Buying property is a major decision. The whole process, from selecting a piece of property to receiving the keys, could take months or even years to materialise.
The entire journey is exciting for some but can be overwhelming especially to first-time buyers.
Today, information on properties is abundant thanks to the internet. Thus, the issue is not a lack of information but whether you have the wisdom to process and interpret the information available.
Here are five tips to help you narrow down your search for a suitable piece of property.
Tip 1: Identify why you want to buy a property
Are you looking for a place to call home? Or, are you looking for an investment?
The consideration is different. If you are buying a house to stay in, your consideration may be influenced by your current lifestyle. Where do you work? Do you have kids? Is the house located near the school your child is attending?
Meanwhile, if you’re looking to invest, your consideration is determined by your investment objectives. Are you seeking high rental? Or, are you looking for capital appreciation?
Property selection is different. For instance, if you seek a stable rental yield, you may search for a property in a matured neighbourhood where rental demand is sustainable. On the contrary, if you’re seeking capital growth, you may be interested in a property situated in a new location with potential to grow in the future.
If you’re unsure at the moment, take time to reflect on your priorities. It is helpful to research about property in general to get better educated and inspired.
Tip 2: Decide how much you can afford
Before going property hunting, you should have an estimate of what you can afford at present. This can be calculated easily.
- Your monthly income
- Your age
- Your Debt Service Ratio (DSR)
- Your monthly debt obligations
Tip 3: Decide on what type of property you prefer
This depends on how much you can afford. For instance, if all you can afford is a property under RM500,000, then, you have lesser choices.
Perhaps, you may start with a flat or a medium-cost apartment if you prefer a property located in the Klang Valley.
Obviously, if you can afford up to RM1 million, then, you have more choices. You may choose to shop for a few units of medium-cost apartments or settle with a condominium or even a terrace-house.
If you can afford beyond RM1 million, you may even choose to invest in commercial properties.
Tip 4: Which is best? Properties under construction or existing in the sub-sale market?
Once again, it depends on your objectives for buying a property, how much you can afford and the amount of cash-in-hand.
There are pros and cons associated with both under-construction properties and existing properties.
For instance, if you intend to receive immediate rental income from your property investment, then, you may search for an existing property in the sub-sale market. You may even prefer a property that is currently tenanted.
In this case, you may need to prepare more cash-in-hand to place the down payment for the purchase of your property and to pay for legal fees and stamp duties for both the sales & purchasing agreement (SPA) and the loan agreement.
Meanwhile, if you don’t have much cash-in-hand, you may opt for under-construction properties. This is because, today, most developers are offering discounts, rebates and incentives to absorb the legal fees and stamp duties for the SPA and the loan agreement.
However, you will not enjoy immediate cash returns from your property as it is still under construction. Instead, you will be servicing partially the interest of your loan while your property is being built.
Here PropertyGuru.com.my has built a collection of reviews on new property projects. It contains almost all the information you need to know about the project. This includes its project details, location, and analysis.
Tip 5: Identify what your ideal location is
You don’t need to be an expert of every single location to hunt for a good property. Most likely, if you are reading this, you are already an expert in your own backyard.
For instance, if you live in Subang Jaya, you would know intimately the whereabouts of nearly every school, hospital, shopping mall, and the best “makan” places there.
You should leverage on this knowledge as it is helpful in searching for a suitable piece of property.
Also, if you’re really a “Budak Subang Jaya”, then, it makes sense to expand your search to locations such as Petaling Jaya, Kelana Jaya or Shah Alam.
It may be less practical to find a property in Ampang, Cheras or Seremban if you are not familiar with it.
This article first appeared in kclau.com
KC Lau’s first book Top Money Tips for Malaysians has sold thousands of copies. He launched the first online personal finance course specifically designed for Malaysians, entitled the Money Automation System. He also co-founded many other online financial courses including the Bursa Method, Property Method, Founder Method and REIT Method.