Hi everyone! As we have just entered the beginning of year 2022, one of the most exciting and busiest time for most or at least some of us, embarking on a many uncharted journey such as new goals, new career, new challenges, new resolutions, new car and of course new home too.
When we are talking about new home, the word “renovation” naturally will come into our mind. Many of us who just got our new home probably have had been planning to start the renovation since last year which is rather not a good year. As we all know, many activity had been temporary halt due to MCO and renovation work was one of them.
Renovation work schedule which had been interrupted due to MCO had caused the accumulation backlog of work and when the renovation work resumed after MCO was lifted in August 2021, we noticed there was a sudden surged of cost in home furnishing such as renovation, electrical appliances and furniture due to sudden tremendous demand from the market simultaneously. As rising cost of for home furnishing to make it liveable easily up by than 20%-30% compared to pre-pandemic, this poses a new challenge to the new home owner especially for rental market.
As some of us are totally new in market who probably don’t know how and where to start, getting some tips and advice from the experienced people in the industry might be helpful, we think.
Therefore, PROPCAFE paid a personal surprise visit to The MakeOver Guys’s office to get Mr.Gavin Liew to share some of his insightful tips and strategies with us. Mr. Gavin Liew is an avid property investor himself and he is also one of the founder of The MakeOver Guys. When we says “experienced people” , we are not just referring to someone who had done a few jobs in their entire career. The MakeOver Guys has been staying relevant in the industry for having completed more than 2,000 makeover to date. If that number does not justify them as an expert, then we don’t know what does.
Let’s hear him out what he got to say.
BOOSTING YOUR RENTAL YIELDS LIKE A PRO!
By Gavin Liew, The Makeover Guys
Hi everyone! previously PROPCAFE™ shared an amazing compilation of 75 DON’Ts in RENOVATION. I have to say, it was one of the most comprehensive list of tips I have come across. If you missed it, you can find the article here.
Receiving the keys to a new property is an exhilarating experience. But more often than not, the excitement is pretty short lived, when owners realize the sheer amount of work that must be endeavoured to make the property liveable.
In today’s high-supply environment, making your property liveable is just the first part of the equation. The second part is where the real challenge lies; being competitive in the rental market.
Let’s face it, the current rental market is a rather tough one to conquer. The sudden influx of newly completed properties has given our prospective customers (tenants) so many options to choose from! So much so that it calls for new strategies to be formed in order to stay relevant.
What worked 10 years ago, just isn’t going to work today.
In hopes of tackling these difficulties, I’ve gathered a few tips, strategies, and mindset shifts that need to take place, in order to boost your rental yields like a pro!
1) ELIMINATE “TENANTS” TO ACHIEVE A GREAT RENTAL PORTFOLIO
Yes, you heard that right. The first secret to having a great rental portfolio is to eliminate ‘tenants’ from your life.
You see, the word ‘tenant’ in itself is limiting your growth as a property investor. As you might already know, the opposite of ‘tenant’ is simply ‘landlord ’.
And this powerful word, landlord, tends to give property owners a false sense of empowerment.
Let’s start by taking things back to the fundamental truth. We are in the business of real estate investing to make money .
Our property is our product, and those on the opposite spectrum are our customers.
This is the key paradigm shift that must happen, if you’d like to start boosting your rental yield like a pro. Eliminate The Word ‘Tenants’, And Start Calling Them ‘Customers’ instead.
And why is that?
Your customer is essentially giving you a RM30,000 contract (say, for example based on a RM2,500 a month rental rate). I’ve seen many instances where people will go out of their way to secure a RM30,000 contract for their job, but on the other hand, be extremely rigid and stingy when it comes to their rental properties.
Just as it is in every business, the customer’s satisfaction should always be priority, and this does not differ in the property investment world. When one manages to wrap one’s mind around this ideology, we are certain that your business would run more smoothly and be able to generate better returns. You are doomed to fail if you behave like a lord to your ‘tenants’ (and we’ve met many who still do).
I can truly say, without hesitation, that anyone investing in real estate who doesn’t change their paradigm and strategies to match this important shift will struggle as the cycle changes and a new reality begins.
