to spend? You don’t have to rip them off, just provide a quality, competitive option.
Here’s a tip straight from the Guide. If competition gets tough, you can maintain your rental rates while others engage in price wars, slashing the accommodation to ribbons and putting themselves out of business. How? Through increasing value! You throw in the jeepney ride to and from work, saving them however many peso a month! You write off any losses against what the jeepney makes the rest of the day plying its regular route.
Still not keeping the spaces filled? Offer free meals from the carenderia. Two for one, all you can eat on Fridays, Tuesday Two Peso Time, use your imagination and offer more value and so keep your customers happier than if they went elsewhere!
The other no brainer is to offer clean, safe accomodation. Don’t rent to men. Just Filipina’s! Far kinder on the eye and you don’t have to break up fights induced by too much Tuba on paynight. Filipinas are more reliable and more likely to pay on time and less likely to steal or damage the premises. Of course there is always the exception and I am not saying all Filipino’s are bad tenants, but it is simpler and much less risk of giving yourself brain damage if you simply rent to Filipinas only.
Setting up your bed spacer is fairly simple. If you aren’t handy with tools then you can always negotiate the local carpenter to fix up some partition walls, maybe build in some bunks and storage and generally make maximum use of space. Think cruise ship cabin to get those ideas happening about sensible storage and maximum use of space and remember the renters are a lot
smaller than you!
I think the minimum space per person is 2sqm, providing there is a common area they can lounge in, watch tv, chismis etc. 2sqm is 2m long by 1m wide, not much space but it can be comfortable and remember it is only sleeping space really. So long as they have some room to stand and change in and somewhere to spread out and relax, the actual personal sleeping space doesn’t have to be too much bigger.
I like to work on having one CR between four to six. Anymore and you really need a second toilet and separate to the other and the shower/washing facility. Kitchen space really only needs to be a bench with a two burner gas 7 cooker on it, perhaps a water boiler for hot water for noodles and some shelf space. I would discourage cooking in the rooms to prevent vermin and other infestations, not to mention you would rather they eat at the carenderia!
How much will it cost to get this business off the ground? It all depends on the building and location. You may have an existing venue or you may want to locate a promising position and buy or build there. I have several people interested in buying Lease Holdings on suitable properties near a major hospital which will see their US$5000 come back to them with up to 50% profit in just five years, all secured against the best guarantee of the lot, Real Property! My estimations so far show a potential 12% per annum return, which is about the average for the stock market or real estate back home, the kicker being they can get in for as little as $5000. If they change their minds they can always pull out and their initial investment is backed by the value of the property. So long as they can wait until the premises are sold or someone else buys out their share, they are not going to lose a penny.
Other readers may have their own ideas and already know of a property that would be just right for conversion to bed spaces. Day to day management of the business is minimal, very similar to renting the entire house out. You collect the rents on pay day, keep an eye out for possible repairs needing to be done and make sure nobody runs off with the fittings. Part of my personal plan will be to offer reduced rentals to “Den Mothers” who will act as my managers and keep the rest in line, or at least give me early warning of trouble.
All in all, bed spaces for bed spacers is the best business opportunity for many retirees and those relocating to the Philippines to be with their Asawa. Unless you enter into a Lease Arrangement such as the one I am offering to some of my readers, you will need to have the deed to the property in the name of a Filipino. If this isn’t an issue, then it is a great way to give the asawa, or her family, an income source. You can buy properties in fairly suitable locations from as little as US$10,000, maybe even less. ROI is usually three years but it can be sooner depending on the way the business is operated.
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The above article on Bed Spacers was written by Perry Gamsby for the StreetWise Philippines Dreams newsletter. Perry says that if you are looking at options, give Bed Spacers some thought. You will find more information in his Philippines Dreams book which includes membership to his online forums where he invites you to contact him privately for more information about Bed Space Lease Holding and other business ideas.
Posted: Thursday 28th July 2005, 8:02 PM
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