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? Daily rental? Monthly rental? Target market? Are they students? Private university students? Local university students? Are they office people? Rent out bare unit? Rent out partially furnished? Renting out the unit FULLY FURNISHED? You see, there are many questions to answer. Today, we focus on just one. Renting out fully furnished and the 4 reasons why.
#1 Lower risk.
Yes, I personally think its lower risk. If your tenants are not that financially well off, why would he pay extra few hundred Ringgit to rent your place? Assuming its RM400 extra, that’s already an extra of RM1,200 at the beginning. It’s an extra RM4,800 per year! Secondly, if the person is really needing just a place to stay, there is NO need to rent a fully furnished place. Any place, cheap would be just fine. I remember when I was renting a student house previously, the main theme was just ‘cheap.’ The rest will somehow fall into place. It’s still true today.
#2 Better tenant.
Seriously, better tenant? Well, my tenant of that RM700 unit remained my tenant until he bought a landed property in Gertak Sanggul in Penang. He paid RM700 when similar units were rented out for RM550. He rented my unit for nearly 4 years. He has always paid rental on time and when he moved out, I think the apartment was still in one piece. Even the washing machine, LG brand was still working! After 8 years of continuous usage. Thus far, all my tenants have remained friends because all of them have rented for many years. Well, a good homeowner is a plus too. Yes, that’s me. Haha.
#3 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 about 12 years ago in Penang.
Potential tenant: Wah, your place is just so-so but you want to rent out RM700? I have seen a few furnished units for just RM550.
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.
#4 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.
When tourism returns, AirBnB will be awesome again. When it’s for students, the number of rooms could be higher than if it’s for office people. I have friends who rent out empty units and said that it’s so fast and easy. 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.
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