From a viewer who wrote in on Instagram
He is 26, works in logistics and takes home about RM3,000 a month, with no commitments besides a credit card. He plans to buy a four-bedroom freehold unit due in 2028 with RM20,000 down and about RM1,900 a month in instalment and maintenance. An agency has offered a rent-to-rent contract: it would rent the unit from him for three, five or ten years at 10% below the market rate, and he could not use the unit in that time.
Should he use the rent-to-rent guarantee on a completed unit now, so its rent helps him buy a second property within six to 12 months?
“Don't buy this. Not because of the property, not because of the deal.”
No. Sean's problem is not the project or the scheme but the rush: on a RM3,000 income he is not ready to carry one property, let alone two, and a guarantee does not make an investment safe.
Why
Guarantees sell to fear and laziness
Like the guaranteed rental return schemes before it, rent-to-rent answers buyers' fear of not finding a tenant and their wish to avoid the hassle. Sean says that if those two things worry you, property investment is not for you, and FD, EPF or a money market fund would suit you better.
The contract decides everything
Is the guaranteed rent gross or net of management costs? Who signs: the developer, a company set up for the purpose, or an agency? An agency a few years old promising rent for ten years, a market rate nobody has defined and no terms for delays, defects or a market fall are all warning signs.
One unit already takes half his income
At about RM1,900 a month, a single unit takes more than half of a RM3,000 income. If he lost his job and his tenant in the same month, a second unit would leave him asking his parents to pay the mortgage.
The guarantee is priced in
Sean says such agencies make their money by taking units from the developer in bulk and pricing them up, so the rent they pay you is often built into what you paid. You also give away the unit's best rental years, roughly years three to ten, and get back an older unit when the contract ends.
What to do
- Don't sign yet; first ask yourself why you are in such a hurry to build a portfolio.
- Before buying, set aside RM50,000 to furnish the unit plus six months of instalments, Sean's test of whether you can afford it.
- Research the rents and prices of surrounding projects yourself instead of relying on a guarantee.
- Read any rent-to-rent or guaranteed-rent contract for who signs, gross versus net rent, the start date, and what happens if the project is late or the market falls.
- Compare deals across all four channels, new, subsale, auction and bulk purchase, before buying at retail price.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
ASKING SEAN #319 | THIS A NEW GRR SCHEME IN TOWN?
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #319. The quoted answer is verbatim; everything else is paraphrased. Figures are as stated in September 2026. Sean mentions that in an earlier role he promoted guaranteed-rental schemes himself.