2) UNDERSTANDING YOUR CUSTOMER PROFILES – The Rise of the Millennial Renter
With the long term trend of rising house prices, it comes as no surprise that millennials now make up the dominant demographic within the rental market. This is one of the main reasons why strategies that worked 10 years ago, isn’t going to work today.
The Merriam-Webster Online Dictionary describes Millennials as those born roughly between the 1980s and 1990s. In short, that means anyone below the age of 38 years is more or less, a millennial.
Growing up in an era of rapid change, millennials have vastly different priorities, expectations, and values than those of prior generations.
So what do all these mean to you, as a property investor?
Understanding these traits mean you can use it to your advantage. Let me give you a few examples.
Millennials prioritize work-life balance: This is very important for a millennial so providing convenience always wins. Fully furnish your offerings so they need not fret on the tiny details and have more time for the crucial stuff.
Millennials are tech-savvy: Post ads online (duhhh :P), and pay a lot of attention to the photography styles used. Extra brownie points for those who can pull off instagram and pinterest worthy pictures for your ads!
Millennials prioritize lifestyle: This generation of people don’t mind paying more for socially sought-after things. Basically, things that are high in-trend. So make sure your interiors are in-trend and relevant.
Millennials and the internet: Even the oldest of Millennials have had internet since their high school. It’s no surprise they have a high dependency on it. Therefore, do provide internet services if you can.
Just remember, your customer profiles have begun its shift to millennials, and you can no longer employ the same strategies you used to to attract Gen-Xs and Baby Boomers.
3) THE EQUATION FOR HIGHER RETURNS
Contrary to popular belief:
Fitting-out and completely furnishing a property DOES NOT equate to higher returns.
Higher returns can only happen when your customers’ quality of life is improved via the things you provide, and it MUST be better than what your competitors have to offer.
So therefore, the equation for higher returns should be:
Basically, what this means is, your goal as a property investor is to improve the quality of life of your prospective customers. When you’re furnishing your property, always think about how your choices will affect the quality of life for its dwellers.
So, the next big question is, how do you define an improved quality of life for your customers?
There are quite a number of ways. I’ve listed down a few common things your customers typically look for:
● Convenience – A hassle-free home that’s move-in ready. This means, your customers can save lots of time from having to hunt around for the essentials such as bed linens, cutleries, appliances, etc.
● Low-move in cost – This is pretty related to convenience. If everything is provided, it also means your customers don’t have to fork out more cash for living in a place that isn’t truly theirs! Don’t forget, they already need to allocate 3.5 times the monthly rental value up front (2 months security deposit, 0.5 months utility deposit, and 1st month rental). That’s already quite a sizeable sum.
● A clean, comfortable environment – Nobody wants to live in a dirty old dump, if they had a choice. And, they do!
● Great interiors – In all honesty, who wouldn’t want to live in a great-looking home? This is a strategy that’s centuries old and is still heavily employed today in all hospitality industries.
If you put yourself in your customers’ shoes, I’m sure you will be able to list many more beyond these.
4) OKAY, I GEDDIT NOW. SO WHAT DO I DO NEXT? – Liveable and Competitive
Once you understand the philosophies behind what drives rental rates and returns up, you’ll be able to strategize and prioritize what you need to do with your property.
Let’s face it, we are in the business of real estate investing to make money. This simply means we do NOT want to overspend.
So how do we create impactful yet practical spaces, without negatively affecting your ROI?
Below are some examples of typical rental interiors, and what you can do to make it more relevant for today’s market and stand out from your competition.
The top picture is something you’ll often see being offered in the rental market today. The essentials are all there; the lights, fans, dining table, chairs, air-conditioner, kitchen cabinets. It certainly is liveable, but as we mentioned earlier, in today’s environment is has to be competitive too!
Walls play a huge part in the ambience and environment. In this case, what you can do to increase its competitiveness is to focus on the walls. Wallpapers or textured paint is a great way to increase the perceived value of the space, without having to spend too much.
Here’s another example of a typical rental property offering.
