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Renting vs Buying a House

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by David Geh


To rent or to buy?

Nowadays it’s trendy to buy a house especially when the entry cost is very minimal and affordable. With only a RM500 or even RM1,000 booking you can book a property in a new development and the rest of the acquisition cost is either discounted by the developer or covered by the mortgage loan you take out on the property.

So if it’s a RM450,000 property, you get a RM45,000 rebate from the developer and the balance RM405k you can take a loan from the bank with up to 35 years repayment tenure. With the current interest rate as of June 2022, you are looking at RM1,700 to about 2,000 per month for a 35 years loan depending on the bank you choose to go with.

Fees to consider when buying a house

Besides that there are maintenance fees to consider. You probably wouldn’t have to worry about this if you were renting a place as usually the landlord is responsible for covering this cost. Nowadays with newer projects, maintenance fees usually won’t be below RM0.35 per square feet. For higher end properties, it can go up to as high as 70 or 80 cents per square feet but on average, those that I’ve seen are between 35 to 50 cents and this is inclusive of the sinking fund.. So at 0.35 per square feet, for a 850 square feet condo you are looking at about RM297.50 per month for maintenance fees for a strata title property. This may not be the case for landed properties but in landed properties you are probably looking to fork out roughly about RM150-300 per month for security fees if it’s a gated and guarded community. Monthly charges could be higher if there are clubhouse facilities and you would like to utilize it.

Then there are quit rent (cukai tanah) or cukai petak for strata title properties you need to consider. Besides that you also need to pay assessment rates or cukai taksiran by the loan council in the area you are living in. Assessment Rates (Cukai Pintu or Cukai Taksiran or kadaran or revaluation list termed by local government itself) is chargeable by the Majlis/Local Government onto any holding under their jurisdiction as per the National Land Code 1966 and Local Government Act 1976 (Act 171). According to an article in propmalaysia.com, legally, the local government or authorities are empowered to impose a new rate (revaluation list) within 5 years, however many of them are not implemented due to manpower shortage or other reasons. According to the same article, some local councils have not updated their evaluation lists for some time, in some cases more than 20 years. 

Quit rent and assessment rates are not payable every month, for example quit rent is payable yearly while assessment rates are collected half yearly. If looking at the frequency of collection, it may not be a lot, but it adds to the cost of ownership of a property in the long run. For example, the place I am staying, my assessment rates by Majlis Perbandaran Ampang Jaya (MPAJ) is RM429 per annum, it is not much as compared to some more expensive properties or even landed properties but it does add to the cost of ownership of my property as compared to if I were renting. 

Landlord’s Obligation to cover all other costs

When you rent you pay a flat rent to the landlord which in turn has an obligation to cover all other costs such as maintenance fees, assessment rates and quit rent. In many cases it can be seen as the landlord subsidizing the property you are renting in. Why? You see, for example a RM450k new condo which the owner has to pay a RM2,000 per month mortgage on, usually does not rent out for RM2,000 per month due to the competition from other properties for rent in that area as well as due to the high number of properties in that project. So if there are 1,200 units in the condo unit, and 30% of the properties are for rent, there are some 360 units for rent. As tenants you would be spoilt for choice and if one or two partially furnished units are offered for rent at RM2,000 and another 20 partially units is up for rent for RM1,200 and some fully furnished units are offered from RM1,500-1,800, naturally the RM2,000 per month unit won’t be getting any phone calls for viewings. 

So the owner has to lower down their expectations and follow the market rate and rent out their unit at RM1,200 or even lower to attract prospective tenants. When this happens it’s a race to the bottom, especially in newly completed high rise projects because if landlords don’t do so, then they would have to wait longer to get their units rented out in which they would have to continue paying their monthly mortgage payments with nobody inside staying or renting. Besides that they also need to pay the monthly maintenance fees while the unit is left vacant as well. 

With the example above, for a 450k property, the landlord pays a RM2,000 per month mortgage payment and roughly RM300 per month maintenance fees. The total amount they have to fork out monthly is about RM2,300. However, say they successfully find a tenant, either by themselves or through a property agent and they successfully rent it out at RM1,300 per month, the owner effectively needs to topup RM1,000 per month for the tenant to stay in their property. But this is far better than if they had to pay RM2,300 per month and leave it vacant. 

