Everyone knows that real estate, especially rental property, is a business with much potential. For starters, properties rarely depreciate, and people are constantly demanding for more and more housing, all the more when you are in an urban area. But at the same time, just like any other trade, it is also a known fact that it is more than just merely buying properties up and rent them out; no matter how much money you have, plunging into the market and competition without any knowledge and preparation is akin to courting failure!
Having said all these, the pressing question is always about the matters of “How” rather than “What.”
While the art and methods of renting property will not be as detailed or profound as Sun Tzu’s Art of War, there are still a number of strategies and ideas that have been proven to work in practice – some involving wisdom while the rest, a little bit of extra common sense – which we will briefly talk about in the remainder of this simple but insightful blog post.
One of the first things anyone would teach to another when it comes to business. It is Not only a matter of securing locations where it is strategic or highly accessible to traffic – location also determines the type and nature of tenants you would come across. Knowing and understanding this piece of information would help a lot in figuring out methods to attract them and prepare you to deal with whatever problems that would come with them.
To further illustrate this point – if you know that you are targeting a location near colleges or universities, for example, it is more likely to anticipate that your future tenants would be tertiary students. It would then be ideal to secure a house or apartment unit that is within a safe neighbourhood, has a conducive environment where they could study in the privacy of their rooms, and comes with basic amenities such as cooking stoves and furniture that they would not have to buy when they first move in. While they would only stay for several years at most, you can almost be certain that you would be able to find a new replacement every time an old one moves out – thus guaranteeing a rather secure source of passive income.
On the other hand, if you are going to rent out rooms in areas such as a low-cost flat or housing area, be prepared to deal with people such as foreign workers and families from middle or lower income groups – where tenant turnovers, the risk of property damage and the amount of headache are usually higher than elsewhere. Ouch!
Divide and Conquer (Just like Roomz)
Here in Roomz Asia, we focus and encourage room renting instead of renting the entire house or apartment unit – obviously for various reasons.
It is generally easier to find tenants – Especially in cities, most potential tenants are either students or single working adults who are looking for and could only afford a simple living space to live in and commute between their colleges or workplaces. Therefore, it is more popular and practical for them to be renting individual rooms rather than whole units, since they do not need (and would obviously want to avoid paying for) the extra space.
Those with families, while they may prefer whole units instead of rooms, would usually also be financially stable enough to either start thinking about owning or have already owned their own properties – even if they do move in, it might be just a matter of time before they move out again when they could find a house or apartment that they could purchase for themselves.
Cheaper, but more profitable – While tenants could SAVE a lot from renting individual rooms compared to renting a whole unit by themselves, landlords also stand to gain from the same practice. Don’t you realise that just like how individual products are often sold more expensive than when they are bought in bulk, individual rooms can be rented out at the higher price while still being cheaper than the price of a whole unit as well?
Think about it: rather than renting the whole unit with three rooms (1 small, 1 medium and 1 master room with attached bathroom) for RM1,000, these individual rooms can be rented out as RM300, RM400, and RM600 – netting in a total of RM1,300, while being more likely to attract tenants to boot!
The Power of the Internet
Whether it is in the art of warfare, an intellectual pursuit, or even in business, only a narrow-minded person would not utilise every tool that is given to him – all the more if it is one that is so easy to use and readily available to everyone including his competitors.
The Internet can be used in various ways, mainly to reach out to potential tenants and to research on your market (while keeping an eye on your competitors at the same time!). Make use of available resources and sites to check out information such as market prices and consumer trends to determine the ideal and competitive rate to rent your rooms out. It doesn’t make sense to charge rents that are much higher than what your competitors are offering for the same property, or go for methods that would not appeal to the type of tenants who would most probably come knocking at your doorsteps – all the more than you can simply find these out with a single mouse click!
Similarly, there are also many ways to use these same mediums to make yourselves and your properties known – more often for free and for just a minimum amount of hassle, but would yield a lot more returns. From websites (such as Roomz Asia – duh!) to even social media groups, there are many platforms that landlords can utilize to attract and get in touch with potential tenants who are in turn, using the same methods to hunt for a room or unit they could move in. Just like product advertisements – marketing goes a long way, even when it comes to rental properties.
Hard Work Pays
Here’s a rather elementary but important principle that should never be overlooked. Come on – don’t tell me that you didn’t see this coming, do you?
The key to having a stable income when it comes to rental property is to obviously keep the rents coming. In other means, it is all about getting your tenants to stay in your property as long as possible – and just like every other relationships, this takes effort (and is definitely worth investing in!).
Just like the saying, “Customer is king,” make every effort to keep your tenants happy and comfortable. Pay extra attention to their needs and concerns, especially when it comes to parts or facilities in your property that require immediate maintenance or replacement – such as plumbing, electric circuits and the washing machine. Even little things, such as providing extra bookshelves (if you have some to share) to a tenant you know loves to read in his or her room, could go a long way in maintaining a healthy and trusting landlord-tenant relationship.
Not saying that you should become a pushover and have them start taking advantage of you for being too nice (especially when you have bad tenants – which may require a whole different set of approaches “What to Do When You Don’t Get Along Well with Your Tenant” or another relevant article*), but it is obvious that if you do not make effort to even care for your properties and the amenities essential in making your homes livable for your tenants, it is them who will be affected the most. Should this be further left unattended, it won’t be long before they find it less troublesome to just move out and find another place to stay.
After all, knowing how popular and lucrative this business is – regardless where you are, you are most probably not the only landlord they can rent a room from.
In a Nutshell
Successful investment strategies for rental property can be summed up into several shared criteria: as long as you know your resources, opportunities and competitors; and leverage, making the best out of everything you have. With all these in mind, you can almost be certain that you would reap great returns from your endeavor.
Roomz Asia wishes you the best in your future endeavours – we look forward to the pleasure of having your rooms listed on our website in the future!
P.S.: And of course – Psst! If you like what you read here, do share this article around on social media/the Internet. Good wisdom and information deserve to be shared around, don’t they?