Buying a property is a long term commitment. You need to hold the property for at least 5 years if you don’t want to pay the expensive RPGT tax. Below tips were based on my experience and guides from my property guru, Milan Doshi. Hope it will provide you with good insights.
- Buy at high growth and compact area. Preferably near to mrt, lrt station or close to highways entrance as demands for such properties are higher. Avoid areas that have huge land that potentially has a lot of further development in future. When there are many new apartment’s project completed, your apartment unit will be competing with many other landlords.
- Don’t buy property that is very far from your home or your workplace. From time to time you need to perform maintenance, viewing of new tenancy’s prospect etc. If you ‘bercita-cita’ to purchase an overseas property, think twice. Should unforeseen things happen in future, it might cost you a lot of flight tickets.
- Avoid buying the biggest unit especially the penthouses. Recommended is smaller ones such as 2 or 3 bedroom of the smallest unit as it is much easier and faster to rent out.
- Avoid apartment with only staircase. The reason is that it’s difficult to find tenants who don’t mind walking up and down 3 to 4 times a day.
- Try not to buy on the spot at property fairs, unless the developers are very well established and have good track record. Some properties that are sold at property fairs are usually unsold units or undesirable locations. Hence don’t blindly book a property based on beautiful brochures. From my experience, even with their promises of GRR (Guarantee Rental Return), it could be ‘hanya tinggal janji-janji manis mu’
- It is ideal to purchase a unit that facing east. Besides you get vitamin D in the morning, you could avoid the sunset which heats up the house in the evening. This means it can be very uncomfortable or you have to spend extra air conditioning bill.
- Should you buy brand new or sub sale ?
- Brand new: The advantages are it is cheaper and normally developer will throw a lot of freebies such as free s&p etc. However, you need to assess a lot of risk such as abandoned project, delays in completion, poor workmanship and uncertainty with future residents etc.
Besides that, you need to have a holding capacity to pay monthly bank loan up to 1 – 2 years (depending on density of the apartment or condo) until you get the right tenant. Not forgetting that your borrowing capacity is locked until your unit is tenanted.
- Subsale: It may cost slightly more. However the risk is very much lower. You can see, feel and touch the property before you agree to buy and you could see who’s living in the neighbourhood. And upon bank approval, the property can be advertised for rental or do necessary renovation.
Happy Investing !!