Thursday, September 10, 2009

Investing in Students Accomodation

Finally taken possession of the Pangsapuri Subang Jaya in SS15 and had little under 2 weeks to complete renovations before students move in. Yes, we managed to get tenants even before collecting the keys. I wonder why I have been wasting so much time and money in expats market for the past 10 years.
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The most fortunate thing to happen to us was to find a very good contractor. Philip, wife, son and his team managed to turn the whole dump into a nicely liveable student dorm which includes the following:
1. Retile 2 bathrooms and some broken floor tiles
2. Convert a kitchen into a bedroom
3. Moved the kitchen to the dining area
4. Plumbing works to move the kitchen and bathroom sinks
5. Moved the master bedroom door to enable access to the bedroom's bath and toilet - we did this to enable a ratio of 2 rooms to 1 bathroom
6. Laminate the floors of the bedrooms
7. Painting; and
8. All fittings, including curtains, accessories etc.
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Here's the result:
The living room - we initially thought about converting this to yet another bedroom but decided against it as we wanted to provide the students with a common area to hang out. Also access to the balcony to dry their clothes.



This is the new kitchen. In hindsight, we should not have relied too much in Ikea. The stainless steel kitchen you see is not suitable for an electric stove as we were later worried that there might be electrical leakage. It's also too small. So, we had to make do with a single hob gas stove. Having the students' welfare in mind, we installed a water filter which is fit for drinking. The kitchen, I must admit is a little spartan and probably only suitable for some light cooking and heating up snacks.



2 of the bedrooms have a swimming pool view. We maintained the cheapy long fluorescent lamp as it does a good job brightening up the room. we replaced the curtains with black-out blinds and laminated the floor. This picture taken before the place is furnished.

The swimming pool view.


This used to be the kitchen and has since been converted into a bedroom. The wet kitchen is now a balcony to enjoy the pool view. I thought earlier of converting it into a sexy shower area but decided against it due to time constraint and avoid getting myself into trouble. Every bedroom is air-conditioned and later furnished with 2 wall mounted book shelves, a wardrobe, bed+mattress, writing desk + chair and fan. This picture taken before the blinds was installed.



We retiled all the bathrooms with white tiles and black grouting to lend that modern touch. The WCs have been changed to these modern single units from Johnson Suisse - expensive stuffs but since we are going to let this last a long time, why not? Since we moved the sink outside the bathroom, there is more space for the shower and we built a tempered glass partition so that the WC does not get wet after the shower is used.


We also installed a Grundfos pump so that our students can enjoy their power shower.

As mentioned we moved the sink outside and this is a designer Johnson Suisse sink with tap. Why move it outside? So that we have more space inside the bathroom for an orgy and so that students rushing for their class in the morning do not need to wait for someone to finish on the pooper before brushing his/her teeth. There are 2 bathrooms.

We moved the sink out from the 2nd bathroom too and installed a washing machine. There is a tall glass mirror on the wall for one to admire herself before stepping out to go to class.
One might think we are crazy to spend so much on quality items for a students' house. I think it is not wasting money because as much as expats would pay us good rental for our CBD apartments with interior design, the students are paying just as much. There are 4 rooms in this house and total 5 occupants. We are fully booked for at least the next 1-2 years without even having to engage estate agents to market for us. Returns > 10%.

29 comments:

Jackie said...

Hi,

Wondering what is the market price now for this area? Am quite keen to invest here as well.

Tks,
jackie

sinleong said...

i think biggest problem is to find someone willing to sell

Anonymous said...

Greeeaaaat blog! I was looking for this kind of blog for a long time and finally found it!! Very informative! Thanks.
Japanese living in KL

Joseph said...

Lately i have been viewing for 231TR studio unit. Owners are pushing price up in a matter of days. Do you think is a good investment choice>

sinleong said...

231TR's developer is managing the place themselves. The developer is from a hardcore contractor background with no experience in building management and high-end condo projects. For example, they turn off the lights and aircon at the main lobby at night. When residents complaint, they claimed they did that to save electricity. I wonder then if the management would reimburse the savings to the owners

Anonymous said...

Hi, you mentioned return >10%, GREAT!!

but may I know, is that before factoring in all the reno, walls knocking and nice toilet/sinks?

Further to all the fixtures, you are putting in furniture? Still >10%??

sinleong said...

yes, i am glad you asked this question.

returns must always be calculated:

1. Rentals less maintenance fees and other recurring costs e.g. RM5000 rent - RM450 maintenance fees = RM4550. Multiply by 12 = RM54600, Less Assessment and other recurrings RM2400. Total per annum income is RM52200

2. Investments
Property purchase price RM450,000
SPA and Loan Legal fees RM15000
Renovations RM20000
Furnishing RM30000
Total RM515000

Yield RM52200/RM515000 = 10.1%

Above is example ONLY

sinleong said...

