VIP Property Advisors: June 2018

Monday 25 June 2018

Property Investment Landed or High Rise?

Reblogged from loanstreet.com.my. View original article here

When going into a real estate investment deal, the first thing that should be kept in mind is the location. The location of the real estate determines how close it is to business district, schools, restaurants and also to public transports which is a huge deal to the tenants. The Second thing to keep in mind is the convenience for your tenants, whether there is a parking space, good security system, access to major highways and if you are renting out a condominium, its facilities and view could all help add value to your property also. However if all of the above are more or less the same for both landed and high rise property, which one will you choose?

The most common way to earn a profit from your property investment is by renting it out. When renting your property out it is important to keep in mind how much return on investment you expect and stick to it. In terms of return on investment, a condominium will definitely yield the highest revenue. Even though landed property may cost more, it does not necessarily guarantee a higher revenue than a condominium.

Besides renting your property out, you might also want to sell your property one day to earn a lucrative amount of money. The way to make sure you do not lose money when selling your property is to make sure that your property appreciates in value. See our guide 'How do people make money from real estate' for more advice in this area.

For a freehold landed property, the prices are more resilient to depreciation because there is land attached to it. On another hand, for leasehold landed property, the property value will stagnate or depreciate towards the end of the lease. Other than that, there are also a lot of regulations and uncertainties when going through the renewal of your lease. Therefore, if you are going for a short term investment it is advisable to hold on for 5 years before selling. While for long term investment it is not advisable to hold more than 10 year if less than 70 year lease.

Every property requires maintenance.

For landed property, the responsibilities for maintenance falls to the investor to keep it in good condition.

Condominium properties rely on good maintenance to keep the building in good shape and the facilities in good condition. If the condominium management is subpar and leave the building to its own device, the building value will depreciate very quickly and at that point it is advisable to sell your property as soon as possible.

Some studio apartments could be above a shop lot. Therefore, if it is a good retail shop below offering peaceful, convenient and quiet environment, then the studio will have a good chance to appreciate. However, if it is a shady shop or very crowded and poses a security threat causing discomfort to the tenant, then that studio might drop down in value quickly as people quickly move on to nicer locations.

Another aspect that you should keep in mind when purchasing a property is the developer planned Phases for their area. If you purchase property at a later phase, it will always be more expensive than purchasing it at an earlier phase. The prices for these phases are usually planned out very early and only reflects the projected value of the property in the developer’s perspective and does not necessarily reflect the true market value at that point of time. Therefore if you are planning to purchase a condominium at a later phase, look around for early owners and buy it from them rather than developer’s to avoid buying a overpriced unit.

Once you have decided on which type of Property to invest in make sure you use a Home Loan calculator to find the best deal
Conclusion

In summary, always keep in mind your goal for your investment, whether you are angled towards short term/long term investment and then always invest into your choice of real estate property appropriately.

Original post is from Loanstreet.com.my, Malaysia’s leading independent loan comparison website. Please note that the reason for reblogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

VIP Property Advisors

We market new projects for top developers in Kuala Lumpur and Penang. We have freehold properties in newly launched projects that start from RM395k with down-payment as low as 1% and booking fees from RM500 to own your dream home. Completion in year 2021. Call/SMS/Whatsapp us at

+6010-353 9911

If you are a first time home-buyer, here are some entitlements, privileges and benefits you might like to check out. Click here.

Top Tips for Property Investment

Reblogged from Loanstreet.com.my. View original article here

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Photo Credits: loanstreet.com.my

Property investment: it’s the domain of property tycoons and multi-millionaires, isn’t it? Not necessarily my friend - with a bit of capital, some know-how, and lots of research, even you can start your own little property empire. Whether you’re aiming high and dreaming of becoming a big property player, or you just want multiple passive streams of rental income to give you a comfortable life, property investment isn’t as scary as it seems if you are willing to learn. Here are the top 4 tips for property investment to help you get started!

