WHEN you have a vacant property, one option to consider is to lease it out in order to make some rental incomes instead of leaving the property empty or selling it at a loss when there is a downturn.
It is, however, important for landlords to understand the advantages and disadvantages of owning a rental property and its influence on their financing.
According to SuperiorWealth Group chief executive officer Alan Poon, one of the biggest letdowns of any landlord is when the property is damaged by tenants during their stay there.
“Usually, tenants will not take care of the property or the fixture and fittings for fully furnished units provided during the tenancy.
“While it can be true to a certain extent, this could likely be another myth and I wished that my input could make a difference in ensuring that all the horror or nightmare stories shall not deter people from renting or letting out as a landlord,” he said.
Poon said a smart landlord should ensure that the fully furnished materials were on par to the duration of the tenancy.
For instance, a tenancy of 2+1 years is considered the normal market average, which permits a considerable amount of money to furnish.
He said a landlord should avoid getting too emotional with furnishing the unit as though it was for them to stay and not the tenant.
At the same time, do not skimp on the quality of the furnishing where it matters such as bed mattresses.
“Subject to the profile of your tenants, one may already know where to spend when it comes to furnishing. Of course, one may argue and say what if these are provided by developers? Well the same mind set of allowing fair rate of wear and tear happens when a tenancy expires.
“Of course, the landlord can take comfort in a sense that they are also holding up to two months standard security deposit in advance, which can be used to offset some of this spoilt or damage fixtures of fittings. When it comes to resolving such disputes, it is best to take a lesser than stern position, so long the tenant is made to accept that they have responsibility when it comes to damages of the unit that they have reside in for a certain period of time.”
Poon said in extreme cases, when one felt the risk could be higher, such as higher number of occupants in a shared unit apartment of rooms, a higher than usual deposit can be requested to safeguard any of the financial losses, which was to be anticipated.
“There could be the assumption that a tenant needs to be highly maintained as they will usually contact the landlords for unwanted minor repairs, which could prove to be a headache for some.
“If the landlords know their responsibility from the onset, the whole idea is to set expectation right from the start. Besides what is laid out in the tenancy agreement, a landlord should walk their tenants around and not just the role of the working agent/broker/negotiator. “Eventually, the landlord is the single person who should be managing the tenants need literally. For a practical investor-cum-landlord, I usually advocate working with a familiar handyman to counter such issue.
“In most cases, I see this happening to tenants who are students, being naive and also unclear of the area where they are studying in terms of contact and cost, and also expatriates. Family-based tenants and working professionals would have minimal request to such incidents in my personal experience,” he said.
Poon added that of all concerns, the easiest to handle would be when a tenant had not been paying the utility bills.
“No money... no water or electricity. You pay, you use. It is as simple as that. However, cases as such may happen during the last final months before tenancy expires or for student accommodation, where one is leaving and the other is taking over, a lot of precaution has to be taken by any landlord. The best would be to monitor the tenants’ usage remotely such as online tracking system for Tenaga Nasional Bhd or Syabas.”
Poon will be giving a talk at NSTP’s MyRumah Property Showcase 2017, which will be held from October 6 to 8 at The Curve, Mutiara Damansara.