Be Different. Be Weird. Stand Out. Even As A Landlord.
I’ve been asked many questions about tenancy management. How do you rent out your unit fast? How do you find the right agent? How do you build tenant loyalty? How do you get tenants to pay on time?
Therefore, I would like to share a principle or two in this article.
Let’s face it – the rental market is tough. Tenants are now “King” in most areas in the Klang Valley, and they know it. Agents are playing each other out. Tenants want the best unit at the cheapest price. Landlords are complaining about vacant units. Sounds familiar?
I recently took possession of a new apartment in Jalan Kuching, and I found myself “competing” with 300 other new landlords. This article is how I rented out my unit, and hopefully stood out from the “competition”
THINK DIFFERENTLY. CHALLENGE THE RULES
Sometimes, rules are meant to be broken. At our new Jalan Kuching apartment in Kuala Lumpur, the partially furnished and fully furnished rental is around RM1,600 and RM2,000 per month respectively.
Note to reader: My portfolio comprises mostly of long-term and boring tenancies. Yes, the yields may be lower than short-term vacation rentals, but the payments are automated and I’m comfortable with my strategy.
The units at the project are mostly one-bedder apartments ranging from 530 sq ft to 600 sq ft. Many landlords tend to make their units fully furnished and demand fully furnished rentals ranging from of RM1,900 to RM2,000 per month.
There is however, just one small problem. They forgot that it is now a soft rental market and tenants are now “King”. Vacancy periods for some of them have now stretched to nearly 2.5 months!
What did I do? I fully furnished my unit with a simple design (pleasant but not too atas), at a total renovation cost of about RM6,500. Yes, you are not hallucinating and read the RM6,500 figure correctly.
The total renovation cost above included the sofa, dining table, curtains, coffee tables, fridge, bed, wardrobe, washing machine, rug, TV, art and décor. (The kitchen cabinets, hood and hob as well as air-conditioners) were provided by the developer.
My wife Lauren and I had challenged ourselves to be innovative in sourcing for affordable but quality items. Our furniture range has a designer feel and looks tasteful. Best of all, the furniture was affordable.
My unit is now a fully furnished unit but the question is why should I rent it out at the fully furnished price of RM2,000 per month? That’s what the market expects us to do. To stand out, I instead rented out my fully furnished unit at the partially furnished rental price of RM1,700 per month.
And, that’s my unique sales proposition – a fully furnished unit at a partially furnished rental.
Therefore, the tenant wins – he feels that he got a good bargain. The agent wins – he got his commission. And, I win – I got my unit rented out within two weeks. So,everyone wins.
Some people mocked me for renting out a fully furnished unit at a partially furnished price. Fair enough, but don’t forget I spent a modest RM6,500 on my renovation.
My other “competitors” or landlords furnished their units at “standard” renovation costs ranging from RM15,000 to RM25,000. They obviously feel more compelled to rent it at a higher price. I don’t.
THE MORAL OF THE STORY?
Now, I am not saying that I am the best Interior Designer out there. That’s not the intention of this article as many have better technical expertise than me. I just believe in being simple and practical.
I view tenancy management as a business whereby my customers are my tenants. When it comes to landlord issues, you don’t just simply charge high rentals for “fun” and without a strategy. Always find ways to add value to the tenant first.
IValue creation is always the first step towards wealth creation. This forms the guiding principle of how you can think differently from the rest of the masses.
By Mark Chua. https://www.facebook.com/MarkChuaMY
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