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[Landlord Edu] Managing Your Own Room Rental? 5 Tips To Avoid Losing Thousands Of Ringgit

Updated: Jul 31, 2021

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As landlords, you would know renting out your properties is not an easy game.

The struggle of setting up your properties, attracting prospective tenants, and executing property maintenance will never end.

So, what can you do? Give up your rental business?

Nope, that's a horrible idea and definitely not an option.

Instead of calling it quits, you can take a step back and take a quick overview of your business.

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These are some of the questions you need to ask yourself as a landlord. Whether it's house renting or room renting, you need to know how to manage your operation properly so you won't run out of business.

In this blog, we will look at the 5 most important tips landlords must never overlook in their rental businesses (- what if they do? Well, be ready then to lose a couple of thousands of ringgit, yikes!)

1. Set Up Your Rental Property

Gaining or losing money starts from square one - the very moment you set up your rental property.

Before you put on your landlord hat, make sure you've thought things through when choosing your rental property.

You must have solid reasons behind why you buy and rent out a certain type of property, why you choose that particular location and neighbourhood.

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And how do you decide all that?

Well, making such decision is absolutely not a one-day process. Before actually purchasing your rental property, you must already have your business outline, plan, or profile.

Here are some things you need to have in your house/room rental business profile:

1. Your brand name

2. Your mission, vision, and objective

3. Your target audience

4. Your target income

5. Short-term & long-term goals

Once you have all these aspects decided, you'd know what kind of property to buy for your rental business.

Yes, setting up your rental property cannot be done within a day, just like building Rome.

You really have to pull up a chair, sit down, and think things through - what do you want to achieve and who is your target audience.

For example, if you're targeting families, renting out a terrace, bungalow, or semi-D would be perfect.

If you're targeting students, renting out a flat or a low-cost apartment is enough.

Apart from choosing the best properties for your clients, you should keep tabs on the properties with the highest rental yield in Malaysia.

As a landlord who wants consistent profit from your rental business, it is crucial to know this. Once you understand the concept of rental yields and capital appreciation in property, you'd know which kind of property is best to rent out.

On top of that, you must carefully figure out the most fundamental part - which location should your rental properties be in?

Yup, deciding your rental location is absolutely as complicated as rocket science.

...high-rise residential properties in good, established locations have always commanded a higher rental yield than landed residential properties..." - Datuk Siders Sittampalam

Still, the main point is to get a good location. Why? Because a good location can guarantee you good returns, despite whatever property you're renting out.

Let's think about it for a minute.

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City X is an urban megalopolis that offers countless job opportunities and career advancements. City W, on the other hand, remained as a small, peaceful town. Obviously, people will go to City X to earn money and some, make career changes.

Thanks to this pattern, the location of City X is an established one and it gets a higher demand; people are jostling to find a rental room/house in City X.

From here, you can see - no matter what kind of property you rent out, either high-rise or landed, people will still want to stay in City X's location.

With such high demand in location City X, it just doesn't make sense if you rent out a house in City W.

You wouldn't get the return you're dreaming of. In fact, you'll lose up to thousands of ringgit for sure.

So, as you can see, choosing your rental location can really be a ringgit-worthy game changer.

Also, besides the two important aspects, make sure your properties are rental-ready.

Make efforts to decorate the rooms and houses you're renting out.

Want a great, budget-saving tip? Get all necessary home decor items at your nearest eco-shops or RM2 stores. Trust me, everything you need is there.


And instead of losing thousands of ringgit, you won't believe how many more you'll get in return.

Yup, by just spending a few ringgits on room decor.

"Nahhh, room decor isn't that important."

If you think so, well then, don't be surprised when your tenants don't last long.

Just so you know, in Malaysia, the rental business is a competitive game. Other landlords are aggressively making their moves.

Try searching for any rental rooms in your location now.

You'll see how the rental properties with most furnishings and deco get most inquiries from prospective tenants.

So, if you don't step up your decorating game, be ready to say bye-bye to your precious tenants.

2. Market Your Rental Property

How do you market and advertise your property nowadays?

This is the question you MUST ask yourself if you're not getting any tenants.

If you're still on the pages on klassifieds in the local newspaper, I insist you stop. As in now. Stop it now.

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No matter what type of properties you're renting out; houses, condos, rooms, offices, co-living spaces, people nowadays do not flip the pages of classifieds to find them anymore.

The same goes for your efforts of printing out your ads as posters or banners - that's extremely outdated today, especially if you're targeting urban areas such as KL and Selangor.

I know most of you landlords have adapted well to the ways of technology. Keep up the good work!

For those who don't have their own Facebook page (for your rental properties), that's a start for you.

Most social media platforms are the new "newspaper" today.

So, bring all of your ads online - promote them on Instagram, Twitter, TikTok, and Facebook.

Join all possible communities, groups, or rooms that are curated specially for real estate and rental properties.

