Millennial trio plans to profit off 'authentic' Malaysia properties they don't own. Is it an 'asset-light' rental loophole or a risky hustle?

Examples include Airbnb, which doesn’t own its properties, as well as Uber, which doesn’t own its cars.

Now, three millennials are adapting the asset-light model to a small business, with plans to profit from “authentic” Malaysia properties they don’t own. But is this a smart business move or a risky hustle?

Adopting the 'asset-light' model

George Town in Penang, Malaysia — a UNESCO World Heritage site since 2008 — is renowned for its architecture, which blends Malay, Chinese, Indian and colonial influences.

If you’re a tourist in Penang, you can now stay in one of George Town’s distinctive shophouses.

In 2023, Shane Low and his wife Chong Xin Pei, an architectural designer, started a property development company called Aayu Homes, according to Business Insider (1). A year later, they were joined by Low’s childhood friend Andy Ooi, who oversees daily operations and business development. All three are 33 years old.

“We felt that whenever you travel, staying in something very local is more authentic than staying in high-end hotels,” Low told the publication in an article published Oct. 13. “We don’t own any properties; our model is asset-light.”

Rather, they work with shophouse owners and investors to fix up the properties, at their own cost, and then either rent them out or help run them, taking about 30% of the revenue, reports Business Insider. The shophouse owners tend to be locals or foreigners who buy them as future retirement properties, stay there when they’re in town and rent them out when they’re not.

So far, they manage over a dozen properties, which are marketed through Airbnb and Booking.com, but they plan to expand by adding more properties while curating experiences such as the ability to book cooking classes and walking tours.

“It becomes a whole ecosystem,” Low said. “Not only do you have houses — you have everything that is local around, from experiences, to products and shops.”

The risks of 'asset-light' models

As with all business models, this one does bring some risk. The heritage nature of the homes means they might come with some pitfalls, such as no windows in bedrooms and poor noise-proofing. If guest expectations aren’t handled properly, Aayu Homes risks reputational damage, which could depress future bookings.

If you’re considering a similar venture, it’s important to assess the risks first and account for them in your financial projections. For instance, these properties are in a UNESCO heritage area, and they may be subject to a host of regulations, particularly regarding alterations.

Since Aayu Homes renovates the units before renting them, there’s a chance the business could face cost overruns and delays. It’s good practice to stress test renovations, such as applying an additional 10% to projected costs and analyzing whether or not the renovations still make sense. This could be done with all costs, such as maintenance, taxes and utilities.