Business Times Interviews - Starting Young

[Musicwhiz]

I like the idea of being a landlord and having people to pay my house installment, secondly I only need to work hard for the first few mths and once rented out, i just hv to deal with the tenant when problem arises. Of course there are also problematic tenant and other misc which is part and parcel of prop investment.

I do my searches through property forums, newspaper classifieds and talking to agents. am thankful cause along the way I met a few successful investor that doesn't mind to share. I'll write more later. Very hard to reply using iPhone.

I am also currently renting out one room to a tenant who has lived with me for close to 2 years. I am lucky in the sense that my tenant is well-behaved and does not mess up the room/house and is also considerate enough not to bring in unwanted guests and to ask me for permission if she decides to. She is also a punctual paymaster and has not missed or been late for any rental payments. I guess a big reason could be because she is a friend of mine and there is a mutual understanding not to "spoil the friendship" by being difficult.

When you are dealing with a total stranger, it can be a lot tougher to set ground rules and negotiate on various aspects of the rental contract. A property agent friend of mine did warn me of a lot of "unforseen" events which could occur with regards to problematic tenants, and he said I was lucky because about 70% of the tenants he has seen have given various types of problems for their landlords. This post is not to discourage you, but rather just to inform that handling and managing tenants is not as easy as it seems.

The screening of potential tenants should be a very rigorous process which involves both the landlord and the agent; but it's still hard to detect cases where tenants give problems later on, or cases where the tenant colludes with the agent to cheat the landlord. Cases of tenants absconding without paying X months of rental are not uncommon, and one has to be very meticulous in ensuring one does not inadvertently accept such people of dubious integrity.

Successful property investors usually have many decades of experience and also very deep pockets. While I agree that it's important to learn from these veterans, things are somewhat different now compared to "our father's era", and even in Singapore, no one can buy a cheap $40,000 HDB flat anymore as those days are gone forever. So what worked back then may not always work the same way now. Just ensure your leverage is not excessive and that you can tackle the cash outflows should there be 1) no tenants or 2) a rise in interest rates or 3) both.

Good luck!