Unsure of starting everything alone? Get a team.

Here are a few quick tips on how you can get your own marketing team:

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1. Family members

- If any of them know the current marketing trends, seek help

2. Volunteers

- Ask for volunteers to assist (there are many digital volunteers you can find today)

3. Interns

- Seek interns that specialize in business, marketing, and advertising

4. Your own in-house marketing team

- Hire professionals that are expert in digital marketing

Once you've got your own marketing team, you'll definitely get a lot of leads - way much than before.

Yup, the moral of the story is to keep updated with the latest digital marketing trends. Why? Because that's the most effective way to get potential clients today.

Well, we have the marketing part sorted out. But what if you're unable to manage your property hands-on?

Let's say you live in Pahang but you have several rental rooms in Kuala Lumpur, Selangor, and Melaka. How should you manage?

Besides getting some help from your family or friends to take care of things for you, try getting a property manager.

"A property manager is a qualified professional who is competent and experienced in the management and maintenance of buildings." - Wong Kok Soo, Burgess Rawson (Malaysia)

Managing properties can undeniably be burdensome at some point. So, having a property manager who can supervise and handle your rental properties for you can be the answer you're looking for.

If having others do the job for you sounds like a great idea, consider getting a property manager. So, how does it work?

Do you need a property manager for every single rental property you own? Nope, that's not necessary.

Principally, a full-fledged property manager focuses on optimizing the returns on the property. In other words, on your behalf, a property manager will:

  • Ensure contracts and bills are signed properly and paid on time

  • Report on the monthly cash flow, income, expenditure, and overall operation of the property

  • Inform the progress on the upkeep of the property - maintenance, electrical support, current state of property

So, shortly, a property manager will manage and assemble all facts and figures pertaining to your properties, handling the administration part.

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Another convenient, short-cut way for you to manage your rental properties is to hire a property caretaker.

How does a caretaker function?

Unlike a property manager who has a macro-perspective in overseeing things, a caretaker's duty is more on the hands-on side.

If you have no time to be a hands-on landlord, you can start looking for a caretaker. A caretaker usually does what landlords do. And that includes:

  • Do a background check on tenants/tenant screening

  • Come up with the rental agreement

  • Hand over keys to tenants

  • Cater to tenants' requests in maintenance, cleaning, or repairs

Typically, a caretaker will report to the property manager on every update. And the property manager will then report to you. Still, if you plan to hire property managers and caretakers, you can later determine their tasks.

If you have multiple rental properties in various different states and having a hard time managing them, consider having caretakers and property managers.

3. Learn the Rental Laws in Malaysia

Once your marketing strategies work, you'll be happy to see the number of leads and clients you'll get.

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Before letting your prospective tenants put down their signatures on the tenancy agreement, make sure the agreement is foolproof.

Learn how to properly create a tenancy agreement. This is very crucial as it determines whether or not, your agreement can be used in court later on (if something happens).

Here are some things you must include in a tenancy agreement:

  1. Details of property

  2. Rental and deposit amounts

  3. Tenancy period + option for renewal

  4. Inventories and services provided by landlords

  5. Tenants' obligations

  6. Landlords' responsibilities

  7. House rules and prohibitions

  8. Procedure of resolving disputes

  9. Others/special clauses

So, how do you do that? First up, learn the rental laws in Malaysia. Yup, even when you become a landlord, you cannot skip studying.

Start by picking up some books, go on Youtube to get some visual legal input, and ask your connections. See if you have friends who are well acquainted with the laws and regulations of the local property market in Malaysia.

As landlords, you must also be mindful and vigilant of all the new updates in the local rental market.

Presently, a lot of homeowners are waiting for the much anticipated Residential Tenancy Act - an act that's produced to protect and safeguard both tenants and landlords.

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And this act is forecasted to be tabled in the Malaysian Parliament in 2021.

Now you've understood the lack of ruling when it comes to the rental market (since there is no current law that oversees to resolve the arising disputes between tenants and landlords), you must be familiar with the existing legal frameworks.

The next wise decision to take up as a landlord is to find yourself a lawyer. Setting your rental business with a lawyer is imperative to legally secure your business.

If you think getting a lawyer is costly, think about all the thousands of ringgit you'll be losing if something were to happen in the future. Yup, sometimes, investing in something worthy can be a blessing in disguise.

Equally important, you need to set your rates right.

Setting your rental prices too high or too low can backfire on you in the long run.

As a start, you can find yourself any real estate agent who's an expert in the location of your rental property.

A realtor would know how to estimate your property's worth, by considering the overall rental rates in that particular location as well as the related contributing factors.

Being a landlord, it's very crucial for you to understand the positive & negative attributes your rental property has:

  • Location; near to public transport (KTM, LRT, MRT)

  • Type of accommodation (condo, flat, apartment, terrace, bungalow, etc.)

  • Facilities (swimming pool, gymnasium, library, sauna, park, etc.)

