In this MELEPAK session, I will be starting with my co-living series. In this series, I will be sharing my journey in starting a co-living side hustle. At the moment, my side hustle is comprised of online stuff such as flipping website, providing online services like content creation, graphic design etc. So I am in the lookout for an offline side hustle and chance upon this co-living concept.
In this first post of the series, I will be sharing what I’ve learnt in the 2 day Co-Living course that I attended. By doing this post, I hope it will be a revision to what I’ve learnt throughout the course. Hope you find this post useful too! Alright, let’s start MELEPAK!
Test Tenant Demand
The first activity that we did was to test tenant demand. The reason this is done because lots of participant addressed concern if there is any demand for rental rooms especially now during Covid-19.
So for this activity, we created a test listing on Facebook Marketplace. The 4 things that we need to take note when creating the listing are:
For this exercise, I chose project ‘The Warren’ which is near Choa Chu Kang MRT to create the listing.
Title of Listing
For the title of my listing, I need to think of a good and descriptive title. An example is ‘Condo Common Room Rental Near Bishan MRT’.
My Listing Title: Condo Common Room with Modern Decor (Near CCK MRT)
Price of Listing
For this activity, we were not told yet how to set the pricing. But personally, I checked the existing listing in a similar area and set my price as such. Checking the rental listing on Property Guru App, a common room in The Warren is going for $900-$1100. With this baseline, I’ve decided to set my price for a common room at $1200.
My Listing Price: $1200
Image of Listing
The images are the most important aspect of any listing. Some of the things to take note for this test listing is to find a random bedroom pictures online. BUT the pictures need to be relevant and make sure it is easy to ‘duplicate’. What this means is that we should not choose pictures that have built-in-carpentry or too ‘atas’. On top of this, make sure the pictures do not have TV or anything that you do not want to provide in your own rental room. For example, if the room pictures have photo frame on the wall, make sure you try to have them in your real room later.
My Listing Picture:
Description of Listing
There are some points that are recommended to include in the listing description. These things include:
- No agent fees
- No owner staying
- Free Wifi
- Full Condo Facilities
- Weekly Cleaning Service
- 3 Minutes Walk To MRT
My Listing Description:
Tastefully decorated (newly furnished) common room within 3 mins walk to CCK MRT. Comes with free WIFI, weekly cleaning and quarterly AC servicing. The unit itself is on a high floor and an unblock view. There are no agent fees and no owner staying. Access to full condo facilities.
This is a very useful exercise as it teaches us how to do basic marketing of our unit and also to give us assurance that there are demand for such room rental. At the end of the course, I’ve gotten 3 inquiries from this test listing. Cool right? (2 participants got 10 inquiries at the end of the course)
Know Your Customer (KYC)
Next is learning about quickly filtering our potential tenant. When you got lots of inquiry from your listing, you will need to filter your potential tenant. This is to save time and not to rent out unsuitable tenant.
Information You Need To Find Out
From the start, you need to find out some information to qualify the potential tenant. Some of the information that you need to know from them are:
- Lease Period (Minimum 3 Months)
- Type of Pass (E & S Pass Only)
- Number of Pax (Price for 1 pax & 2 pax different)
- Move In Date (2-4 Weeks is good)
Other Tips When Filtering Potential Tenant
- Don’t need to entertain too many questions from potential tenant
- Focus and ask our own questions first
- Don’t entertain request to view before finding out if they are eligible
Priority Question To Ask
The 5 things above is important for you to know but if you want to be more efficient, you just need to know the 3 questions below. If the potential tenant meets your budget, can move in quickly and requires max 2 pax, then they are good to go. So ask any potential tenant the questions below first:
- May I know your budget?
- When can you move in?
- How many pax staying in the room?
Type of Properties for Co-Living
Next, we learnt about the type of properties that we should aim for when searching for units to do co-living. There are 3 types of properties that we can do co-living and each type will have some criteria for us to check before deciding if it is suitable. The 3 types of properties are Walk-In Apartment, Landed and Condominium. Let me share what to look out for each different type.
