Tag Archives: Renting

Real life issue -Tenant wants to upgrade existing room to a air conditioner room, how to address this issue?

Every now and then, I get existing tenants asking this question and just recently I had a tenant who was renting one of my rooms paying a monthly rental of RM310 for a non-air conditioning room. She was willing to pay as additional RM100 each month if it was installed but I was not really willing to do so for several reasons.

Firstly, when I received this inquiry, I did mention to her that I would check with the owners on this issue and revert back to her. It is important for you to revert back to your tenant soonest possible on any issue that is brought up to you as it is part of the service that has to be done by the owner or manage r of the rooms.

Secondly, we have to look at the cost involved in this possible upgrade, buying a new air conditioning unit and installing it plus the piping required to the outside compressor would cost quite a significant amount since this is a non-windowed room situated in the centre of the house so therefore it would need quite a lot of piping just to get to the outside of the house to install the compressor. This is additional cost required vs if the room had a window that was next to the outdoor of the house.

Thirdly, would it be viable and profitable for this upgrade to be done? Yes it can be done but the situation may defer from case to case. In this particular house there is already 5 rooms out of the 10 rooms that are fitted with air conditioning units. Normally air conditioning rooms will also naturally increase the electricity bills of the house so that is also a something to consider especially when your rental includes the utilities of the house. Air conditioning rooms are also the slowest to be filled vs non air conditioning rooms. There was also a situation where the upstairs tenant which was a air conditioned room was also looking to move out so it would be possible to arrange a transfer of the existing tenant to either that particular room where the tenant is looking to move out or another air conditioning room in the house. There are of course the standard transfer fees required if the existing tenancy agreement has yet to expire. It takes extra time and effort for transfers to be done, therefore a charge is required and the tenants will not misuse this. What has happened in the past is that tenants would move in to the rooms and after a month or two, they will either start asking about either upgrading or downgrading a room and at that point in time, I did not have any experience in this situation and No charges was initiated to the tenant for the upgrade. What I notice after this upgrade was that tis news started to spread around the house and other tenants also wanted to do the same thing as it did not cost them anything to do so but it would give you a real administration nightmare. The reason for this is that you would have to pro rate what the owner has paid for in rental and also tenancy agreement fees and all the other fees vs the cost of moving in to the new room and whether they have to either top up or refund certain deposits and also you would have to have a new tenancy agreement written and you have to get involved in the moving of the tenants stuff from the old room to the new room as they would need some time to move their physical stuff. So the new room keys would have to be given to them while leaving the other room open for this process to be done. After which you would have to get this room that the tenant has just transferred from to be ready for viewing for the next potential tenant. All this really takes a lot of time and effort so a fee for this process is usually a norm that you have to make clear to your tenants. Of course, some profit will be made at the same time but that is what I call a business. I charge RM50 for every transfer done and currently I only allow upgrades and not downgrades as refunds are required on the deposits and I rather not get into that situation where it would reduce my cash flow but focus on increasing it.

Do please share with us what you feel on this issue or whether you have encountered a similar issue and how you have solved it by commenting below.

Should your room rental include utilities or exclude it ?

When it comes to renting rooms out, there will come the time when you have to decide what you want to include in the rental of the room. You will have to keep in mind that you still want to be competitive in the your neighborhood and not over or under deliver when it comes to the facilities included in the rental. You will have to do your initial research of the neighborhood and the easiest way is via checking out rental ads on the Internet. Best way to do so is to use certain keywords like “room to let ” on Google.

One example that I have recently personally experienced took sometime for me to decide on as it meant forking out additional expense each month if I decided to proceed. It was to do with increasing the bandwidth of the Internet connection in the house. It was running on the minimum package of 384kbps unlimited package and I was paying RM68 per month. The upgrade option that I was pondering on was to upgrade to the latest technology of 5Mb Unifi that came with free channels. This upgrade was RM148 per month, which means additional RM80 each month for extra expenses. I was very skeptical as I was hesitant to pay more each month but I had many complaints on the speed of the Internet by the tenants of the house. The house had 10 rooms and it is situated in an area full of universities and very conveniently situated near a shopping mall and close to the train station and bus stops. This is the most popular house among the other 4 houses that I own. Finally I said to myself that I had to calculate the rentals that I was getting each month and deducting all my expenses for that house to see how much I was getting in net profit. I noticed that I could afford it but there should be a way on how to pass this cost to the tenants. I did not want to increase the rentals immediately as it was not the right thing to do but the option to increase the rental on the next tenancy renewal or new rentals would have an increase in the rental. If I made the calculation easy, RM80 divided by the 10 rooms was hardly even RM10 per room so all I had to do was to increase the rental by 10% and I would be already covering the cost of the increase of this expense and still have happy tenants. So was it worthwhile? Indeed it was. I knew I did the right thing when I was in the house and the telecommunication guys were doing the upgrade, my tenants actually ask me whether I was going to increase their rental because of the upgrade, and in my mind, “ka ching” all I could hear was more money is to come with this upgrade. So basically the more value I give to the house and the room, the more I can charge and the tenants will also be willing to pay for it.