In 2016, I and my recently wed husband bought our first property. It was quite a straightforward decision for us because I’ve always wanted to start my way to passive income. Both mine and his parents were landlords, so we both knew a bit about the property investments. We had some knowledge, but this was our first-ever property.
We listed our house in Subang on Hostel Hunting – we wanted to make as much as possible, and rental by rooms seemed to be the most logical and profitable option. And indeed, all the rooms got rented in mere 2 weeks, we got some excellent support from the HostelHunting team and we thought it’s now just going to be easy as a breeze. All in all, now we should just be waiting for the money to come!List Your Place Now
Well, but this is when we learned how much work and effort you have to put into being a landlord.
Nobody can’t deny, owning a good property in a popular location is a no-miss idea for making money. Of course, any landlord has to pay the standard cash down payment and will require years of cash support via repairs, upkeep, and major component replacements.
But once the house loan is fully paid, the Subang house will become our major income stream, and we are looking forward to retiring earlier thanks to this property. You wouldn’t even have to think about the property at all! With the right tenant, it’s the most simple way of earning money. Hubby and I are dreaming of travelling, while our children are living their own life peacefully. Can’t wait to see the Maldives!
It’s not always a perfect journey, though. We’ve heard too many stories from our parents and friends. The most common: lies given by the tenants during the initial meetup.
Example? My dad was once renting out a unit in a condo in Petaling Jaya. A potential tenant came in and said that he just got a job in an international corporation nearby. He explained the details about the job, even told the stories about his family etc… My dad signed the rental agreement with him and the problems with payments started to happen. After a while, he realized that the tenant lied all the way – he was actually unemployed and knew that signing this would give him at least couple of months of easy rental, that is – until my dad gets angry for lack of payments.
Even if you’re lucky and you find a decent tenant, you still might encounter payment delay problems. If you’re strict (and we are not), you can charge an additional delay fee. But this leads to a toxic atmosphere and spoils the whole relation with the tenant. We just can’t do it – even though sometimes the payments are late, we try to keep everything clean, and as long as the money lands in our account, we don’t cause trouble.
You know these moments in life, when you’re just too busy and stressed to handle more sticky situations? Last year, I was pregnant and had an extremely tough time at work. We were finalizing a huge project, and I had to work 11 hours a day for a while.
Additionally, the tenant from on of the rooms in the Subang house decided to move out earlier. You know, it’s always a bit difficult – making sure everything is in place, pushing the tenant to pay the fee for moving out early… But I certainly did not expect what happened when I went to visit the property! The tenant’s room looked simply as if someone detonated a bomb inside. There were punch holes in the walls. The place was incredibly dirty. The door knob was missing and the carpet had holes from cigarette buds (even though the house was a non-smoking property!).
After fixing everything and dealing with the tenant, who was being nice and paid the damage fees, we found a new tenant. It took us a month – one stressful month in my pregnant life, that I just want to forget.
But it was a good lesson – we realized how important the tenancy agreement is, and all the points about the repairs and damages.List Your Place Now
Property investment is still the best way of generating a passive income, in my personal opinion. But it needs to be planned well – without rushing or catching “deals”, that may actually be all fake. While being a landlord can be stressful and expensive, I believe that the future rewards will be worth it. Plus, you’ll learn so much about the market, people and psychology – more than in any school!
Important 3 points to keep in mind, before you invest:
- Don’t trust people too much
Always check the payslips, call the potential tenant’s office to double-check if he’s an employee there. Even if someone looks nice, it may be a false impression that may cost you a lot later on! And I’m talking about your own cash!
2. Don’t be stingy on your property
Always keep in the back of your head, that you might want to move-in to this place in a couple of years, and stay there. Would you like the current state of it? Don’t wait for repairs, changing furniture or maintenance to be done at the last moment.
3. ALWAYS have savings
Your property might give you a constant income stream, but it might also generate huge costs in the process. Always keep at least 40% money than you thought the investment will cost, in your pocket.