Co-living has been a roaring trend since last year, with many landlords adding rooms to get as many tenants as possible. There’s always one or two contrarians, however, such as SK, who absolutely refuse to follow the crowd. A landlord for over 18 years, SK surprised us by explaining that he turns away even high offers from singles. Here’s why he has a policy of renting only to families:
Almost two decades of living on rental income
SK describes himself as being “almost” a full-time landlord. While he does have a side job, the bulk of SK’s time is devoted to five different properties, three of which were originally bought by his father.
As SK’s father is retired and no longer mobile, and his brother is running the family business, SK is tasked with maintaining and renting out the properties.
SK says that: “I was taught about managing tenants, TAs, DIY work, all these things since I came out of the army at 21. My brother has always been more interested in the family’s business, but I have always been more interested in the property; so the keys were handed to me to look after the houses.”
SK has been a landlord for over 18 years now, and he has experienced a range of different tenants. He’s been a landlord to delinquent troublemakers, to students, to business people, and even to an 87-year-old man, his oldest tenant ever.
Seeing too many ups and downs to be impressed by the current market
We asked SK why, given the current trend toward co-living, he seemed to have zero interest in adding rooms.
Many of his properties could in fact accommodate another study or bedroom, and SK himself admits that – by his own estimate – he could be making almost 30 per cent more in gross rental income if he did. However:
“The rental market moves in cycles,” SK says, “And there is no way to know how long the demand will stay. If I renovate now, maybe next month the demand will already die down.”
But the real reason he’s not interested in adding rooms, SK says, is that:
“As of a few years ago, I only rent to families. I don’t rent out one unit to separate tenants who live in their own rooms.”
Massive savings in time and effort
SK says that, while renting to unrelated tenants can sometimes mean higher rental income, the extra time and effort more than make up for it. The main reason is that, with unrelated tenants, you have to deal with each person individually:
“With families, I settle issues with the husband or the wife. That’s it. If I have six different people* as tenants, I need to talk to all six separately and handle their issues one at a time.”
One of these issues, for example, is collecting rent. It’s simply easier to collect from one family than to collect from six individuals – SK has had many experiences where one or two of the tenants are late, whilst others are on time. This makes accounting much more difficult.
(Note: you can have one master tenant pay the rent, and collect from the others as sub-tenants. This takes less effort, but this arrangement brings its own host of problems – such as if the master tenant absconds with everyone else’s money).
SK says that:
“In the past when I used to have four, five, or six unrelated tenants, my phone was full of messages every day. And don’t forget you get more keys and key cards to deal with, when tenants come and go.”
Even rent collection can be a minor issue, however, when you consider that unrelated tenants also expect the landlord to be a mediator.
*Landlords can have up to six unrelated tenants in a private property.
Being in the middle of tenant conflicts
SK recalls an incident when one tenant accused the other of entering her room:
“The two were students and I think course mates at the same school,” SK said, “And there was some dispute, and one day she (one of the tenants) texted me saying the other tenant had entered her room without permission.”
SK then sent a text to every tenant, reminding them to lock their room door and to respect each other’s privacy even if the door wasn’t locked. This seemed to settle the matter… for all of one hour.
“About eight o’clock at night, I was informed by the tenant she decided to make a police report, and she accused the other tenant of stealing some of her belongings. At the same time, the other tenant called me and said she was being harassed by this other tenant.”
There was no actual theft involved, but SK still had to come down on a Friday night to sort out the situation. He also became directly affected, when one tenant insisted she was justified in breaking the lease, as the other tenant was harassing her.
While the tenant eventually carried on with the lease, SK had to play the middleman until the end of their year-long leases.
Another common issue, that SK found himself having to deal with, was utility bills. He says that:
“Among individual tenants, the most common complaint is that one person is using much more water and light than the others. In one case, I had some tenants who video-recorded another tenant using the washer/dryer.
I don’t know what she was doing, but she had a giant mountain of clothes; I suspect she washed for other people too. But she would monopolise the machine, and the other tenants said it happened almost every day.
And she almost never went out – she stayed at home all day and blasted the air-con in the common areas and her room. So of course the other tenants were not happy as they were sharing the utilities, and I had to talk to her and be the bad guy.”
Accountability is tougher, and singles tend to want fully-furnished units
SK notes that most single tenants, such as students or ex-pat workers, tend to expect fully-furnished units. This is different from family tenants, where he can provide semi-furnished units.
(Families staying for the long term tend to prefer unfurnished, as they can do up the unit to suit their own preferences. Singles usually don’t want the expense of having to buy their own beds, desks, chairs, etc.)
The problem is that, with fully furnished units, the damage is more common; and with multiple unrelated tenants, it’s not always clear whose security deposit is covering it. SK says that:
“It was very common, during the walkthrough, to find paintings are scraped, or common area furniture is damaged. One time I even found a cigarette burn on the living room sofa.
Of course, all the tenants will deny it’s their fault. Then you need to play detective or the blame game starts. With a family tenant, this doesn’t happen.”
Unfurnished units for multiple single tenants also create problems
SK says that if you have multiple unrelated tenants, and you leave the unit unfurnished, you must be prepared to clear out a lot of junk when the tenants leave:
“With families, they tend to at least have some coherent theme to the way they do up the place. With many different singles, everyone has their own style; and everyone buys cheaper things.
When you see the way they furnish, you will see the living room has one massage chair, mismatched sofas, and someone’s dirt bike, and the dining table seating is half stools and half-office chairs…the place will look like a rummage sale.
It’s not very nice during viewings, and sometimes when they’re moving out they’ll claim some of the junk is ‘not theirs’ and refuse to clear it themselves.”
This isn’t to say family tenants are always perfect…
But SK swears the pros outweigh the cons. SK has rented to several families with just one or two minor problems – as opposed to renting to students, single expatriates, etc. where he “ended up dreading a call from them every day.”
The only real drawback to families, in SK’s opinion, is that:
“If the family break the lease, your rental income can go straight to zero. With multiple tenants, even if one or – touch wood – two break the lease and run, at least you still have a rental from the others.”
One example of this was the Covid-situation in 2020 when one of SK’s tenants got retrenched. The entire family left at once, dropping his rental income to nothing within a few weeks.
“Had there been multiple tenants,” SK says, “I wouldn’t have lost all the income at once.”
Nonetheless, SK’s advice to landlords – both new and current – is to focus on families if you really want passive income.
“I won’t say it’s ever truly 100 per cent passive income,” SK says, “But you work less hard for it when dealing with a single-family – a family has a single contact person, and they are tenants who are far less likely to up and leave on short notice. Especially since families tend to pick rentals where they live and work nearby.”
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