Planning to do some property investing after the pandemic? Here are some factors to help you find rewarding deals.
Real estate investment is one of the most preferred forms of medium to long-term investment, especially for Asians. It increases in value and generates ongoing passive income over time.
Despite the Covid-19 pandemic that took a toll on Malaysia’s property industry, experts say the property market will likely recover in 2022 with renewed consumer confidence and the expected recovery in Malaysia’s overall economy. They anticipate that property investing will get better in the first half of this year before it begins to pick up in the second half.
“All signs are pointing towards 2022 being a recovery year for the property market in Malaysia. It is predicted to be stable in the first half with gradual improvement in the second half. While many are adopting a wait and see approach, landed properties in the Klang Valley are hitting new highs each month,” says Chan Ai Cheng, President of the Malaysian Institute of Estate Agents.
4 Factors To Consider In Property Investing
With the attractive low interest rates and property prices on an upward cycle, it seems like a good time to snap up some good properties. However, you do need to have a sound knowledge before venturing into the world of investment properties.
According to Chan, some of the factors to consider when investing in a property in Malaysia include:
1. Purpose Of Property Investing
Are you looking to make money through rental income or property appreciation? What you plan to do with the property makes a difference in deciding the type of property you need to buy. It also helps you narrow down the available options to find one that is better suited for your needs.
2. Location And Neighbourhood
Location is one of the most crucial factors to consider when investing in property. Other factors include accessibility and connectivity, amenities, plans for future development, proximity to transportation network, and how safe is the location from natural calamities like floods or landslides.
“For me, I look for properties within easy reach of areas I am familiar with. There may well be opportunities in other localities, but it is always best to invest in locations you know best. You would have better knowledge of the neighbourhood, past prices, and potential for the area compared with buying on one’s hunch,” she explains.
3. Type Of Property
The main three types of property investing include residential, commercial, and industrial.
“In Malaysia, most investors buy residential properties with a minority investing into commercial and industrial properties,” Chan says.
Popular residential property options include landed properties like terraced houses, semi-detached houses, or bungalows. For non-landed properties, they include highrise or strata residential properties such as condominiums, serviced residences, and apartments.
Each property type has its own set of terms and guidelines or considerations; thus, you need to determine what you are looking for in advance.
Your choice of property to invest in should not only be a good investment, but it should also fit within your budget.
When calculating your budget, remember to factor in all initial costs such as downpayment, legal fee, stamp duty, bank processing fee, valuation fee (for subsale), as well as renovation expenses to get the property ready for use.
Besides the monthly loan instalment, you also need to budget for recurring payments that come with owning a property such as monthly maintenance charges, annual quit rent and assessment tax.
While most people buy directly from the developer and the secondary market, Chan says that there are some investors who focus only on picking up investment properties via public auctions. So, how do you find a profitable investment property in Malaysia post-pandemic?
“Data is key,” says Chan.
“Do your research on the type of property and the location you have your eye on. Although most hold the view that investing in property should not be an emotional affair, it is quite hard to separate the two.”
According to Chan, if prices of properties within the area you are targeting have had a downward adjustment in asking prices – then it might be worth your while to put in an offer.
With the rising cost of building materials and disruptions in the supply chain, Chan indicates that this might lead to higher property prices. This is favourable to property owners as real estate has historically been viewed as a good hedge against inflation—when housing prices rise with inflation, owners will see appreciation.
Besides being a hedge against inflation, if done right, property investing can get you a substantial return through passive income and equity gains.
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