Property Investment 101: 10 tips to choose a good tenant
Such a bad market, still want to choose tenant?
Actually, this is a good question. The answer lies with the home owner aka landlord yeah. As for the below thoughts, it’s not a guaranteed foolproof. If it helps you, that’s great. Else, feel free to accept any tenant whom you feel comfortable with yeah. There is really nothing wrong because everyone is different. In the years that I have been renting out my units, I did have a few unfortunate incidents but generally all are good.
Laws of Attraction
Before I start, I need to remind everyone again that there is really such a thing as “Law of Attraction.” Somehow, we always seem to attract many people who’s just like us. Our friends… our colleagues… our tenants… Be good to people, usually they will be good to us too. I give you a real conversation as below with one awesome tenant in Kota Kinabalu (not the current one, the previous one)
Tenant: I realised the door knob on the master bedroom is broken. May I get it fixed?
My wife: Yes please get it fixed. The cost for the change or repair or whatever, just let me know. I can tt you or you can take it out from the rental.
Note: Tenant did not say how much. My wife also did not ask how much. This tenant has NEVER needed reminder on rental since the first month. Trust element was established earlier on.
A few days later.
Tenant: Just wanted to let you know that after work today, I went to buy a new door knob and fixed it already. (Took a photo and sent to my wife via Whatsapp)
My wife: This is good. Let me know if you prefer me to tt you or you prefer to reduce the amount from rental.
Tenant: No need lah. It’s only RM16 for the knob and I managed to fix it by myself.
We were also very nice to him too
This tenant really appreciated all our gestures too. Example, when air-con was not working well, we immediately get the technician to check and replace the aircon when the cost of repair is half the cost of buying a new one. From the day tenant told us until the new aircon was fixed was 72 hours…
I cannot say 100% of all my tenants are good people but I can safely say 80% are awesome people (rental on time within first few days of new month, no need reminders… ) and another 10% are okay people (a little more demanding). Remaining 10% is best to forget and we will do our best to choose the tenants too. Here are 10 tips to choose that tenant too.
Remember, the extra money is not going to be worth the many, many months of headache in the near future. Here are 10 things to think about when choosing our potential tenant. (renting out fully furnished)
1. The Don’t Like at First Sight type.
If you do not have a good feeling about the potential tenant during the first meeting itself. Note, this is not like meeting your potential husband. There’s no need to try and go out a few times and see what happens. This is JUST a tenant. If you don’t like, don’t rent. There is NO need to try to ‘give chance’ and evaluate before rejecting. Remember, ‘ejecting’ them will be very hard in the future.
2. The Unrealistic Negotiator type.
After the viewing, they try their best to negotiate for a VERY much lower price by commenting that your home is way below their expectations. Alternatively, they ask far too many extras. Well, if it’s really that bad, it is better for them to view other cheaper units. For this type, I think they are just too calculative. Since I am not one, I would not rent out my unit to one.
3. The ‘Don’t Care’ type.
Sorry but I really mind a lot about those who do not even take care of how they smell. Messy perhaps. Drunk the night before, perhaps. Did not wash their clothes? Perhaps. Whatever, the perhaps may be does not matter. These are not my choice too. Even if they had just come from the gym, they should have taken a shower before coming for viewing. If I know how to respect people, they should also know how to respect me.
4. The Secretive type.
Come on, questions such as what do you do for living SHOULD be answered easily and directly. As the homeowner, I have no issues telling you what I do for a living but if you could not do the same, I think there’s something wrong with you. I know, I know, even if they could tell me, they could be lying. For that, I would have to just admit I was fooled… Else, your job should NOT be a secret.
5. The Threatening type.
Before they even come for the first viewing, they ask for lower rental. They would not want to view unless you lower your rental. Fat chance, please try on others. I will never price myself out of the market for fully furnished but without even viewing you are already trying to negotiate lower? Just a note, fully furnished units mean they can move in just with their luggage…
6. The Missing in Action type.
It’s hard to at least meet them once. They ask their agents / friends / anyone else to be the middleman. It’s okay, just let them be. I usually prefer to meet my potential tenants before I say Yes. These days, it’s possible for a video call too. I am very sure they want to know who their homeowner is, right. If it’s hard to meet them the first time, when you need to meet them in future, it would be almost impossible.
7. The Complaining Type.
When you started asking, they started telling you that they were looking for a new place because their previous landlord was VERY BAD. It may be true, so asking them to explain why their landlord was bad may also reveal why their landlords were bad to them. Until today, I think my tenants’ relationships with me has been quite good. Somehow, all of them are successful people!
8. The ‘pretend to be’ Foolish type.
They came to view, knowing it is a fully furnished unit. After the viewing, they ask if they could rent the unit without the furniture. If you say no, they would most probably say, how about lowering your rental. I do not need this, this and that. Apologies. I would not negotiate at all. I would let them loose. I think they deserve a better landlord who would move the furniture out for them and after moving the furniture out is willing to charge them lower rental.
9. The Second secretive type.
When we ask them how many people are staying, they have to think for a while before answering. It would be good to include this into the tenancy agreement if they have informed us the number. I am worried if they are going to sub-let my place and turn it into some crisis relief centre or a student ‘megamall’. Couples who are both working would be great.
10. The ‘Not-Enough-Money’ type. (I kena before… sigh…)
They asked if they can pay just one month advance and one month rental. The another month deposit, they want to pay later. This was an actual tenant issue for me. I was foolish to accept what the tenant said. Within a few months, she has started to delay and then ‘forgotten’ to pay! Fortunately it was settled after a few months. I would not want to rent to these people ever again!
A GOOD tenancy agreement is a must.
Malaysia does not have a Tenancy Act at the moment though the government is saying that it is something in progress. If the tenant says there is no need lah. Then, I will say ‘don’t wantlah.’
My property may be worth a few hundred thousands if not more. The rental is likely to be just a thousand or thousands of ringgit every month. The risk versus return is just too high yeah. If the tenant turned out to be a ‘devil,’ it will take me a very long time before I could remove them, legally. Welcome to the world of owner and tenant.
If we are engaging a real estate negotiator to help us rent out our few hundred thousand home, please ask them to at least read through the above tips too. While potential tenants could still fool the best precautions from owners but as usual, better minimize the potential risks before they happen. Stop using the slow market as an excuse to relax our guard and simply rent to any Tom, Dick and Harry okay.
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