Crisis and Opportunity – Being a Stay-in Landlord

One of the reasons I’ve been pretty busy the past couple of weeks and unable to blog is because we’ve decided to use our ‘spare’ room to rent out to Malaysians who were looking for cheap accommodation while avoiding dormitories. And there was a lot of preparation that went into making it happen.

These Malaysians would have just gone through two weeks of SHN in Johor and another two weeks here, before being allowed to return to the community and go back to work. They would have otherwise commuted daily across the causeway, but that was not possible since 18 March because of Malaysia’s lockdown.

Chinese word for crisis.svg
The Chinese word for “crisis” also signifies “opportunity”, although that etymology has been disputed, I’ll still ride on the misconception anyway.

As we learnt from friends and relatives that there was this “opportunity”, we considered deeply whether it was something even worth doing from a financial standpoint in the first place. Even if we wanted to offer our help by not overcharging, we had to balance that against the trade-offs too – there was going to be a lot of hassle moving furniture in, not to mention the loss of privacy in our very own home. Moreover, we would not be able to guess what kind of tenants we would be getting. In the end, after working out some figures, we took the plunge.

I knew right from the start that I wanted to do things the correct way, as doing otherwise would open myself up to unnecessary risks. What if enforcement officers dropped by? What if the tenants were unhappy and complained, or did even worse things? In the end, such an arrangement would mostly end up with me having the most to lose.

At the same time, there were many obstacles that we faced upfront as we grappled with all the paperwork and bureaucracy – checking their work permits, registering with HDB, drafting a tenancy agreement. Internet is an amazing place, and I found the Council for Estate Agencies that provided templates and checklists, both for tenants and landlords. It was only then that I found out about stamp duty must also be paid to IRAS too.

But for somebody doing all this for the first time, I could understand why the much easier way is to not bother. Moreover, doing it the right way means you’re also subjecting yourself to all the rules imposed by HDB, like a non-citizen quota for non-Malaysians, minimum rental period (6 months – so all Airbnb style rentals of HDB flats are illegal!) and maximum number of tenants and occupants in a flat (maximum of 6 depending on size of flat; doesn’t affect families that don’t rent out rooms).

Nevertheless, if we never had the intention to rent out to begin with, this was always going to be some additional stream of income anyway. Friends that I have shared this story with claimed that I have unlocked value in my home, even though I haven’t hit the 5 year minimum occupation period (MOP) yet. To me, between having the COVID-19 crisis so that I have the opportunity to rent out a room and having business-as-usual, I would still prefer normalcy! Just to put things in perspective, it will be many more months of rental (at the rates that I’m charging) before I can even make up for my lost bonuses because of the crisis. So honestly, not worth it at all. It is probably just a temporary solution until the border re-opens, and there are suggestions recently that this could be happening earlier rather than later, possibly even in January 2021. Of course, it all depends on how this crisis pans out by then.

Most people generally do not think that being live-in landlord is viable. Personally, if the family is small and there is a spare room, then privacy is honestly quite overrated. And I don’t say this as if there hasn’t been inconvenience to my family. We are both pretty much still working from home, so we just have to be conscious that there are other people staying in our place too. When we do leave the house, we also lock up the rest of the rooms, just to avoid potential misunderstandings. On the other hand, we have been fortunate to have tenants who have been pretty invisible to us, in the sense that they spend most of the time in their rooms or outside. So we don’t feel like we have to adjust too much either.

It has also opened my eyes to the plights of others because there was no natural platform for me to interact with people of such background previously. As I chat with them, I learn about their families back in Malaysia as well as their gruelling shifts in search of a better life for their own families. This crisis really does affect everybody in very different ways, so I guess this is my way of adapting to the new norm.

How are you doing things differently?


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