1. Location Matters

It goes without saying that a piece of real estate is stationary. The property you want to buy isn’t gonna just stand up and move to a better area overnight. Hence the location of your property makes a huge impact on its price and potential growth. ‘Location, location, location,’ as the saying goes.

So what are the things that make a good location? Well, to put it simply: is it a good place to live or work at? Think about convenience. Is your property within easy reach of amenities and public transport? Is there a train station nearby? Are there any universities or office areas nearby? All these things have a big hand in determining the price of your house as well as how much you can charge for rent.

If you are planning to rent it out, you should definitely take the distance between your own home and the property into consideration. Staying near to your rental property gives you the advantage of being able to handle maintenance and address tenant complaints more easily. If you want to take a less hands-on approach, however, or if the properties you plan to purchase are far away, you can consider hiring a property manager to help you manage your portfolio for you.

2. Find A Good Real Estate Agent

Never underestimate the power of a good real estate agent. The right agent can work wonders for you and take a lot of the stress off your shoulders. What property agents offer is the professional expertise and contacts that you may not have. They make your work much easier and can also potentially sell/rent out your property quicker much quicker than you can.

If you’re house hunting a good agent can help you find ideal properties based on your stated needs and they’ll also help with the negotiation process so you can get a favorable price. As for renting out your property, they can help you with the searching and screening process for potential tenants. It’s always good to have a healthy relationship with your agent in order to ensure that the both of you can benefit from each others’ patronage.

3. Research And Compare For The Best Loan

Properties are illiquid assets, as such it may not be a good idea to tie up all your money in them. The process of selling a piece of property can take anywhere from six months to a year or more, and even then you may not be able to get a good price for it. So financing your investment by taking out a mortgage loan is usually a given. However, it is important to educate yourself about the various loans available to you on the market so that you can find the one that suits you the best. Learn about the different interest rates, settlement cost and prepayment penalties that different banks offer. You can use Loanstreet’s free home loancomparison tool to easily compare and apply for the best mortgage for you.

Also if you decide to finance your property purchase with a loan, you can use the money you earn from rental income to cover your monthly instalments. Find out how much rental income you can expect to get and compare it with the amount you have to pay every month. It’s ideal for your instalments to be around 60% of your rental income so you can still make a profit and also cover the cost of maintaining the property.

4. Different Types Of Property For Different Needs

Landed properties are more expensive than apartment units. However by the same token, they also appreciate in value much more than apartments too. If you can, try to buy a landed property, even if it’s just a single-storey house. It will benefit you more in the long run.

Of course, this is not to say that apartments are worthless as an investment. Apartments are popular for renting out, and their cheaper prices also can be attractive to first time property buyers. Always buy within your means and don’t overstretch your budget.

Also remember to take into consideration the freehold or leasehold nature of your property. Freehold property has no maximum leasing period which means you can own it forever. Leasehold property have a finite leasing period (usually 99 years) is renewable. These can affect the price of your property. A freehold property is more valuable than a leasehold especially when there aren’t many years left on the lease.

Conclusion

Property investment may seem daunting to the uninitiated, but The purchase and selling of a property is not an easy process and will require a lot of work. By reading this article we hope that we could clear some of your concerns and aid you in your investments.

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Original post is from Loanstreet.com.my, Malaysia’s leading independent loan comparison website. Please note that the reason for reblogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

VIP Property Advisors

+6010-353 9911

If you are a first time home-buyer, here are some entitlements, privileges and benefits you might like to check out. Click here.

⚡ Pre-launch Service Apartment Right Next to MRT Station From RM360k. Click here for details! ⚡

Buying a property as a foreigner in Malaysia

Photo credit: loanstreet.com.my

Reblogged from Propsocial.my. Original post here.

Purchasing a property can be a confusing matter even to locals, so what about foreigners who wish to make a home in Malaysia? This guide serves to help ease them into the process as much as possible.

Foreigners in Malaysia are either expatriates or tourists, and thus have been received with warm welcomes when visiting our country. Now the Government is also encouraging these foreigners to choose to make Malaysia their second home, whether for long-term stay, retirement or investment purposes.

