PROPERTY investors should know their rental game plan and understand how the market works to have a good source of income when they lease their property.
Many people believe that it’s a renter’s market now. But what is a renter’s market?
SuperiorWealth Group chief executive officer Alan Poon said contrary to popular belief, people perceived the market by way of over/under supply based on demands.
“While that can be true, the way to access demand are very much a localised scenario rather than at macro level. This is because most macro perspectives are governed by statistics or data usually obtained from National Property Information Centre (Napic), which we can only get months later,” he told NST Property.
Poon, who gained a name in The Malaysia Book of Records for being the first author to launch three books simultaneously, said any consumer survey was usually behind a few quarters or period and did not reflect the actual market unless it was due to a prolong situation based on consistent trends.
RENTER’S MARKET VS LANDLORD’S MARKET
Poon said a “hot” location could be a renter’s market whereas a neighbouring project might be a landlord’s market instead.
He said in a landlord market versus a renter market, it boiled down to how one understood the market well and its surrounding supply and demand.
Most of the time, a landlord would ask for the best rental and value add their properties to attract the desired tenant.
In a market where renters are aplenty, landlord could relook into this strategy and position their rental price instead, said Poon.
Likewise, managing these tenants could be tricky as the landlord would want the best tenant to stay yet they have other choices to move too, should the rental market become hot.
“One of the better ways to stand out in a sea of rental properties, in my personal opinion as a practical investor, is to be known for all the good reasons. This, I mean, not just the rental price of value-add facility provided within the premises but also to be known as the landlord that a tenant would like to deal with.
“This encompasses being a nice and considerate landlord or even someone whom the tenant can make a reference point for. I would say word of mouth is the best leverage you can get to market your rental unit as a landlord,” he said.
In any or all cases, Poon said tenant management was a skill that an investor landlord could master and apply across the board throughout any property cycles.
This is because the ultimate aim to get the returns or yield, one would have aimed for in the first place comes from housing the right tenant that could stay long term for sustainable returns. In short, sustainable tenancy happens when one can keep and retain tenants.
Henceforth, the art of managing tenants lies in the relationship one is building the moment the landlord allows shortlisted tenant candidate into his premises.
Poon said it was common sense that one should filter and screen potential tenants with utmost diligence and care.
“Get it one time right! It may sound impossible, but there are ways that I have personally used successfully as I put in into my latest books through the concept of tenancy quadrant. The quadrant basically allows the landlord to systematically ensure that tenant acquisition and management can be done in a simple and effective manner through the four quadrants, namely P.L.A.N. However, there is this apparent fear that tenants are poor paymasters.
“Every landlord hopes to find good, if not great tenants, that they do not need to be worried about getting late or insufficient payments. Potential or aspiring landlords should not be turned off by this fear if they have implemented preventive measures in the first place.
“It could take hours or even days to lay out the details of a practical strategy one can use but the most common ways is to collect the rent in advance in the form of post-dated cheques or standing instructions put in place by the tenant. In cases where punctuality are not met, the frequency of such incidents can be reduced by way of ‘rewarding’ tenants with discounts in rent should they choose to be prompt instead of the much-dreaded ‘penalties’ which most delinquent tenant choose to ignore anyway,” added Poon.