Property Investment 101: 4 reasons I rent out my units fully furnished

Property Investment 101: 4 reasons I rent out my units fully furnished

Would you like to rent out your unit fully furnished?

Every time people asked me about buying a unit and renting it out, I will ask them many questions. Most of the time, they did not know that renting out the unit is really not as simple as just renting out the unit. Some examples? How would you like to rent out your unit? Is it via aaily rental? (short term accommodation) Monthly rental? Sub-divide the units for more rooms? Who’s the target market? Are they students? Private university students? Local university students? Are they office people? Are they foreign workers?

Will you be renting out as a bare unit? Renting out partially furnished? Or would you like to follow me by “Renting out the unit FULLY FURNISHED?” Today, we focus on just one. Renting out fully furnished and the 4 reasons I like it.

#1 Lower risk target market

Yes, I personally think its lower risk. If your tenants are struggling to make ends meet, why would they pay extra a few hundred Ringgit to rent your place every month? Assuming it’s RM500 extra between a bare unit versus a furnished unit, that’s already an extra of RM6,000 per year. By the way, many will show off even if they are struggling but it’s usually by buying a fancier car because that one everyone could see. Renting a home? No one could see, so no need to spend extra. These people will not be renting any fully funshed home lah. They will just rent a room (probably smallest one) but they drive a BMW or a Mercedes. Renting a unit cannot show off lah.

Secondly, if the person is really needing just a place to stay, there is NO need to rent a fully furnished place. I mean an empty room with just a mattress is sufficient too. Any cheap place would do. Room rental is even better. Fully furnished unit is definitely not needed. I remember when I was renting a student house previously, the main theme was just ‘cheap.’ So a fully furnished unit will skip all these.

#2 SMALLER marketplace. Oops??

Marketplace is smaller. Yes, those who would furnish their units well and renting them out are fewer. So are those who wants to rent fully furnished, these are fewer too. What this meant is that your competition would be lesser even if your target market is also smaller. In this marketplace, there is very little need to negotiate hard. If you need to, there’s something wrong with the tenant, please allow him to rent someone else’s unit. Following is a true conversation with a tenant for my Penang unit.

Potential tenant: Wah, your place is just so-so but you want to rent out RMXXX? I have seen a few furnished units for just RMXXX.

Me: I agree. That’s why if you prefer those units, its best that you take them. I think it would be foolish if those units are similar to mine and you still want to negotiate because the price difference is so huge.

I also look at the tenant when I was saying this in front of the real estate negotiator too. Sometimes, people are funny. So, we just follow them and be funny back to them lah.

#3 Someone has done it successfully

By the way, this is just my personal experience yeah. However, I can safely tell you that I have been renting out fully furnished for many years and all the units are spread across many different towns and cities here in Malaysia. There were definitely some months when it was empty but generally once rented out, it’s continuous and my tenants have always been good to me. (maybe because I am good to them as well?). So, this can be a model to go since it’s tried and tested too.

#4 It’s not short-term yeah

Frankly, if I could do earn rental daily, I would love it too. Many friends have told me that they just needed to rent out their units for 6-8 nights (weekends) and any additional nights after that are extra versus if they were to rent out on a monthly basis. I agree and sometimes I think for some units, this strategy of daily rental is really a better option.

However, there are also other downsides too. It’s more uncertain. It’s more work lah. If you clean it yourself, you will be tired. If you get others to do it for you, then the above 6-8 nights may not work lah. You will need more nights because you have to share the rental with them too. Competition may also be tougher as even the hotels would try to take away this targeted tenant yeah. There are more reasons but I think I have stated enough why I personally prefer to rent out fully furnished yeah.

Conclusion

It’s your unit yeah. So, you should decide how best to mazimise the returns. No one can say for sure that their model works for you. With tourism returning, short-term rental will be awesome again. When it’s for students, the number of rooms could be higher than if it’s for office people. Sub-let works better when people need just a place to sleep.

I have friends who rent out empty units and said that it’s so fast and easy. This works too because there is no need to do so many things before renting it out.

Just remember that as long as you have a strategy which you prefer and it works, stick to it. Oh yeah, remember to treat your tenant well too. I always believe good people will meet good people, if you get what I mean. Happy renting out your unit for continuous rental income.

Edited article on 8th March 2021. First written in July 2015. Latest edition July 2023.

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