  • Parking space

  • Security

  • Design & furnishing (fully furnished, partial furnishing, no furnishing)

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Yes, these are some essential factors that determine rental rates today.

Another aspect worth looking into is to see if your rental income is taxable.

What? I thought this is my own private business? I'm just casually renting out to people; school and university students. Do I still have to pay tax for my rental business?

Well, in Malaysia, you do. First and foremost, you need to declare your rental income at the Inland Revenue Board Malaysia or also known as Lembaga Hasil Dalam Negeri (LHDN).

You must do it because if not, you can be penalized. In other words, you'll suffer a great loss and may lose up to thousands of ringgit.

“The letting of real property is treated as a non-business source, and income received from it is charged to tax under paragraph 4(d) of the Income Tax Act 1967..."

Clearly, from this clause, you can see that renting out property is a non-business source. And your rental income is required to be taxed.

So, if you have any landlord friends or community who said renting out properties is a form of non-taxable investment, you might want to show them this Article.

Well then, what happens if you don't declare your rental income?

In Malaysia, evading a tax is a legal offense. If you failed to declare your rental income, you may be fined from RM1000 - RM 10,000 according to Section 113 of the Income Tax Act 1967.

Yup, that's a lot of money and you don't want to lose that.

If you're unsure of this and want to find out more about rental income tax and landlord incentives, you can reach out to your lawyers, landlords community/support group, or any LHDN personnel.

4. Never Skip Tenants Screening

Another alternative for you to avoid losing thousands of ringgit in your room rental business is by filtering your tenants.

Never skip tenant screening because you may never know those who are renting with you. Do background checks on your prospective tenants.

For a start, you can ask a few basic questions in the initial step, including:

  • Pet ownership - Does your prospective tenants own any pet(s) and do you permit such ownership in your rental property?

  • Monthly income - Do they seem like they can afford to pay the monthly rental fees?

  • Eviction history - In what manner does your tenant leave his/her past rental property? It's also best to seek references from your tenants' employer/former landlord

  • Employment history - Does your tenant have a steady employment record?

  • Reason for renting - Discover why they want to rent with you

  • Moving-in date - Ask your prospective when are they planning to move in

  • Health status - Take into account if your tenant is a smoker or any patient of critical diseases

Yup, it's not only tenants who are in constant search of a good landlord. Landlords too, need to select and scour for their ideal tenants.

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Why not just accept anyone to rent with you? They'll still pay your rental fees anyway; you still have that stream of income coming in.

Aha, not so fast. Things may seem simple but it doesn't always turn out the way we want. There's a lot of cases where landlords, including in Malaysia, had traumatizing experiences. Trust me, you don't want to be a part of that.

One of the most important parts of tenant screening is conducting credit check. Credit check is a particular element of financial checking. It's when you assess and examine your prospective tenant's financial habits and history.

If you don't have the expertise in conducting these checks, you can always go to agencies that provide screening services.

5. Organize Your Rental Business

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The final step to make sure that you won't lose your ringgits is by organizing your business systematically.

How to do that? By having proper accounting and bookkeeping.

Upon being a landlord, you must foresee the countless amount of accounting data and info that you'd have to manage.

Every record of payments, documents, and financial statements must be accurately documented.

It's also best to organize your files alphabetically, by name and date so that it's easily searchable.

If you don't know how to handle the numbers and accounts, try hiring an accountant.

Here are a few things your accountant can do:

  1. Ensure all records are clean by managing all related taxes and deductions.

  2. Keep accurate records of cash flows (maintenance, cleaning, property upkeep, etc.)

  3. Set up specific bank accounts for your rental business - best to separate them from your personal finances!

  4. Allocate a portion of your income to cover taxes and prepare for rainy days.

  5. Scan all hardcopy receipts to have a digital copy of each.

  6. Make backups of all accounting and financial data.

  7. Keep the records and credentials of all contractors, electricians, and contractors involved in maintaining your rental property.

Plus, if you did agree or promise to do something for your tenants, set up reminders on your phone's calendar.

This helps you to keep tabs on everything and deliver your promises to tenants (which includes maintenance and cleaning).

"A satisfied customer is the best business strategy of all." - Michael LeBoeuf

It's also wise to document all the verbal arrangements or promises you've made with your tenants, just to be on the safe side. A reminder in your phone's notes or To-Do list is already enough. Everyone knows; no one likes a person who forgot what they've said or even worst, take it back.

Clearly, walk the talk is a great way to make your tenants happy and loyal to you and your rental business.

Another way to make sure you keep your money safe and sound is by managing your rental utility bills.

You can use the myTNB mobile app, split the bills individually among your tenants (for room rental), or handle things seamlessly through the WiFi meter. You can choose among all these different methods - whichever fits you best.

By doing all this, consistently throughout the years, you won't have to worry anymore about losing any ringgits or not making enough returns.

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