The most expensive things in furnishing a home is already in there. It really doesn’t take a lot to bring it to the next level, and to stay competitive in today’s rental environment.
By providing beddings and linens, it really just kills two birds with one stone; it makes the
space look so much better, and it gives your customers convenience. That extra trip they’d
need to make to buy their preferred beddings and linens can wait till they’re truly free to do
so and it lowers the urgency.
Here are a few more pictures you may use as references to create competitive rental environments without burning a hole in your pocket. Enjoy the pictures!
So there you have it! Hopefully you’ll soon be raking in the moolah with the help of these tips!
Waaay too busy and would rather have someone take care of it all? The Makeover Guys are here to help! You may reach us on our website at www.themakeover.my . If you’d prefer to speak to our friendly consultants, do visit our facebook page at www.facebook.com/themakeover.my and drop us a message!
For more inspirations, feel free to follow our instagram page at www.instagram.com/themakeover.my .
In our next articles, we will be sharing more in-depth tips on how to create these interiors so
do stay tuned!
Thanks for reading! Till next time.
PROPCAFE would like to say a big thank you to Gavin, Amanda and Vince from The MakeOver Guys for spending their valuable time to meeting with us and on behalf of all the readers, we would like to thanks Gavin for sharing his insightful tips with us.
p/s If you ever wondered if this is a paid post, we can tell you it is not but we have to admit, we did received something more valuable (at least to us) – friendship, warm hospitality, knowledge, time and few cups of coffee! 🙂
Tips on how to prevent falling into renovation scam.
Since we touch on the topic of renovation, PROPCAFE come across there were few cases of renovation fraud which happened not long ago where at least 40 owners were scammed. Refer to the news here.
PROPCAFE want to take this opportunity to share this to all of you and keep reminding us on this.
Why? Because they scam, they hide and then they come back and repeat 
.
How? They offer you renovation package and at the same time they entice you that they have tenant ready with xxxx amount rental per month waiting for your unit. And once your unit renovated can immediately rent out to their current awaiting tenant for your renovated unit. They make it like an easy deal. Renovation package and Ready Tenant. Seriously?
Here are some of the tips from us to prevent from becoming victim of renovation scam.(not 100% proof though)
1. Try to view your renovation and tenant as two different matters. If you are looking for renovation, look for credible and proven record of renovation (for eg The MakeOver Guys hahaha). If you are looking for tenant, need not to say, look for licensed agency and professional agent.
2. Do not renovate just because the renovator has a tenant to offer to you or something like GRR. Renovate because you want to renovate and you have a clear target on your rental and market.
3. Never pay 100% for renovation or high amount of deposit. We think anything below 10% or lower as deposit is still OK depending on the total amount of your renovation.
4. For renovation, upfront discussion with the contractor payment on progress basis.
5. If you are doing it yourself without help of an ID company, monitor their progress closely.
6. Do homework to check on their past track record. Like review or communicate with their previous customer for their honest feedback.
7. Believe 50% what you see or hear from them, photo, video or whatever marketing material (even this day news also can be misleading) . The remaining 50%, you do your own research. See the actual final product. Talk to their customers.
8. If anything sound too good to be true like cheap, easy, be skeptical and be more careful. Have a reasonable doubt especially if the company is new.
9. No one say it is easy to be a landlord. Landlord works very hard but most time we only see the easy part. Reward come after effort although no guarantee in equal amount. But no effort most likely lead you to no reward.
10. Again, to conclude deal for tenancy it is advisable to go through professional licensed agency, better NOT from the renovator. Sometime some co do offer to help you to get a tenant, however just treat it as a bonus but not as part of the deal for your renovation.
11. Be humble and listen to people who has more experience. But filter it wisely. Because nowadays most people here on social media they after something else. Even some people who has one or two properties (some don’t even own any property) talk like a guru. True guru is they are sincere and most time they won’t admit themselves as guru.
12. Don’t think you know everything. Best if you think you know nothing and seek for help and knowledge from correct channel and wise people.
That’s all from us for now. Till we meet again. Hope you guys enjoy it, See ya!