Investing in rental is a complicated process. This column is the third of a four-part series on rental income.
In the first one, I identified three keys to managing rental investments: Master the fundamentals of the rental market; deploy a clear strategy for servicing your tenants; and keep your expenses under control.
In last week's column, I broke down the characteristics of the market and emphasised the importance of investing in an underpriced home in a popular neighborhood with good public transportation.
I also stressed that finding the optimum balance between purchase price and rent is your key to success.
Try to minimise the cost of your investment and maximise the rent.
(Hint: Orchard and other expensive areas aren't necessarily the best places to look for an optimal balance.)
Now, let's turn to developing a client service strategy.
In the rental business, your tenants are your clients. Without them, you don't have a business.
Not all landlords get this point and end up turning off potential tenants.
The rental community in Singapore is a small one, and there are plenty of stories of potential renters walking away from unpleasant landlords.
Having been both a rental investor and a tenant, I categorise renters into two groups: The easy renters and the difficult renters. One can then devise the appropriate service strategy.
Easy Renters treat your home as if it's their own. If you get lucky, they even improve the value of your investment by making modest upgrades. Examples include planting lovely gardens, renovating koi ponds, or putting up built-in bookcases.
Savvy landlords spot easy renters from a kilometre away and will even reduce their rent to win them as tenants.
Landlords know that they're better off trading a couple hundred dollars a month for a nice family who pays their rent on time.