Home rental apps get edgier

A number of property rental apps have hit the market in Malaysia in recent months spurred by the pandemic’s ‘new normal’ demands. Asian Property Review talks to the persons-in-charge of two of them to get a better picture of the trend.

A Millennial Fix

Vincent Lim of Cozyhomes

First off, Vincent Lim, Managing Partner of Cozyhomes.my, a curated online platform that lists fully furnished designer homes for rent, gives his take. Next is Eric Tan, CEO and co-founder of Instahome, a platform described as a fully digital end-to-end rental solution.

1. Why is renting a rising trend in Malaysia, especially with millennials?

Lim: From our observation, there is weak purchasing sentiment and lack of confidence when it comes to big ticket items like property. This is due to several factors including rising cost of living, lesser room for capital appreciation as well as significantly cheaper rental rates compared to housing loan installments.
When owning a property, there are also assessment fees, maintenance fees, insurance, etc, that add to the cost of ownership. All these commitments make renting far more ideal, especially with the oversupply situation in the Klang Valley.
Today, we find that the younger generation prefers to spend more of their time and income on their lifestyle and travelling – be it domestic or overseas.
This leaves less income for commitment to property which has led to this group, comprising 65% of all renters currently, to continue to rent indefinitely.
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Switching jobs frequently also means that these millennials would have to be flexible in moving close to their workplace – an option only offered by low commitment rentals.

2. If millennials keep renting long-term, when will they ever have their own property?

Lim: To me, I see property as a great investment opportunity. But first and foremost, it is for our own living needs on a day-to-day basis. Owning one is not essential but when equipped with the right knowledge, one can earn a lot of passive income which can then be used to pay off one’s own rent. Having started my own investment journey back when I was just 24, I would say there is no wrong time to purchase property as long you have the relevant knowledge.

3. Are there alternatives that can give the security of your own place, yet not having to get a housing loan?

Rent to own

  • In a rent to own arrangement, renter pays owner/ developer option deposit, which gives you an option to purchase the home after renting it for say 1-3 years
  • Throughout the lease term, a portion of your monthly rental is applied towards the purchase if you decide to buy the home when the lease expires
  • Main benefit is you have time to rebuild your credit score and also when you decide to buy, you have already accumulated the downpayment towards the purchase with the monthly rental and deposit

Owner / developer financing

  • You make monthly mortgage payment to the seller rather than a bank
  • The terms of such arrangement must be clearly spelt out in the sale & purchase agreement.
  • Property titles, in many cases, will only be transferred after you have made the final payment.

Still not popular in Malaysia though.

Private loan

  • If can’t qualify for a traditional mortgage, go to an investment lender or P2P lender but normally, the interest rate is much higher (8 – 20%) as opposed to 3-5% mortgage from banks.
  • Strongly not advisable because a mortgage is the cheapest form of borrowing you can seek from a financial institution.

Borrowings from family and friends

  • Likely to negotiate more flexible payment terms and lower interest rate
  • Still advisable to have a written contract even if the relationship is close and the lender puts a lien on the property

Cash buy

  • The advantage of not having to wait for financing approval which can be lengthy and tedious
  • Not advisable though, because with that amount of cash, you should be investing in some other vehicles that can give you relatively higher returns

4. What new innovations do you expect in the coming months as proptech players adjust to the new normal?

Lim: The digitalization of the entire rental journey

  • Listing platforms – more players, more competition and each player will have to do their best which is good news for users.
  • Checking out the units online – high quality photography of the unit is already a must; better informed with tech leverage
  • Talking to agents – leverage on WhatsApp, Wechat, social media, website chatbox, and even better with some using AI chatbot
  • Physical inspection – virtual tour in CozyHomes without stepping out of your home, saves travelling time and best for outstation/overseas prospects
  • Negotiation – we are building a system where tenants can actually negotiate with the owner directly through our website. They can write in their offer price, and the owner can counter offer or accept.
  • Fulfillment – partnership with vendors/suppliers to provide the items requested and agreed by tenant and owner respectively
  • Tenancy agreement – e-sign, e-stamping and soft copy instead of handing over the hardcopy. Cloud based.
  • Key handover – the usage of electronic keypad is getting more popular because you don’t have to meet to pass the keys, can restrict the access if tenant is not paying rental, monitor the access log of the units, don’t have to duplicate so many keys for agents to show the unit, safer and more secure.

