In any investment, the main goal is to maximize profits and minimize losses. As real estate is concerned, one of the biggest liabilities for a landlord is owning property that is vacant, unoccupied, and not rented out.
Like it or not, these are the risks that every landlord undertakes upon owning said property. Unfortunately, every landlord will inevitably feel the pinch as It’s not all sunshine and perfectly received monthly payments all the time.
Hence, the Hartabumi Team have decided to compile and share with you how to minimize the losses in your real estate investments.
10 Ways to prevent losses in Real Estate Investments
1. Rent out your property at an Affordable Price
Some landlords overprice their rental and wonder why nobody is interested in being a tenant. Don’t fall victim to overpricing!
For instance, you could easily rent out a flat for RM500/month and single storey terrace house for RM800/month. Alternatively, a quick google of the surrounding market prices should also indicate if you are charging too much.
2. Reward tenants for making early payments
In cases where tenants pay rent before the expected payment date, take the liberty to give a small discount. Let’s say the monthly rental is RM800, it wouldn’t be too much to give a RM20 discount to the tenant.
Some may see this a loss for the landlord, but you can also view it as a small investment to ensure your tenants keep paying on time.
Let’s not forget that it’s important to constantly rent out your premise as you don’t want to go through the hassle of searching for new tenants to cover expenses for an unoccupied property.
3. Consider Adopting Referral Programmes
It is typical to start scrambling for new tenants once you reach the end of the contract period. This is when we start blasting our property to agents and property websites alike.
Before you do that, have you considered offering a commission to your current tenant for referring the rented property to anyone in their circles? Besides, who else would be more suited to advertise and market the property other than the tenants themselves?
For all you know, the commission used to compensate the referral could be cheaper than the total cost involved in online ads and promotions.
4. Paint the house with Bright and Radiant colours
Nothing turns off a buyer than a dull, worn out, run down looking apartment. A nice bright coat of paint will do the unit wonders for the pictures used to promote the site.
This also allows those that physically view the house to imagine how they would place their prized possessions and belongings into their potential homes. Although minor, these all play a part in enabling your potential buyers to decide on your property.
5. Provide the ‘Bare Basics’ of Furniture
Another simple method to increase the value of your property is to include basic furniture such as beds, wardrobes, dining table with chairs, sofa and etc.
These items need not be exquisite or expensive, but the mere presence of such items do increase the appeal for potential tenants. In a side by side comparison, having these extra items could even be a deciding factor for many.
6. Provide essential Home appliances
If you have a larger amount of capital to invest, it would also be recommended to provide certain appliances such as a TV, washing machine, air-conditioner and water heaters.
Not only can you charge a higher monthly rental (due to the increased value of the unit), you also allow yourself access to a market of people that are willing to pay a higher rental for said conveniences.
Think about it? Many newly married couples would rather opt for a semi-furnished home due to the extra conveniences that come with it.
7. Build a Relationship with your tenant
Make it a habit to give the occasional ‘Hello’ and check in on the living conditions of your tenants. Not only will this gesture will make them feel appreciated and cared for, you will also always be aware of anything the tenant may need.
On the flipside, this is also an effective way to find out if you have the worst tenants in history. In that scenario, we trust that you can take action and resolve any issues if you come across cases of any damages to the property and/or breaches to the tenancy agreement.
8. Be humane and considerate
There will always be a possibility of misfortune for each and every one of us in this lifetime. Having said that, exercise some humanity when your tenants fall victim to theft or home break ins.
Considering the amount of financial loss they are already experiencing, provision of a half month discount or delayed payment would go a long way to ease the burden of your tenants.
Moreover, this simple symbolic gesture of condolences and empathy will further increase the chances of the tenant to continue renting with you.
9. Lower the Deposit Amount
It was never set in stone that the standard deposit should be high to be eligible to rent. There is no need to blindly put the typical 2 + 1 + 1 (Utility) nowadays.
Instead, we would suggest that you only ask for 1 + 1 only. This makes sense in today’s market as most tenants that rent out would have the capacity to commit to monthly payments, but may be hard pressed to have huge amounts of savings.
Logically, if they had that level of financial capacity, they would most probably be looking into buying and owning their own property anyway.
By reducing the amount required for deposit, you greatly increase the odds of your apartment from being vacant to occupied. Besides, the extra month deposit can still be utilized in the cases where you need to cover for late payment and/or damages incurred.
10. Hire an Agent
You should hire an agent to help you find tenants for your property as early as a month before you receive the keys to said property.
This is because real estate agents have access to databases and networks of directories to find these prospective tenants.
The advantages of hiring a professional real estate agent range from not having to deal with the negotiations with the buyers, to the rest of the steps and processes involved from the house viewing, all the way to the signing of agreements for your rented property.