5 Expensive Ways to Wreck Your Rental Income

Buy a house, rent it, and let the rental pay the home loan. Simple, right? Yeah, in about the same way heart surgery is “simply re-attaching some tubes”. New home owners like to count on rent, but a lot of them are inexperienced landlords. In this article, I look at their favourite ways of wrecking their rental income. If you’re counting on your tenants for loan repayments, best avoid these costly mistakes:



1. Be a Total Cheapskate  

Wow, that tenant, he whines all the time. He wants a new microwave, a new fridge, a new paint job…but you know how to deal with that. Just act like the evil step-mother in a fairy tale. Right?

There are limits. Here’s a quote from Melissa Lam, who used to rent a single room in Siglap:

“I don’t mind if some things are spoilt. Like the tap in the attached bathroom kept leaking, but it would have been expensive to fix, so I understand that. But just little things, like the paint was peeling really bad, and the lock was funky, he (the landlord) also wouldn’t fix it.

In the end I just got fed up. I left on short notice. And I know I paid a lot more than usual for the room. I was paying $900 a month for that one room. I didn’t mind because the location was convenient. But he was so cheapskate I just couldn’t take it.”

Before refusing your tenant’s request, compare the costs. How much would a vacancy cost you, as opposed to a fresh coat of paint or a new kettle? If you’re still paying the home loan, maybe you can’t afford not to cater to tenants.



2. Don’t Give Tenants Their Privacy

It’s understandable if you check your property from time to time. But when your tenants start reliving their stand-by-bed days from the army, your notice is on its way.

Good landlords restrict their visits to the following:

  • Upon the tenant’s request
  • Bi-annual checks
  • Consultations / checks during repairs or upgrading

If you drop in more than once a month, you’d better be the tenant’s mother or something. Repeated checking puts tenants on edge; they’ll assume you’re trying to find fault.

If you live on the same property as the tenant, don’t pry. Sneaking into tenants’ rooms will result in higher turnovers than an Iraqi bomb squad. Always ask for permission to check.



3. Keep Making Changes

As a landlord, you have the power to seriously inconvenience your tenant. And a great way to do that is to keep changing the paint, buffing the floor, or tweaking the air-conditioning.

A couple of times a year? Understandable. But having a contractor turn up every other month? Would you live with that? Tenants don’t like camping at McDonald’s while someone drills the wall, or coming home red-eyed at 8pm and finding out the windows are being refitted.

You could argue that these are improvements. But improvements are meant to attract and retain tenants, not drive them away. Before making changes, ensure it’s convenient for them.



4. Keep Tenants In The Dark About Rent

If you intend to raise rent, give your tenant plenty of prior notice. Otherwise, even if they want to stay on, they just may not have the money ready.

This is often the case if you’re a home owner on a floating rate package. Because you can’t predict the monthly repayments, it’s hard to decide your rental rate. It may be tempting to wait until the last minute before renewing the lease, to get a feel for the SIBOR or SOR rates.

While I empathize, it’s better to undercharge a tenant than to have no tenant. Even better, take this into consideration when picking your loan package. If you’re heavily dependent on rental income, maybe it’s better to take a fixed rate package.

Tenants don’t like migraines any more than you do. Try to inform them at least two months ahead that you’re raising rent.



5. Don’t Clarify Terms In The Lease

Yeah, I know you spent a fortune paying your lawyer to draft the lease letter. Too bad the tenant only understands it as well as you. Admit it; without your lawyer to explain it, going over the lease is like reading Ulysses in kindergarten.

The lease agreement may state the tenant pays for all repairs, but whether the tenant understands that is a different matter. Even if you’d win a legal dispute, what sort of victory is that? The only thing you’d “win” is a loss of rental income.

Before letting the tenant sign, clarify the terms in plain language. Make it clear what he pays for, and what you pay for. This will ease tensions and prevent confrontations. You should also spell out the consequences for things like late payment. It may turn away some prospective tenants, but those weren’t the tenants you wanted anyway.



Want Your Rent to Pay Your Home Loan?