Asking for higher rental prices

As a landlord you can of course ask for higher rental prices, that is if you invest some money, around RM30-50k to get the place renovated, put in some furniture and niceties such as airconds, large screen tv, fridge, washer and dryer, wifi etc to bring it up to a fully furnished unit so as to command a higher asking rental. But that cost that you put in needs to be factored into the monthly cost of acquisition as well, albeit it may be amortized into a longer tenure as you do not have to renovate or buy furniture for your unit every year, only when it’s broken or is worn out. So your 30k investment, you can probably spread it out to 10 years, so if you calculate monthly it’s between RM250 to 420 per month to add on top of your monthly installment and maintenance fees payment. 

But the advantage of this is, after 10 years, property prices (not always but most will) will probably double up. So a RM450k property in 10 years may be worth RM800k. The equity on the property (the difference between what you owe the bank and the current value of your property, if you choose to sell it or refinance will most definitely cover back the amount you topped up renting it out (RM1,000 or so) as well as the amount you forked out to renovate and furnish the unit. 

Back to the RM450k condo example, you had taken out RM405k on it, and paid the mortgage monthly diligently for 10 years (120 months), the balance if you choose to pay if off after 10 years according to a financial calculator app is roughly RM377k, now if your property is worth RM800k, you get back about RM423k gross. Not bad for a 10 year property investment. If your unit was rented out at 1,300 per month for 10 years and you had to fork out an extra 1k per month to service your mortgage, in 10 years you would had paid 120k. RM423-120k still gives you back RM303k in equity. Bear in mind, you are able to increase the rent every year according to the current market rate so a RM1,300 per month rent may not be RM1,300 per month after 5 years. 

Renting doesn’t give you that kind of equity because the rent you pay to the landlord is in exchange for the comfort of having a roof over your head. It’s like buying term insurance over investment linked life insurance or endowment. The benefit you get out of it in the end is the enjoyment of the product (which in this case you get to stay in a nice property). Paying RM1,000 per month in rent for 10 years.

The advantages of renting

However renting does give you the flexibility of moving out and renting other places as and when you please. So if you had rented a place for 2-3 years and you feel bored staying there or you got yourself a new job somewhere else and you want to move nearer to your workplace, you can simply give the landlord ample notice and move out when the tenancy has ended and very quickly you are in a new rented property. If you bought a property you probably have to continue living in it and commute to work everyday even though you now work far away. This is of course not the case if you are working outstation. 

The other benefit of renting is of course not having to make additional payments for maintenance fees, assessment rates and quit rent which you have to if you were a house owner. 

There is no right or wrong in renting vs owning your own home. Do what suits you and your budget the best. Those who rent reap the benefits of renting while those who own reaps the benefits of owning. At the end of the day it is a matter of what we are able to afford and what our life goals are when it comes to having a roof over our heads. We hope this article helped out see the differences in costs involved between renting and owning. 


If you want to find out more about renting a house or room with zero deposit, now you can with BlueDuck Zero Deposit. Do find out more on www.blueduck.my We look forward to serving you as our customer real soon!

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BlueDuck and Nextsix Forge Strategic Partnerships to Ease Tenant Move-in

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Hello readers, announcing this strategic partnership means so much to us. BlueDuck and Nextsix now teams the market strength to ease tenant’s move-in through a GPS app – allowing tenant to get profile screened and zero deposit packages directly from Nextsix app.

Our shared vision partnerships are to bring the modern way of renting solution closer to the tenant who are looking for a home to rent and without having the need to pay a hefty deposit before move-in. A tenant can now GPS their future homes via Nextsix app.

Download here: https://signup.nextsix.com/ ; Exclusive promocode: NextsixBDZero to get tenant profile @ RM1!


“GPS your home, you deserve a better deal.”

Nextsix - #GPSYourAgent

Nextsix, with over 40,000 available properties listed, and over 6,000 active users on its platform, is a proptech platform company that is first to pioneer a GPS-driven search technology that links homebuyers and tenants directly to professional agents through the function #GPSYourAgents.

