renovation

What to do when nobody rents our property?

empty properties

Do you own a property which is empty? Meaning it’s not being rented out but you still need to pay loan instalment every month. What should we do to the empty property?

First of all, as we know, investment property needs to bring in the money especially if we need to pay instalment for the bank loan. As we all know, there are two ways to make money from our property, rent it out for cashflow or sell it for capital appreciation.

money properties

If nobody renting it, this means the property is not bringing in any income to us. In the meanwhile, we still need to pay the holding cost and instalment for the loan.  Usually we will end up using our own money and this may become a burden to us.

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Should we rent the property out?

Basically, if we invest for cashflow we need to rent out the property to get the cashflow to pay for all the holding cost and the loan instalment.

We need to know if the rental is enough to pay the loan instalment or not.  For example, if our loan instalment and maintenance fee cost us RM1,000 monthly, we need to rent it out at this rate or higher. If we can rent it out at the rate higher than the holding cost, we will have positive cashflow and this will become our passive income.

If we can only rent it out at the lower rental rate, then we will be having a negative cash flow. In this case we will need to use our own money to cover for the insufficient amount.

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Now, if you are in this situation, you really need to put your effort and use your creativity to increase the rental rate. Renting out your property is a business by itself and you should take the ownership and responsibility to make it work. Do not totally leave it to others as they may not have the same priority and urgency as you.

 

There are few ways out there to increase the rental rate. For example, we can furnish it up and make it more appealing so tenant is willing to pay more, or do subletting by doing some simple renovations to add additional rooms and rent it out by the rooms, or we can rent it out as short-term rentals using platform such as Airbnb. Make sure to connect with as many property agents as we can so they can help us to rent out the property. Do not give up and just wait and hope that the rental will increase by itself. We need to take the ownership and put our effort and energy and use our creativity.

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If you decide to sell it, what should you need to look out for?
Usually for those who invest in property for capital appreciation, they already have the plan and resources to keep it for the duration they intended. If you have the plan and the resources, then it shouldn’t be too much a burden for you to keep the property. However, if you do not have enough resources and simply do not have a good plan, you either need to find the resources needed or you need to sell the property to avoid undesirable consequences.  Either way you need to act fast.

Some investors who invest for capital appreciation, use their income from other sources to fully or partially cover for the holding cost of the property. They usually will have the plan and holding power to keep the property until the time is right for them to sell it. You can use income from other sources like income from positive cashflow property or income from your business or income from your active job, for example, to cover for the holding cost.sell

However, if you plan to sell the property, you need to find out what is the current market price and the current bank valuation for the property.  You also need to know what is the most effective price for you to sell the property. From that information, you should be able to know if you will be able to make some profit from selling the property. Go through the numbers and figures vigorously, and make your decision.

If you are comfortable with the number and figures, then quickly work with as many agents as you can and convince them to help you sell your property fast.

If you are not comfortable with the numbers and figures, then you have to decide whether you can get the resources you need to keep the property or whether you need to cut the losses and move on. Either way, the situation requires you to take charge and ownership of your investment.

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In conclusion, as property investors, we need to be actively involved in managing our investment. We can still outsource the tedious work like property maintenance to maintenance team or tenants sourcing to property agents, for example. As property investor, we need to seriously treat our investment like a business and take the ownership and responsibility to make it work.

 

Want to learn more? Here are coming Rachel’s workshop to help you to learn more.

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FYW JB English Workshop

Date: 29/5/2019

Time: 1pm – 4.30pm

Venue: TBC

Register link: www.fyw2019.com/in


FYW JB 中文班

Date: 30/5/2019

Time: 7pm – 10.30pm

Venue: New York Hotel, JB

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FYW Klang 中文班

Date: 12/6/2019

Time: 7pm – 10.30pm

Venue: TBC

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FYW Seremban  中文班

Date: 13/6/2019

Time: 7pm – 10.30pm

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FYW KL English Workshop

Date: 15/6/2019

Time: 1pm – 4.30pm

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FYW KL 中文班

Date: 15/6/2019

Time: 7pm – 10.30pm

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FYW Melaka English Workshop

Date: 16/6/2019

Time: 1pm – 4.30pm

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FYW Melaka 中文班

Date: 16/6/2019

Time: 7pm – 10.30pm

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FYW Penang English Workshop

Date: 22/6/2019

Time: 1pm – 4.30pm

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FYW Penang 中文班

Date: 22/6/2019

Time: 7pm – 10.30pm

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FYW Ipoh English workshop

Date: 23/6/2019

Time: 1pm – 4.30pm

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FYW Ipoh 中文班

Date: 23/6/2019

Time: 7pm – 10.30pm

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See you soon.

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