Renting out property is becoming an increasingly popular option for people who want to supplement their income. You might have a house you cannot sell or an extra room you don’t use, whatever the case may be, there are tons of reasons why people choose to rent out their property. The process of renting is pretty straightforward, once you have your tenancy agreement set up, you can begin to court likely tenants. However, before you get started, there are a few things you should keep in mind when renting out your property in Malaysia.
Setting up a tenancy agreement
There are no specific laws in Malaysia that govern tenancies, however there is the house tenancy agreement which is the binding document between you and your tenant. You can draft this agreement yourself, but it is advisable to stick to a standard tenancy agreement. The agreement is based on mutual understanding, so both parties can object to covenants within the agreement. Once you and your tenant have reached a consensus you can both sign the contract and get it stamped in order to make it valid. You can have this done by the Malaysia Inland Revenue Authority, who will charge you with a stamping fee for tenancy agreements in Malaysia.
You can calculate your stamping fee as follows:
(((Monthly rental x number of months) – 2400) / 250)
Understand the Responsibility of becoming a landlord
If you have decided to rent out property, you are going to have to carry the burden of being a landlord. As part of your responsibility you will have to take care of maintenance and arrange utilities. Tenants might call on you to fix lights or replace washing machines. Depending on your tenancy agreement, you might also be liable for the behavior of your tenants. Make sure you clearly outline liability for both you and you tenant. Becoming a landlord likely involves a lot of extra work and might require a lot more active involvement than you might think. Make sure you have the time and the patience to take on this extra responsibility. Renting out your property is a great way to supplement your income, if you can manage it.
Set a competitive rental price
Many people are not sure if they want to own or rent. To persuade people to become your tenants you are going to have to set a competitive rental price. For your renting price to be competitive, you have to consider the square feet of the space that you are renting out. The second major factor is the other rental prices in the area. If your space is more expensive than other similar places in the neighbour people will not want to rent from you. Make sure you set a competitive rental price, but don’t undercut your profit margin. A good way to measure your profit when renting out property is by calculating your rental yield. You can calculate you rental yield by dividing your annual rental income by the property value and then multiplying by a 100. This can tell you if your rental price is not too low. Good luck!
News Source: Star Property