“We’re excited for this collaboration, integrating easy access to BlueDuck’s Zero Deposit solutions through Nextsix. This will provide added value to our users with interest in rental properties. With BD’s freedom from deposit products, tenants are able to move-in at lower initial cost, it’s definitely an appealing option. BlueDuck’s innovation in the property rental scene are benefitting both landlords and tenants, we believe there are more values to be discovered by our users through this initiative”” – Wei Kwang, Director of Nextsix.


Download here: https://signup.nextsix.com/ ; Exclusive promocode: NextsixBDZero to get tenant profile @ RM1!

BlueDuck - Say Bye Bye to Rental Deposit

BlueDuck has established an end-to-end fintech solution for the stakeholders in the real estate from tenants, landlords, developers, room operators, property managers and property agents and property agency.

Our innovative solutions came from co-creating insurance packages to ease move-ins to help individuals and businesses in savings deposits upfront. Transforming the way security deposit is collected. Landlord can now speed up the rental process and unstuck from looking for “the one” tenant with our tenant profile and payment gateway in place.

To know more about BlueDuck Zero Deposit for residential & commercial properties: bit.ly/BDbrochure 

Every partnership is unique. This partnership with Nextsix is in-sync with where the proptech industry in Malaysia is growing tremendously. We are so excited and proud to be able to work together with such a great team - Nextsix in bringing this solution closer to the tenants. 

Not to disrupt, but to elevate the whole customer experience and helping the sector to survive and sustain by leveraging various technology. So, welcome to the rise of proptech in Malaysia.

Download the app today for free! psst, I heard that Nextsix is now rewarding users Grab Credits! Don't miss out the chance. Download here: https://signup.nextsix.com/ ; Exclusive promocode in conjunction of the launch: NextsixBDZero to get tenant profile @ RM1!

Till then!

Cassandra.

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BlueDuck - Financing Option for Landlord?

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Best time of the year, every day every month!

Hello quackies, did you know we had a major celebration for getting the 1st place of the 1337 ventures X BNM's | Alpha startups X MyFintechWeek 2022 back in February?

Very proud and we’re celebrating all the small wins that we have and again, this couldn’t be done without teamwork and to those who said YES on this journey with us. Watch our celebration video here: https://youtu.be/-AiuFOs6SD4

It was a rapid growth for our company and we are motivated by it. We have grown from building an in-house tenancy system -> insurance -> payment services -> eKYC -> financing (YESS!)


BlueDuck - Fintech in Real Estate

From the start, we manage to officially kick-off our business by having the our famous, and fabulous product on Zero Deposit that aims to unlock cashflow (which is our mission). We had it covered for residential properties from unit to room then to commercial units for shoplots and offices rental range between RM1,000 to RM12,000.

Followed with our payment services – BD Pay, a FPX auto debit recurring system on rental collection, then eKYC on tenant’s profile to increase transparency during rental transaction.

It’s been our best interest to always, provide value-added services to our stakeholders and YES we’re now offering financing services to landlords!

You heard it right – for landlords!

TenancyCash - Cashflow for Landlord

While we were searching for ways to unlock cashflow, we realize that financing is one of the best options. People apply for financing for many reasons. It could be for home remodeling, subsidizing for wedding costs, medical, emergency funds or even for traveling! But is there a financing option cater for landlord? Now you have it 😊

3 Main Reasons to say YES to TenancyCash

  • No collateral/guarantor is needed
  • Loan up to 80% from your active tenancy
  • Interest is as low as 3.99% p.a.!

If you are a landlord, and having an ongoing tenancy. I mean, hey yeah, it's for you! 

We were so excited to bring this to the table the past months and today, finally the day we've finalized and it will be officially launched in June! 


So excited!

Quack.

Cassandra,

Chief Revenue, BlueDuck Malaysia.

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Tracking your tenancy details with a BlueDuck Landlord Portal

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Did you know that as a landlord, if your property is insured with our BlueDuck’s Zero Deposit insurance in partnership with Liberty Insurance Malaysia, you can actually have total control over the details of your tenancy?


When you register as a landlord in our website blueduck.my, you will be provided with a landlord portal where you can see the details of your property. In the main page, under ‘My Properties’ it includes the property address, the agent managing your rental property (if you have appointed one to do so on your behalf), the name of the owner of the property (obviously it’s you…), the tenant’s name if your property is currently rented out, if it’s currency vacant then the name of the tenant will not be visible, it’s tenancy status, whether it is available for rent, or currently being rented out and if it’s rented out then the tenancy period (for example 31 May 2021 until 30 May 2022. It also shows the date of the last payment made.