Yes, furniture inclusive. That's why students housing is so profitable. You collect expat level rental but you do not need to put in premium grade furnishing i.e. no need LCD TV and all that. But in my opinion, it does not hurt to put in better quality things to make life more comfortable for the students. It's just that you don't need to throw in luxurious items. Ikea will do.

Mary said...

Hi Sin Leong,

I am an ardent fan of you and I always return to read your new post. How much did you pick up this unit. Estimate/range will do.

Mary

sinleong said...

thank you...
2 hundred plus...

Anonymous said...

same person posting >10% question:

Almost pengsan when I see your example of RM5k rental, must be darn rich kids to pay RM1.25k per room per month. But like you said, it's illustration. I hope you do fetch such good rental.

House of RM200k+++, may I ask for a rough gauge, does the reno+furnishing cost exceeds 20% of your purchase+legal price?

Thank you for generous sharing. Another very important question, I am a recent buyer of your previous post, unit near Kesas/MRR2 with carrefour, hair is wet already.

Yes the maintenance fees may go down the drain due to ineffective property management, but as a owner of 1 unit, can we at least do something to the unit to make things better? One example would be reno/furnish the unit superbly to boost the tenants desirability to rent. Any other fix to make the investment a good success? Appreciate your comment

sinleong said...

no la... not 5k rental. i gave example only of how rental yield is calculated. the figures does not apply to this investment. of course i am not going to tell you exactly how much I bought and profit I am making.

sorry to hear you bought a unit at the condo beside kesas highway. my advice to you is to cut your losses and sell it as soon as you can. don't wait, don't think!

Endah said...

really so bad ka?
The rental yield giving close to 8-9% wor... tot it was a good location, and treat it as a mid range, something like miharja but slightly better.

Anyway, it's gonna be a big hole if I let go now, loan penalty is meant to be a punishment for wrong call.

Think positive, hope things will work out fine.

Will seek more of people's opinion before another purchase next. Thanks.

sinleong said...

hi Endah, I would advice you to attend their management committee meeting and make lots of noises about the poor maintenance. Hopefully one day, you'd get yourself elected into the committee and you can make some changes. Good luck!

Anonymous said...

Hey,

do you know that taylors is moving out their busines school? still have student renting pangsapuri meh?

lemon

sinleong said...

well...
inti has expanded with more students.
taylors moving all their degree students to their new sunway campus. the subang ss15 campus will become the pre-university campus.
total nett number of students in subang jaya ss15 from taylors, inti and metropolitan combined actually increased.

Anonymous said...

Hi
Are you paying for the utilities and monthly wifi? Or are the students footing the bill?

Anonymous said...

The 231tr then is it worth to invest?

Joseph said...

sinleong,

what is your comment on sucasa service suites?

sinleong said...

it has been a while since i visited sucasa. i understand they are under the management of nomad now. so, things should be better.

Joseph said...

Hi Sinleong,

Between Holiday Villa and Nomad Sucasa, which is a better deal?

Anonymous said...

hi, Sinleong,

thanks for your sharing over the blog. what do u think about Casa Tiara for own stay & investment? as i may not like the place and wanting to sell it later on, but i am worry if the price is too high and i won't be able to make any profit when i sell the unit. i am actually looking for a place to stay, but it must be convenient and be able to link up with public transport as i don't like the traffic jam during peak time. hope u can give me some advice, my budget is 300k plus.

sinleong said...

personally, i dont like high density apartments like casa tiara. where u want to spend the 300k depends on where you like to live and where you work? and how you plan to get to work...

Anonymous said...

The valuation for bank is only rm240k but the selling price is rm300k now. Do you face this issue when you buy this apt?

sinleong said...

the valuation is slightly higher than RM240k. But not as high as RM300k. I have found a few owners wanting to sell at RM300k - I asked them to keep the apartment. But no doubt, there are some blind investors who still buy at RM300k. If I come across such buyers competing with me, I just withdraw. If they are stupid, does not mean I have to be stupid too.

Gelina said...

Hi Sin Leong, thanks for sharing your insights to the various properties. Now I know what to look out for when purchasing a property. The good and the bad points. Bdw, can you let me have the contact of your contractor (Philip)? Hard to find a reliable and efficient contractor nowadays. Thanks

Anonymous said...

hey sinleong,

just wanted to know how you got the numbers to confirm the increase in total number of students in that area.

thanks very much!

sinleong said...

internal inti and taylors sources... ;)

Anonymous said...

Hi sinleong,
Wow ! You really have a very good contractor. As mentioned by Gelina, it is really difficult to find a reliable, sincere & effficient contractor. Mind to share your contractor's contact here? I think many of us are very keen to find one like yours & we will be very thankful for your kindness & sharing.