It is not common to choose Walk-In Apartment for co-living unless you are the bigger players. But if you do have the opportunity to get a walk-in apartment unit, there is one important factors that you need to know. Only choose level 1 or 2. Do not take any unit that is on the third or even forth floor.
Reason? Well, it is called a walk-in apartment for a reason which is you have to walk up to your apartment and not many tenants wants to climb up the stairs to the third level everyday.
So as much as possible, we do not want to reduce our potential tenant pool just because it is in the higher floor and tenant do not want to ‘exercise’ everyday.
However, it is not a deal breaker especially if you can get undervalue unit with lower base rent.
Landed property is not recommended for co-living because of the new occupancy cap of 6 unrelated people per unit. What this means is that you cannot fully maximize the space/base rent if you get landed co-living unit.
However there are still potential tenant for them (profitable if you can get good rental rate) as some tenant prefer not to deal with Condo’s Management Corporation Strata Title (MCST).
Condominium should be the main focus for the type of properties when doing co-living. As there are abundant units available for rent and it will give you the most profits. But even for condominium, there are factors to consider. And it is totally opposite when choosing a condominium project for your own portfolio.
When we choose a property to buy for ourselves, we are encourage to buy newer and bigger projects. But for co-living, we should look for units in a smaller and older project. Reason? Smaller projects means more rental demand and older projects so base rent is lower.
Location Location Location
The next activity was to teach us about picking the right location. For this exercise, we were told to pick 1 MRT Line and find 5 projects along the line. For me, I choose the North-South Line (where I currently stay). So based on the criteria above, I chose the following projects:
- Oleander Towers (Toa Payoh)
- Windermere (Choa Chu Kang)
- Scotts 28 (Newton)
- Bishan 8 (Bishan)
- Guilin View (Bukit Gombak)
After picking our 5 projects, we are suppose to find the base rental for each project based on past transaction and other factors. This was an important module as it helps me to quickly search the base rental that I offer the landlord. So once you know how to price your target base rental, it is much easier to spot suitable units.
How To Calculate Rental Price For Each Room?
Now that we know how to figure out the base rental, next we need to know how to calculate total rental that we can get for the unit. This module took the main bulk of the time, and rightfully so. I enjoyed this module the most as I learnt how to check the expected rental and how to price them. This way, we can calculate the total passive income for that unit by taking the total rental minus the base rental.
Rental Price Follows The MRT Line
For starters, the rental rate follows the MRT Line. The nearer the MRT Line towards town (Core Central Region), the higher the rental rate. So a common room near Jurong MRT can fetch $900 while one near Tanjong Pagar MRT can fetch $1500.
Pocket Room, Common Room, Master Room
By comparing the price from a number of listing, we should be able to figure out how much to charge for a common room (CR) in a particular project. Once we’ve calculated the price for the CR, we can roughly gauge the rental price for the master room (MR) and pocket room (PR).
To find the rental price for MR and PR, you can use the formula below:
- MR Price = CR Price + $400
- Pocket Room Price = CR Price – $200
- Bigger CR Price (Living Room Turned CR) = CR Price + $200
So it is important to know CR price to find out PR & MR room. If you get the CR price wrong, then everything can go wrong. Especially if you set your CR price too low.
Tip: Good condition and presentation can fetch $100 more rental income.
Super Excited After Day 1 = Whole Night Browsing Property Portal
At the end of day 1 of the course, I already learnt how to do basic marketing, finding the right unit, checking the base rental that we should offer and figuring out rental price for individual room. So at the end of the first day, I can determine how much profit to expect for each units. Feeling pumped with all this knowledge, I spent the whole night browsing through Property Guru and other property portal. Searching, looking and finding for suitable units for this business.
With that, I am going to end this session. I hope you find this useful. I sure does as it allows me to reflect and remember all that I’ve learnt.
Will post my reflection for the 2nd day soon Check out my 2nd day reflection and hope to get 2 co-living units up and running by end of the year. This is it – the start of my Co-Living Side Hustle journey.
As usual, if you have any question or feedback, please comment below. (Even an encouragement would be great. =p) Thank you and looking forward to our next MELEPAK session.