If a tenant opts to use our BlueDuck’s Zero Deposit, they are required to use our BDPay service, which is a recurring direct debit service using FPX where tenants can opt to pay their rental to you through their bank savings or current account or their credit or debit cards. They will be prompted to set a recurring date every month, usually on the first of the month where the rental amount is deducted from their savings/current account or their credit/debit card direct into your account. The service fees for such a convenient and hassle free service is only 1% per month. That means, if the rental amount is RM1000 per month, after the service fees deduction you will receive RM990. 


Another benefit of this direct debit service is, all payment records are kept on our system, and in the event of a payment default or runaway tenant scenario, these rental payment records are then sent to the insurance provider, accompanied by a police report to file for claims up to the amount of the sum assured. 


In the landlord portal's main page, if you click on any one of the properties you have keyed in, there are several options for you to choose. First there is the ‘View’ button where, when you click into it, you will see further details about the property listing, such as photographs, which you or your agent had uploaded earlier into the system, the type of property and its address, as well as the rental amount. It also details the amenities and facilities. Down below there is also a location map. You can use the url of this property listing to send to agents or interested tenants and they have an option to leave their contact details such as name, email and phone number as well as viewing and estimated move in date so that you or your appointed agent can arrange for a viewing or prepare for the tenancy. 


Another button allows you to view the payment history of the tenant via direct debit, such as the payment date, payment amount, status, type and action. The status is either ‘transferred’ or ‘received’ for successful transfers. In ‘Action’ you are able to download the transfer receipt to save into your pc. If the property is currently vacant, there is an option to re rent it (yellow button). 

There is also a button for you to download the tenancy agreement to view or save into your pc. You can also add and view utility bills, the purpose to add utility bills is to both have a copy for recording purposes as well as have it handy to claim for unpaid utility bills in the case of a runaway tenant as the zero deposit for residential (whole unit) provides for this. The limit for unpaid utility bills depends on the plan chosen, ranging from RM1,000 to RM2,500 between the lowest and the highest plan.


The benefit of having this landlord’s portal is so that you have full control over the property and tenancy details of all your properties which are protected under BlueDuck’s Zero Deposit. 


Why not give it a try? If you have properties to rent out and would like to consider BlueDuck’s Zero Deposit as an option, do browse our website https://www.blueduck.my/ and click on I am… it will pull down 2 options, tenant or landlord. Click on the yellow ‘Join Us Now!’ button in yellow or scroll down further to ‘Sign Up As Landlord Now’ button in blue and you will be taken to a sign-up page to fill up your full name, email address, password and contact number then click on Sign-Up. Alternatively you can opt to sign up via your Google account. 


You will then receive an email from our team. In the email we will require you to send us your IC number as a last step verification process for us to approve your landlord’s account with us. Do reply that email with your full name and ic number to start using your BlueDuck Landlord Portal. We are excited  to have you onboard on your Zero Deposit journey with us and we are looking forward to welcoming you as part of the thousands of BlueDuck Zero Deposit landlords family. 


Do get in touch with us via email at hello@blueduck.my for any enquiries or feedback you may have regarding setting up your landlord’s account or on Zero Deposit in general. We are always here to support you.

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What Does a Security Deposit Cover?

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Security Deposit


Usually before moving into a rented property, a landlord would require you to put down a deposit. Today we would like to share about what types of deposit is required when renting a residential property. Generally there are two types of deposits required when renting. One is a security deposit, the landlord would typically ask for two months of security deposit. This is used to guarantee against whatever damages caused to the property by the tenant or betterment cost required to be paid by the landlord to return the property and its contents to its original condition to be able to rent it out again to another tenant. 


Under normal circumstances it is not intended to be a cost to the tenant, as technically the landlord is required to return this sum of money to the tenant when the tenancy period ends if there is no repairs or betterment required for the property. Some landlords may even imply that it is required as a security against runaway tenants to cover for rental loss should the tenant actually ‘run away’ within the tenancy period but it should never be the case. So for example if the rental of a residential property is RM1,000 per month, the security deposit required to be paid is RM2,000 on top of the RM1,000 advance rental for the month the tenant is moving in. This security deposit of course is refundable when the tenancy period is over. 