As I mentioned in point 4, you need to match your rent to your home loan package. To find an appropriate loan, visit www.smartloans.sg. Just enter your property type and your desired loan, and this free site will display the best available packages. The site’s mortgage specialist can also contact you to advise your further.


Image Credits:
dickhune, akeg, daniellehelm, USACEpublicaffairs, maebmij, David Ortez, La Melodie

How do you protect your rental income? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.

More From MoneySmart

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippines to fly over disputed South China Sea: Aquino
    Philippines to fly over disputed South China Sea: Aquino

    Philippine military and commercial aircraft will keep flying over disputed areas in the South China Sea despite Chinese warnings over the airspace, President Benigno Aquino said on Monday. "We will still fly the routes that we fly based on the international law from the various conventions we entered into," Aquino told reporters when asked whether the Philippines accepted China's position. The Chinese military last week ordered a US Navy P-8 Poseidon surveillance plane away from airspace …

  • Mitsubishi reaches out to far-flung Batad community
    Mitsubishi reaches out to far-flung Batad community

    A “Dadbod” is a newly coined term now trending in media. It was introduced to the world by Clemson University sophomore Mackenzie Pearson as she refers to any man—father or bachelor—with a physique that’s a “nice balance between a beer gut and working out.” “It’s more human, natural, and attractive,” she adds. For this writer, […] The post Mitsubishi reaches out to far-flung Batad community appeared first on Carmudi Philippines. …

  • Aquino: Philippines to fly usual routes over disputed reefs

    MANILA, Philippines (AP) — Philippine aircraft will continue to fly their usual routes over disputed reefs in the South China Sea, the country's president said Monday, defying China's challenges to its planes and those of the United States. …

  • A weekend of premium cars
    A weekend of premium cars

    Good news to all luxury car fanatics as PGA Cars, the exclusive importer and distributor of Audi, Porsche, Lamborghini and Bentley cars in the country, will be holding the PGA Cars Premium Festival from May 29 to May 31 at the PGA Center in Global City in Taguig. The 3-day event will showcase PGA’s latest […] The post A weekend of premium cars appeared first on Carmudi Philippines. …

  • APEC ministers to endorse Boracay Action Agenda
    APEC ministers to endorse Boracay Action Agenda

    Trade ministers at the Asia-Pacific Economic Cooperation (APEC) meeting in Boracay, Aklan agreed yesterday to endorse the proposed Boracay Action Agenda to the member countries’ leaders, presenting opportunities for global trade for micro, small and medium enterprises (MSMEs). In a press conference following the conclusion of the APEC Ministers Responsible for Trade Meeting, Trade Secretary Gregory Domingo, who also served as chairman, said ministers agreed to recommend the adoption of the …

  • Talks with China over sea row urged
    Talks with China over sea row urged

    The Philippines should engage China in bilateral talks in its efforts to maintain peace and order at the disputed West Philippine Sea, Sen. Francis Escudero said yesterday. Escudero supports the government’s move to bring the issue before international arbitration but also stressed the need for the Philippines to pursue talks with China. Escudero made the statement after UN Secretary General Ban Ki-moon on Friday called for a peaceful solution to territorial disputes in the South China Sea. …

  • House panel tackles bill on regular disaster drills
    House panel tackles bill on regular disaster drills

    The House committee on national defense is deliberating on a measure mandating the regular conduct of disaster risk reduction drills in educational institutions nationwide. Authored by Camarines Sur Rep. Rolando Andaya Jr., the bill mandates that risk reduction drills be held annually in all educational institutions throughout the country in coordination with the schools’ respective local government units. “The Philippines’ location along the Pacific Ring of Fire and close to the equator …

  • PCSO running out of funds
    PCSO running out of funds

    Philippine Charity Sweepstakes Office (PCSO) chairman Ireneo Maliksi has admitted that the revenue-generating agency is running out of funds as it continues with its mandate to provide financial assistance to indigent Filipinos. Aside from providing financial help to individual recipients, Maliksi cited at least 13 laws that mandates the PCSO to provide mandatory contribution to different government agencies. Just last week, PCSO released P100 million to the Commission on Higher Education as …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options