Rented within 9 hours!

Eric Tan, CEO and Co-founder of Instahome

1. The pandemic has accelerated fully digital end-to-end rental experiences. Is this the trend going forward or is it just a fad whose importance would diminish with reduced threat from the pandemic?

Tan: Instahome’s unique value propositions are aimed at solving the home rental market. We just happened to launch during the pandemic. While the pandemic has helped us with educating our users, we believe our platform will remain the number 1 choice when it comes to home rental simply going forward because renting through Instahome is significantly safer, faster and simpler than existing alternatives in the market.

2. Possible to give stats on the numbers of such end-to-end rental experiences pre and post-MCO in Malaysia as sourced from your website?

Tan: Since launching, 30% of tenancies completed through Instahome were done completely without physical viewing. Overall, for tenants who still prefer physical viewing, on average it only takes 1.4 viewings per rental transaction on Instahome. This means that on average, users on our platform only takes 1.4 viewings before they make their decision on which home they’d want to rent, as opposed to roughly 4 viewings per transaction
per market standard based on what we understand from our partner real estate agents.

3. The much talked about record 9-hour transaction time for rental on your website – might it not be because the tenant has already physically made a viewing prior to proceeding with the rental procedures online? What is the average range of time taken to complete traditional rentals?

Tan: The tenant did not view the unit beforehand. However, I must admit that the process was made way faster because (i) all the required information including virtual tour, photos and videos were already stated on our listing page, (ii) the tenant profile was very good so the landlord quickly accepted her offer (Instahome conducts a 58-point background check on all our tenants) and (iii) our partner agent was very efficient in the whole process. So it was made possible as we have great partner agents and tenants, and our technology was just working its magic behind the scene.
The nine hours started from the moment the listing was live on our website.
Based on what our partner agent shared with us, it would normally take them one month on average for traditional rentals for the same procedure from the moment they list them on other property advertising websites. This is also part of the reason why our partner agents like working with us – it’s faster and safer. Even for rentals that require physical viewing, our conversion rate is so much higher as we send highly qualified leads and tenants can already learn most of what they’d like to know on our platform.

4. As with purchase of property which requires several physical viewings prior to purchase, isn’t it more practical that a potential tenant has actual physical viewing of the rental premises before signing the rental agreement?


Tan: There is actually no physical viewing for purchase of new property. Physical viewing for property purchase only applies for secondary sales. So if people can buy a new home a few years in advance that costs hundreds of thousands without seeing the actual completed house, why can’t they do the same for their rental homes?
For undesirable features such as cemetery, workshop, market, night situation, car park spot, garbage room, layout, we provide our tenants with those information without requiring viewing because we physically inspect all the properties listed on our platform.

Patrick Grove – co-founder of Instahome

For the surrounding area and amenities, we can find many reliable sources of information, including Google Maps, online forum, online reviews and blogs. For building specific information, we have built up an internal database of all the property details listed on our website based on our internal on-ground inspection and details shared by our partner agents. I suppose another way of saying this is that we visit the property so that our tenants don’t have to.
The only exception would be the identity of the neighbours but we have never found this to be a problem so far – we have never met any of our users who requested to meet their neighbours before making a rental decision. Neighbours come and go. This is also quite similar to buying a new house; the purchaser would not really know who his or her neighbours are going to be in a few years’ time.

5. Will Instahome be expanded regionally if it gains further traction?

Tan: Yes, we aim to build a global property technology company from day one and we are just starting out.
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