Tenancy period is usually for 12 months or 1 year but is stated in the tenancy agreement as 1+1 years, what does this mean? It means that the active tenancy period is 1 year with an additional 1 year option to renew should both parties mutually agree upon it. If both parties agree to renew the tenancy agreement, they will enter into a new agreement with agreed upon terms and are required to sign a new tenancy agreement document. 

Utilities Deposit


Another deposit usually required by a landlord when executing a tenancy agreement is the utilities deposit. This deposit is usually 50% of the monthly rental. If the rental per month is RM1,000 then the utilities deposit is RM500 and is held in trust by the landlord until the end of the tenancy period. This is to guarantee against any unpaid utilities bills such as electricity and water bills, which are services usually incurred by the tenant while staying in the property. Other expenses such as maintenance fees (high rise and strata buildings), security fees, assessment bills and other taxes are borne by the landlord and are usually not charged to the tenant during their stay. 


Repairs to the property for wear and tear are usually the responsibility of the landlord, such as changing light bulbs and electrical fixtures, leaky faucets and drain pipes and are not deducted from the security deposit unless there is proof that the tenant deliberately and maliciously damaged these items during their stay. However if the tenant attempts to fix these things themselves, they should take a photo for proof that they have fixed the items and attach other documents such as receipts to claim against such repairs from the landlord either in cash or to be deducted from the monthly rental sum.

Booking Deposit


When a tenant has decided to rent a property and both the tenant and landlord agree to initiate a tenancy, a booking deposit (or some may call it an earnest deposit) is collected from the tenant on behalf of the landlord. In normal circumstances if the services of a property agent is used to execute the tenancy agreement, it is collected in cash, cheque in the name of the real estate agency or transferred into the bank account of the agency, never into the property negotiator or agent’s personal bank account as this is illegal. An offer to rent form bearing the agency’s letterhead is signed by both the tenant and landlord with terms and conditions for the tenancy laid out inside. This forms the basis of the tenancy agreement document to be signed by both parties later on to be stamped by the stamp office of the Inland Revenue Board. 


Thereafter the remainder of the refundable deposits are paid by the tenant to the landlord via the agent, which is the balance of the 1 month security deposit and the half month utilities deposit. As mentioned earlier this 2.5 months deposit is held by the landlord until the end of the tenancy period and is refunded back to the tenant if there are no damages to the landlord’s property nor are there any unpaid utilities bills. 

Other Rental Costs


Other costs involved are usually for the admin cost of the tenancy agreement as well as the stamping fees at LHDN (IRB). If the landlord uses the professional service of a real estate agent to execute the tenancy agreement, the landlord is required to pay the agent a commission equivalent to 1 month’s rental. Although this usually comes from the monies paid from the security deposit and advance rental, landlords cannot assume that the security deposit is intended for this purpose and deduct it from monies paid by the tenant. It is a cost that the landlord must bear to acquire a tenant for their property if they use the professional service of an agent for this purpose. 


If you are a landlord or even a tenant, would you like to know if there is an alternative solution to all this? BlueDuck is in the business of Zero Deposit rentals, which means we are here to revolutionize the rental market by doing away with security deposits. 2 years on and 3 thousand tenancies down the road, we are proud to announce that this idea is actually catching fire throughout the country and has been on the upward trend. To know more about how you can benefit from it, do visit us at www.blueduck.my

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Why Do Fresh Graduates Need BlueDuck Zero Deposit?

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What a great feeling it is, finally graduating from college or university with that degree/diploma after putting in all the hard work for the past 4 years completing assignments and coursework, studying until 3am for final exams and waking up early to go for classes at 9am in the morning. But it’s totally worth it. Now you can move on to your next adventure in life which is to prove to the world what you as a high achiever can do. 


All of a sudden you are an adult and armed with an overwhelming sense of independence and determination. The whole world is yours for the taking. Suddenly reality starts to sink in very fast. To achieve your big goals and dreams you need to be where the action is, and where the action is are the big cities like KL, Penang, JB, KK, Kuching (to name a few lah, there are a lot more big cities in Malaysian) And if you are not from those cities, you may need to rent a place to stay when you get your first job in the big city. Even if you are from those places, now that you are all grown up you may want a say in how you live everyday, how you decorate your house, the rules you set for yourself in your own house. That is where renting your own place comes in. Now comes the dreadful part, having to pay security deposits to move into a new room or that condo with awesome facilities you have been eyeing for a while. 


