If you have an extra house (wow!) just lying there and being wasted, it only makes sense to turn it into an investment by renting it out. However, we understand if you are not stepping forward because of the multiple ‘what ifs’ clouding your mind. Rest assured, most of them are misconceptions you must not give importance to.
Let’s see which concerns you might face before renting out your house and why you must not let them stop you.
Myth 1: Your house will turn into a party pad
The first thing that comes to mind when you think about someone else living in your house without you is that they will convert it into a sheesha parlour or a lounge and blast EDM till the neighbors come out shouting. Cut to reality.
Your tenants would be responsible adults just like you and most need to have a 9-5 job to pay your rent! Some of them might have kids so ‘loud house parties’ don’t figure on their list. All you need to do is not be petrified.
Your tenants will be living in your house just like they would be living in theirs and will definitely not turn into wild party animals as soon as the moon rises. If you are still concerned, make sure you add specific terms in the lease or request the building management to keep an eye initially.
Myth 2: You will be chasing your tenant for rent every month
This is every landlord’s nightmare. Who wants to deal with a tenant who constantly needs to be reminded to pay rent on time? However, this problem can be solved without much drama. The best way is to select the right tenant after doing a thorough check – credit, education, job, and rental and criminal history. Ensure your agent does just that. Ask for company addresses and work contracts, just to be sure.
And the best way to avoid any such hassles is to get a GIRO set-up for the monthly rent.
Myth 3: Your house will become a hub for illegal activities
This one is a serious concern. However, if you run a complete check on your potential tenant, you are safe. Make sure you also check if they are illegal immigrants or are into drugs. Again, you could alert the neighbors to keep a check on them initially.
But honestly, with Singapore’s strict laws, this is very unlikely.
Myth 4: Your tenant will sublet your apartment (or never leave!)
This is something you must not worry about. According to the law in Singapore, it is illegal to sublet an apartment to any individual or vacation home rental companies for short duration. State that in your contract straightaway.
Another worry you might have is that the tenant might never leave the house. While this seems plausible for long-term tenants, it is not legal. So, you can take a legal action against them if need arises. However, the best way to avoid this, is to ensure that you change tenants every couple of years.
No long-stay tenants, no hassle!
Myth 5: Your tenant will trash your place
We agree this one is a toughie. No amount of background check, can tell you how hygienic the individual is. Till they live in your house! But there are multiple safeguards in place.
Here are some tips:
● Take pictures of the house before you give it out on rent.
● Get those signed off by the tenant, his/her agent and your agent. Put it in the contract.
● Ensure you take the standard two-months deposit to cover any damages to the property
Having said that, most tenants are careful about their living spaces. And the two-months deposit that you have, serves as the perfect deterrent.
Myth 6: Your tenant will burn the place down
Literally!
Well this is again a possibility. However rare it might be. Accidents do happen. And here is what you can do:
● Get a home and fire insurance. Don’t skimp.
● Claim tax deduction for repairs and damage inflicted during the rental period (this won’t cover renovations)
● Your premium for fire insurance can also be claimed as tax deduction
If you are planning to buy a house as an investment and then rent it out, make sure you avoid these costly mistakes. If you already have a house but need to renovate it before renting it out, check these home décor sites which ensure a flawless makeover.
This post was written by BankBazaar.sg, a leading online marketplace in Singapore that helps consumers compare and apply for the best offers across all financial products: personal loans, home loans, credit cards & investments.
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