This article was updated on 28 August 2019.
Investors don’t have to stick to the same old playbook to make money out of their rental properties.
Drop the conventional long-term leasing strategy and explore these creative rental manoeuvres to get a bigger bang for your buck.
The buy-to-rent concept sounds fairly simple, invest in a rental property and capitalize on it for the highest possible returns. Most investors will share this one mantra: Purchase a property that is below market value to guarantee a positive cash flow – as long as you ensure that the rental income received would cover your monthly expenses including your instalments and maintenance fees, you are sorted.
But, what happens when you cannot even secure a tenant in the first place?
The Malaysian property rental market isn’t exactly rosy either; 2018 recorded a further increase in overhang units for residential properties. According to the Malaysian Property Market 2018 Report, which was recently released by the National Property Information Centre (NAPIC), the 2018’s overhang volume rose by 30.7% to 32,313 units from the previous year.
If you are struggling to cope with the double whammy of falling rental rates and slow tenant demand, here are a few interesting rental concepts to consider:
1. Vacation rentals
Many property owners, especially those in Malaysia’s capital cities have in fact already moved out of the competitive rental market space into the growing tourism market, in response to the growing demand for ‘value for money’, short-term rental accommodations. You could either:
A) Start a homestay business
Instead of spending money on expensive airline tickets and hotel stays, a growing number of Malaysians are now opting to spend their holidays or even weekends in serviced residences in city centres or scenic, touristy locations instead. There, they get to relax and enjoy the in-house facilities such as the pool and gym, go on shopping excursions or explore nearby attractions.
Should you have a portfolio of high-rise residential units with attractive facilities and/or located within walking distance to places of interest, you could consider making vacation rentals a full-time gig by starting your very own homestay business.
Homestay accommodations provide that cosiness that is somehow lacking in a hotel room besides the luxury of space for the whole family and convenience of having a proper kitchen, making it especially appealing to locals.
B) Enlist with online accommodation portals
Alternatively, list your property on online portals like Airbnb and Booking.com who serve as intermediaries to match vacant houses and rooms with people looking for short-term accommodations. With cheaper nightly rates than most hotels and roomier, more homely spaces, it is no wonder why vacation rentals are a hit among travellers and backpackers, weekend tourists, business professionals as well as students.
Property owners can list their unit for free on Airbnb but they will be charged a 3% service fee upon the confirmation of a reservation. You have the option to either allow potential guests to make a reservation instantaneously or you could opt to receive a booking request first in order to screen potential guests before agreeing to host them.
Admittedly, listing on Airbnb is not as lucrative as it once was as there is now more competition from other players in the market such as Expedia. However, there is still opportunity for single listing hosts. You would want to provide a personalised experience and play up the famous Malaysian hospitality to stand out from the pack.
TIP: Be as descriptive as possible when filling up the form which depicts the general criteria of your rental space – Whether you are offering the entire place, a private room or shared accommodation; how many people your property can accommodate as well as its exact location, the nearby hotspots/landmarks and popular local eateries.
2. Earn some moolah from your spare parking lot
You read that right – why let your spare or unutilized parking lot provided for your SOVO, serviced residence, apartment unit, etc go to waste when you can rent it out instead? That patch of cement could be especially valuable if your car park bay is located in a commercial building within a busy business district or a popular high-rise residential development.
Owners could opt to post a parking rental advertisement, free of charge on sites such as Expat.com. Or, you could explore ParkIt Malaysia, a match-making platform that connects owners of unused parking spaces to drivers and vice versa.
ParkIt rents the parking bays from owners and leases them out to drivers, on top of handling the maintenance and management of these spaces, which means you won’t have to search high and low for a reliable ‘tenant’ and chase them for rent, etc.
3. Be a storage provider
Similarly, your empty property could be rented out to cater to someone’s need for storage space. Though this venture has not been widely explored in Malaysia, our western counterparts have already jumped onto this version of the sharing economy with much gusto – there are various online portals like Spacer, Storemates and Store At My House who match storage unit hunters with vacant space owners.
At the moment individuals in Malaysia have to settle for commercial storage facilities like Extra Space Asia or Lock+Store, which might be pricey for the average Joe. Tenants will be charged on a daily basis and some facilities cost as much as RM 500-800/monthly for an estimated 40-80 sq ft of space.
Owners of strata units looking to conceptualise this rental concept should first consult the management of their building to obtain approval for this renting arrangement.
It is easy enough to advertise your storage space on Facebook and online platforms such as carousell.com mudah.my. Your potential tenants could include individuals looking for a space to temporarily store their furniture in between moving homes or even entrepreneurs and start-ups who function out of small offices and require some extra space to safe-keep company assets or goods. Make sure to equip your unit with a solid security system beforehand including 24/7 CCTVs and computerised locks.
4. You see a rooftop, I see billboard space
Do you have a landed home with a blank wall and lots of visibility? Here’s an idea, you could advertise on it! In Hong Kong, landlords with properties in areas receiving high foot traffic are making a killing by offering their building exteriors to advertisers.
On that note, if your home is located on a hilly plot of land and/or runs right alongside a highway or a busy trunk road, you are in for a treat. Advertising companies will scramble to get a piece of your real estate, specifically your rooftop to place their commercial billboards.
According to a local advertising company specialising in mobile and outdoor marketing, you can earn as high as RM15,000-RM30,000 per month for rooftop billboards measuring either 14ft x 48ft or 20ft x 60ft, depending on the location of your house.
5. Rent your property out for events
If you have a beautiful landed house or bungalow, especially one that has loads of outdoor space, it would make for the perfect venue for garden parties, social gatherings, birthday parties and even corporate events.
It is as simple as contacting and enlisting with online portals such as Venuescape who would match you with suitable clients who are looking for the one venue that will fit their event needs.
This Article was written in collaboration with Fahri Ahmed.