When making the decision to come to Penang, Malaysia on our MM2H Visa – it was important for us to understand what type of house was available and where we wanted to live. Travelling halfway around the world with little knowledge of where we were landing – the phrase “location, location, location” could not be more important. Many folks are looking for a “how to” – so here is our process.
1. Do your research (from abroad)
There are great property sites all over the world. I used PropertyGuru and iProperty and also jumped around to find other places. This gave me an idea of condos and prices as a start. They also included information about certain buildings (we were looking for a condo), and their various amenities. Also listed were real estate agents…more on that later.
This first step is to really determine what you are looking for and where you want to live.
A word of caution. You will see properties on sites that you fall in love with. You will contact the agent to inquire. They will tell you they have the property. You will land here with the expectation to see the property and discover it was “just rented last week”. Many photos (especially the good ones) are not that agents property or were never recently available. Be aware of the come on – and be prepared to walk away from an agent who is misleading.
2. Be clear on what you want and need
- Sea view, mountain, city
- Amenities like gyms or pools
- close to schools
- on the bus line
- number of bedrooms
- furnished or not
All these will be factors in your decision and will also assist the agents in helping you find what you need. Be aware that traffic in the region can be a challenge – and determine how far you want to be from amenities.
3. Temporary Housing is as important as permanent
Let’s face it. You are in a new place, you don’t know anyone, you have come off long flights and staying in a hotel is frankly too expensive long-term. What to do?
We initially started out up island in Batu Ferringhi thinking it was more relaxed and remote. We rented an Airbnb in the area while we were looking for places to stay. We soon discovered that there was plenty of traffic and noise (especially on weekends and holidays), it was far from grocery stores and conveniences, and the clincher was that it was difficult to get a taxi from the area. When we were able to get one – the cost was incrementally higher. Given that we do not currently have a car (and are not sure we will get one) we decided it was not for us.
For a number of reasons (including an Airbnb that was nothing like the pictures) we moved. We then spent two weeks renting a serviced apartment (contact me if you want some real estate connections). The apartment is located in a larger mall area (think Queens Quay in Toronto) and that meant any groceries or restaurants were right there. There was also the added bonus of a lovely boardwalk and the ability to head out and go to other places because Uber, Grab (Malaysian version) and traditional taxis were there in minutes.
As a result – we really got a good feeling of where we preferred to stay without the long-term commitment. Sure we had to move our stuff and it was a bit of a hassle, but in the long run it was worth it.
4. Choosing your Property Agent
Based on some help of people we “met” virtually and a bit of research, we discovered that most people engage multiple agents to look for properties and take them out. This struck us as odd, since in North America you are typically with only one agent. However, we soon discovered the following:
- there is no MLS or database that shows all the properties available to everyone
- properties are based on trust relationships and on networking
- good agents with good reputations will tell other good agents about their properties
- bad agents will be shut out by good agents
- some agents will work cooperatively – others won’t
- multiple agents will get you into different properties – then again – you may be shown the same thing twice
You will hear that there are thousands of vacancies in Penang. This is true. However, just because a place is vacant does not mean that the owner wants to rent. Many simply don’t need to rent their properties, and finding the “right” tenant is of great importance.
We had three agents working for us. Our preferred agent ended up being well connected and upfront about their fees.
5. Understanding Property Fees
Theoretically, in Malaysia, the landlord is supposed to pay the fee for the rental and the agents split that fee. However, in Penang, the trend is a bit different. You can try and fight it or negotiate it. We decided that we would pay the agents to ensure that they were working for us and that our needs were their priority. Some will argue that agents are taking advantage of expats because we don’t know better. Some are able to negotiate lower or no rates. I leave that decision up to you. Typical fees are as follows:
- one month commission (one month rent) for 2 years rental agreement
- half month commission for one year rental agreement
- Subsequently, if the tenancy agreement is renewed, then there’s a half month charge for renewal of the tenancy agreement (I am not keen on this one as that puts you in perpetuity with an agent – and by this time you should have a relationship with your landlord – however, if the agent works to negotiate something on your behalf or builds another tenancy agreement with the stamp fee – I can see this making sense)
- Stamp duty (this is a fee charged by the government that is paid based on a sliding scale of the rental amount)
- Tenancy fees (this is typically a deposit for electricity, water, sewer)
This is an important thing to understand and budget for because your initial outlay is going to be quite a bit.
As an example of what your fees might be:
RM 8,000 Rent
- Two months rent due on signing (note this is the security deposit – NOT first and last months rent) – RM 16,000
- First months rent also due – RM 8,000
- Tenancy Fees deposit – RM 4,000
- Stamp duty – RM 856
- Property agent commission for two-year rental – RM 8,000
In simple terms, be prepared for some significant cash outlay.
6. Viewing Properties
We were clear on our needs, but had to make adjustments as we saw buildings and amenities. The key is to keep an open mind and know this is not “back home”.
We saw empty caverns, overcrowded furniture and stuff just not to our taste. We kept an ongoing log in Microsoft OneNote of the good, bad and ugly. It allowed us to review the properties at the end of the evening and begin eliminating buildings altogether. It also meant that when other agents wanted to show us something we could tell them we already saw it – or we don’t like the building. We sometimes took photos but always asked permission to do so (typically of places we really liked so we could remember them).
We were also candid and direct with the agents about what we liked and disliked. We ruled out places because of size and cost to air condition, narrow balconies, too many kids, too close to the international schools, poor gym equipment, bad views, bad furniture, weird layouts etc. This is a very subjective area, but do ensure that you and your partner are on the same page.
7. Be prepared to be disappointed
We found a place we loved. We put in an offer after discussions with our agent. We were denied. Why? We were told that the landlord decided to continue to use it as a holiday home and have pulled it off the market. The reality is that our offer was too low and no one wanted to lose face negotiating back or counteroffer. It happens. Just keep looking.
8. Write a profile
We wanted the landlords (and their agents) to know us. We provided profiles of who we were, our professional lives, our interests etc. And we wrote it to the cultural values of the landlord. Did it work? We think so. Certainly, on the apartment we lost – the agent on the other side then felt that we were great tenants and agreed to show us another one that had never been rented before. She seemed to go the extra step to bring us into the building and find a way to make it work.
9. The Paperwork
It takes longer than you think, and no one seems to mind. Being someone who was diligent about contracts and paperwork in my professional life, this freaked me out. I could not believe that we had transferred money to the trust account, signed the initial tenancy agreement and the night before move-in still did not have the final documents in hand. In fact, 7 days after move in we still don’t. Both parties have signed and the paperwork is now off to the government waiting for the stamp.
This part can be nerve-wracking Should I move in? Should I cancel my temporary accommodation or make alternative arrangements? What do I do about deliveries? Is this really happening or will the landlord pull out at the last minute?
It is a challenge. But remember, this is a culture built on trust. That is when having a good agent can reassure you, tell you what is going on, and allow you to vent your frustrations and allay your fears.
10. The Last Word
- Find a property agent (or two or three you like) and ensure they negotiate on your behalf
- Be clear on your needs with your partner and your agents
- Do some research ahead of time (websites, floor plans, buildings) so you can narrow the search
- Get good temporary accommodation so you are comfortable
- Make good notes of your viewings so you can eliminate quickly
- Negotiate (within reason)
- On this note we have heard that 20 per cent is possible, but found that was not entirely realistic
Above all – enjoy the process. You decided to try this adventure warts and all – so embrace the differences, have a sense of humour and understand that it is not the same as back home!
UPDATE: I am acquainted with a number of agents and property owners. If you need assistance, do reach out and I am happy to help you navigate the process and refer trustworthy agents!