Ir was published in smartinvestor.com
Let me share a real story
A potential tenant, a husband and wife came to view my 730 sq ft apartment with a real estate negotiator (REN). After they have viewed the whole unit, the husband said to me. “I think your unit is okay. You know, most of the units I have viewed are asking for RM500 – RM550 rental per month.”
“Okay” is not the word I am too happy to hear. Benchmarking a fully-furnished unit (because I moved out) versus some empty units around the area is also not something logical to me. My reply to them in front of the REN is something like this. “Actually if most of the units you viewed are already at RM500 – RM550, I would suggest that you choose one of those units. If I am you, I would not come and view this RM650 unit.”
What happened next?
They did not rent. I was also happy that they did not. Starting on the wrong foot may make the whole thing complicated in the future. The next tenant who came to view told me he really loved my unit as it was super fully furnished and asked if there are any chance that I could consider a lower rental as he was just a new engineer starting in Penang. He was a Malaysian Indian, driving a Proton Iswara. Immedictaly, I agreed with a lower rental. He rented from me until he moved up in his work and bought a landed property in Penang a few years later. Rental was always on time. Starting right is so important.
The Lesson for me? Know your unit’s worth (get help and research)
The lesson here for me as an owner is that there is NO NEED to follow the neighbours if I know that my unit has distinct advantages. In this case the information is not hard to get whether or not my unit is more special than others. Just ask your friendly neighourhood REN yeah. If your friendly REN could not give you an answer, find another one. This REN is not worth the time you spend to tell him about your unit.
The Lesson for potential tenants? Communicate better to potential owner because the decision is his / hers, usually not yours to make.
The lesson for potential tenant is how you communicate would determine if the owner rents to you or rents to the next one at a lower rate but not to you. Occasionally, the owner may be desperate and accepts everything you say. That’s considered lucky for the tenant and is not necessarily the norm. It is not wise to agitate the owner because they may not like it and decided you are not the one. By the way, there is a reason why any owner quoted a rental which is much higher then others yeah. I would propose for potential tenants to skip units which is above what they are willing to pay. It’s a simple decision to do.
30 years later, it’s either an asset or a never-ending payment
My tenant, the one who drove an Iswara and later on bought a landed property is a financially savvy person. He knew he must not overspend on his rental. Thus he rented my place versus the many better condominiums or even some place which is just 10 minutes away from his office. My place was in a neighbourhood which was around 35-40 minutes away. He could easily saved RM250 per month at least. His Iswara was definitely a second-hand unit. he saved at least a few hundred ringgit every month from driving this second-hand unit.
At the end of the day, he just needed 5 years to save enough downpayment for a home and he did just that.
RM250 x 12 months from rental savings. RM500 x 12 months from car instalment savings. That’s RM750 x 12 = RM9,000 per year. In 5 years, he has RM45,000 just from these two savings, not including his usual monthly savings from his earnings. This was why he could have enough for a 10% downpayment for a landed property in Penang. It’s not in Greenlane lah. Be realistic.
30 years later, he would have completely paid for his newly purchased landed home. Most probably driving a way better car and most probably going for good holidays too. For some who did not do what he did, the monthly rental will be a never-ending payment.
Not an easy decision or thing to do but happy choosing.
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