With a RM3,500 per month starting salary, suddenly a RM1,500 per month brand new fully furnished studio apartment with 24-hours, 4-tier security and an Olympic sized swimming pool on the 50th storey rooftop overlooking the city skyline isn’t really out of reach after all. What could sweeten the deal is if you could only pay RM1,500 and move in right away instead of RM5,250 upfront. RM5,250 upfront??!! That is absolutely absurd! Where do I find that kind of money when I’m just a fresh graduate? Of course I can afford the RM1.5k a month, that would come from my first salary when I start working, but to pay so much upfront when I still have a RM50k study loan to settle with PTPTN on top of all my expenses, to have so much money upfront I would need to borrow from my parents or start a crowdfund from friends and relatives, both might not get me the money anyway. My parents would ask me to just stay at home and save the money because they don’t have it and my friends or relatives would ban my number from their phones or WhatsApp and I will never ever be able to contact or talk to them again!


The Solution!

The solution, you might be surprised to learn, is an open secret which many people have known for years. It’s called zero deposit renting and thousands of people have been benefiting from it for at least 7 to 8 years it has been in the Malaysian market. Overseas in Europe and America it is something commonly practiced in the tenancy market especially in the UK, Germany and Switzerland to name a few. 

So what is this all about? Zero deposit, as the name implies, gives you the option to pay zero security deposit to the landlord of the unit you wish to rent to move in. However you still need to pay the advance rental though. It’s the rental for the current month you are moving in. Which in the case of the unit we were talking about earlier, it’s RM1,500 to move in. So what about the security deposit? This one gets covered by a zero deposit insurance policy purchased to cover the property of the landlord in which you intend to rent from. Sounds interesting?


BlueDuck, a fast growing Fintech start-up, utilizes technology to bring you this Zero Deposit (ZD) solution to your security deposit woes by partnering with leading insurance provider Liberty Insurance Malaysia. ZD policies start from RM450 per annum for whole unit rentals up to RM3,500 per annum. What does paying RM450 per annum get you?


What Does It Cover?

For starters it covers 2 months of unpaid rental, unpaid utility bills and malicious damage to the landlord's property. Now I’m sure you are a good person who would never think of defaulting on a tenancy, or incurring high utility bills and refusing to pay for it when you move out from a rented property or worse, damage your landlord’s property intentionally but as the saying goes, you never know. Sometimes things happen beyond our control. Like you suddenly get terminated from your job because your company is relocating to Cambodia for cheaper labor or goes out of business. Suddenly your seemingly affordable RM1,500 per month condo becomes a liability to you and you lose the ability to buy instant noodles, let alone pay for your expensive rent.


You can check out the packages we offer here: www.blueduck.my 


As a start your potential landlord needs to offer Zero Deposit as an option. For this to happen, it is up to you, as the tenant or your real estate negotiator, to ‘sweet talk’ your landlord or persuade them that this is a viable option to consider for them to rent out their property to you. However, based on our experience with ZD and over 2,300 tenancies over the last 2 years or so, many landlords are aware of this option and many of them are also very receptive of this idea to execute their tenancies. 


However we do have some terms and conditions laid out in order to make this ZD happen for you. First of all you need to sign up for a Tenant Profile, which is like a CV you send to a prospective employer when applying for a job. It shows your personal details, employment status, credit score from CTOS, whether or not you are a bankrupt or have any special attention accounts from outstanding loans with banks. This can be purchased from the BlueDuck website for only RM15. Show this to your potential landlord to gain their confidence and trust. Then you need to also sign up for BlueDuck’s BDPay which uses direct debit via FPX to deduct rental payments every month to be credited to your new landlord’s account on a fixed date every month so that you don’t need to remember to bank in your monthly rent. This service only incurs a transaction charge of 1% every month for successful transfers. 


Now you can choose your preferred ZD package from BlueDuck’s website and you are on your way to renting your first home without paying any security deposit! How awesome is that? Learn more at www.blueduck.my or visit our YouTube channel or Facebook page to get more information!

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