I always have to remind myself that I need to go to the gym, right before I put a juicy and delicious fried chicken in my mouth. Well, you just can’t lose weight if you don’t have enough energy to work out, right? Right?
People are generally stubborn and hold on to many old habits—landlords and RENs included. By this, I’m talking about pricing their property’s rentals. Today, many still price their rentals as if it were still three or four years ago when the economy was booming and RENs had as many as six or seven viewings in a day to close deals.
Well, newsflash. Landlords today need to wake up to the fact that the market is no longer the same. Condos like Alam Damai used to go for RM2,400 to RM2,800 for a fully furnished 1,000sf. Now, it’s going for about RM1,700 for a partly-furnished or RM2,200 for a fully-furnished unit. I used to rent out my Fairway Manson unit that only came with aircon and curtains for RM1,350. I don’t think I will be able to do that today because tenants now expect more and they bargain HARD.
- Expectation vs. Reality As a landlord, how many times have you thought to yourself, “I want an expat tenant who can pay twenty to thirty percent more.” But let’s be real here, how many ‘jackpot’ tenants can you find? Not too many, so stop expecting to land yourself a rich person with disposable income or an expat, because their numbers have declined tremendously since the fall of the mighty oil and gas industry. Landlords should now focus on giving realistic rentals to potentially good tenants. Price it 3k and above, and you are limiting yourself to a very small pool of tenants who can actually afford it that choose not to buy yet. If they can afford that kind of rent, they can definitely afford to buy.
- “Kosong” units “Kosong” units are now passé (out of fashion). 90% of tenants will not rent if you just offer them an empty unit even though you’ve priced it competitively. A kosong unit comes in a few categories:
Air Kosong - No renovations done, and comes without kitchen cabinets or any furniture and fittings.
Maggi Kosong – You get the noodles and seasoning but no ‘liao’. You only offer basic things like light fixtures and curtains and aircons but without kitchen cabinets.
Milo Ping Kosong - You get the full flavour of chocolate drink with ice but without condensed milk. You offer electrical fixtures, aircons and water heaters but no furniture. The air kosong unit will not cut it in today’s market. Period. No tenant will bat an eyelid for something that doesn’t even have light fixtures or fans or water heaters. Milo Ping Kosong is the minimum if you are going to rent it out as ‘unfurnished’.
- Non-negotiable because my unit is SOOO SPECIAL! “My unit is very well renovated, got this and this and I spend XXX amount of dollars on this and this.” Some landlords today still hold on to the old practise of ‘holding on’ to their asking rental because their unit is SOOO SPECIAL! But it also takes these landlords SOOO LONG to come to the realisation that many renters today DOOON’T CARE how special it is. Landlords, all they care about is that it fits their budget, ok!
- I don’t need agents. I can rent it out myself Despite the popularity of websites like Speedrent where they cut out the middleman—agents or RENs, it’s still very much a “who’s who” and “who you know” game for a market like KK. The market here is too small and unorganized for sites like Speedrent to work. As I mentioned before, good quality tenants that pay rent on time and take good care of your property are not easy to find these days. With daily congestion, I think it’s not easy for landlords to arrange viewings, or do their own renovations and draft their own tenancy agreements. The right agency can help you find the right tenant and will save you a lot of trouble in the long run.
- Compromise on the amount of Deposit Never, ever rent to people who cannot pay you the standard 2 + 1 rental deposit! Even though you’re desperate to rent out your property, don’t ever compromise on this. The simple logic is, if the potential tenant can’t pay you the full deposit now, what makes you think they can pay you the next month or the months to follow?
- Not giving agents the keys One of the most annoying things that homeowners can do is that they get an agent to list their property but refuse to give them the keys. It’s understandable if current tenants are still living there or you’re using the property as temporary storage for expensive equipment. However, if you need the help and services of an agent for your vacant property, you need to give them access to it. I can’t stress enough about the many deals that have been lost because of the owners’ refusal to give agents the keys for them to do their viewings.
One time, I was interested in viewing—and possibly renting—a unit that had an amazing view. But because I couldn’t meet the owner’s timing and she insisted on being the only one to hold the keys and had refused to pass them to the agent for even an hour, I ended up renting another unit in the same building, for the same price. Why? Because I was able to view it!
- Supply exceeds demand Condos and apartments will have a tougher time to rent out because of the sheer number of supply that will far exceed the demand. Some condos that have just, or are about to receive OCs are The Gardens (500 units), Jesselton Residence (333 units), Ashton Tower (391 units), Jing Yuen (80 units), Jade Residence (135 units), Lido 4 Seasons (820 remaining supply units) and Light Residence (228 units). That’s a LOT of units in the market for the next 12 months and I think it will take at least three or four years to fill up.
Landlords, you’ve pretty much got your work cut out for you. So, fight for your tenants!
This article was originally published in the Property Hunter Magazine by YK Hwong.