Guide To Renting To Students: Rules To Obey

How to rent to students

Over the past few days there was a discussion at the PropertyTalk section at Lowyat.net about the infamous Ridzuan condominium. The thread starter (one “Axuel”) has asked if it’s a good buy (RM500,000 for a 1,400 sq ft unit, translating to RM357 PSF). See the thread here.

I took the liberty to pull out some numbers from GoodPlace’s internal database of asking prices for the past six months and did a quick trending chart which is quite telling on its own:-

Ridzuan Condominium Price

It’s evident that RM357 PSF might be on a higher side as the asking prices peaked in October last year and has been on a downward trend since. Also in late August the residents of the Condo voted to kick “African tenants” out – see coverage here by the Malay Mail and also at GoodPlace. We are currently crunching the numbers for January, but it’s not likely that the asking prices would breach the RM300-320 PSF level.

Prolific LowYat poster Chris Chew offered an explanation behind the seasonal fluctuations of Ridzuan condo’s price –

chris-chew

Prices of properties where student rentals are prevalent (like Sunway) tend to fluctuate based on student cycles. Apart from pricing, there are also a couple more drivers which are unique to properties which are rented out to students:-

  • Above average turnover rates. Tenure is dependent on the length of study (two to four years?). The high rate of churn will eat into the profit margin. Also, as point out by Chris above, Ridzuan may be seen as a “transit point” where students would move out to neighbouring condominiums like Suriamas which are in better condition albeit at a higher price tag.
  • Higher repair bills. Wear and tear is typically higher in student rented properties.
  • More service calls. Remember that these are typically teenagers who may be on their own for the first time in their lives, and as such, the landlord would expect to get called more often than the regular tenant.

Student Rentals – A Bright Spot In A Gloomy Market

Given the impending slowdown of the Malaysia property market, there are buyers who would especially pay attention to student rentals – simply because students are a steady pool of tenants which makes it less affected by the downturn.

Picture of a college girl reading some notes for GoodPlace.myAdditionally, at selected areas around the more upmarket colleges, rents are usually paid by parents (or better still, corporate sponsors) which means that rental delinquency cases are less common.

Now if you are interested in the student rental markets then these are some rules to obey:-

  1. Avoid neighbourhoods which are occupied predominantly by owners. Student rental properties are rather unpopular in owner-occupied neighbourhoods for rather obvious reasons. 🙂
  2. Be wary of the school cycle and know exactly when students are looking for places to stay. Missing this cycle will prove expensive as it might mean that your property may go untenanted for the year!
  3. Factor in the higher-than-average maintenance costs into the yield calculations. If you need help in calculating the rental yield then take a look at this guide.

Some of the areas which you may want to look at: Sunway (an obvious choice), Subang Jaya (where Taylor’s and Inti College are), Damansara Jaya (where KDU is), Cyberjaya (the areas near Limkokwing University and Multimedia University) and areas where international schools are found: Mont Kiara, Setia Eco Park, South Puchong.

If you fancy looking at student properties but don’t know where to start, drop me a line at the DealMatcher page and I’ll check if there are available listings with our panel of agents.

Admittedly, student properties are not for everyone because of the high maintenance factor, but on the positive side this also means that the upside is higher for those who are willing to put in the work.

About Khai Yin

When I am not writing for GoodPlace.my and helping my readers find properties though the DealMatcher service, I spend time doting on my three kids: Wenyi, Qinyi and Eian. My personal stuff, some published essays and contact details can be found at khaiyin.com

Comments

  1. hi khai yin gong xi fa chai.all my house is near by college.1)mentari court.2)menara u sec 13 beside msu

  2. Khaidir Wazir says:

    3) need your advise what do u think obout vega resident cyberjaya subsale 291k n get dis+rebet 17% govt loan get 45k after get house key. all people say this place are over suply it true khai yin?

  3. Hi Khai Yin, thanks for yr pointers. What’s yr view on the Platinum Victory projects in Setapak eg PV 13,15 &16. Are they still good for investments?

  4. Hi Khai Yin, I own a townhouse in Cyberia , rental now rm2,000, i m offered rm420k to sell. Shd I sell to get a unit in pj or mont kiara ?

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