If you're reading this and you're a foreigner, before making any decisions, you would need to understand certain policies and legal fees imposed by the Government on property purchases. Therefore, this article serves to guide you through the properties available to foreigners, the minimum purchase value imposed by state authorities, and the property financing in Malaysia.

What kind of properties can foreigners own?

Foreign ownership of property is liberal (foreigners can even own 100% of the property) in Malaysia as long as minimum requirements are met. In law, foreigners can own any type of properties with the exception of:

Properties valued less than RM1 million
Low and medium cost residential units as defined by state authority
Properties standing on Malay Reserved land
Properties distributed to Bumiputera interest in any property development project as determined by state authority

Having said that, foreigners can easily own a bungalow, terrace house, condominium, flat, landed property, studio unit, commercial property, industrial property, agricultural land (except Malay Reserved Land and industrial land (except Malay Reserved Land).

Read out article "Property Investment Landed or High Rise" to understand more before buying a property.

What is the minimum requirement for the property value?

Generally speaking, a minimum value of RM1 mil is applied to all kinds of property in every state. However, state authorities remain in power to amend the minimum value in the states that they control.

How can foreigners buy at a lower price?

Malaysia My Second Home (MM2H) programme is a programme tailored to foreigners who wish to stay in Malaysia for a long period of time (10-year visa). A large number of foreigners who used to work in Malaysia have already applied for this programme for their retirement in Malaysia.

Before putting in an application, foreigners below 50 years of age are required to prepare a minimum of RM500,000 in their Savings Account / Current Account / Fixed Deposit whereas those aged above 50 years of age need to have at least RM350,000 in similar accounts.

Despite the relatively high requirement, one clear advantage is that MM2H gives foreigners access to property with lower value. The table below shows the lowest value of property foreigners can buy with / without MM2H.

Financing with Home Loan

The Margin of Finance (MOF) can go up to 80% for MM2H holders, while non-MM2H holders would generally get 70% MOF. In this matter, foreigners are usually better off taking loans from foreign banks in Malaysia. However, all these come with an exception when they are married to a Malaysian citizen. In this case, the spouse will be required to take part in the loan financing to enjoy MOF as high as 90%.

Click the link to find a suitable home loan that meets your requirements in Malaysia.

General FAQ

I’m a Singaporean / Singaporean PR and I own a HDB flat, can I buy private residential properties in Malaysia?

Readers who fall in this category might need to guard against the Singapore’s policy. According to HDB InfoWEB, those who own HDB flat can only buy both local and overseas private residential properties after 5 years since first possessing the flat, regardless of whether the flat is being transferred to others within the period. This is known as minimum-occupation-period (MOP).

Conclusion

As you may wonder, many policies are made to tackle the ballooning property price in major cities. Other than that, Malaysia is still a foreigner-friendly country with relatively cheap living costs. Make sure you are fully prepared with your funds and don’t forget to enjoy the interesting life of mingling with the multi-racial community here in Malaysia!

Reblogged from a Propsocial article. Original post is from Loanstreet.com.my, Malaysia’s leading independent loan comparison website. Please note that the reason for reblogging this article is for information purpose only and we are not the original authors of this article. All work above attributed to the original authors from the websites mentioned in this paragraph.

VIP Property Advisors

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https://www.facebook.com/vippropertyadvisors/

Friday 22 June 2018

The difference between buying a second hand (sub-sale) and a new property from a property developer in Malaysia

22 June 2018. By David Geh

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Many people ask me what is the difference between buying a second hand (sub-sale) property and a new property from a property developer. I would like to state the advantages and disadvantages for both sides of the argument.

Consider a RM500k property both new and in the sub-sale market.

You are a new house buyer and you are contemplating your first property. You calculate your commitment and decided that you want to buy a RM500k condo in KL city after searching through iproperty or mudah and contact an agent to view the property. He brings you there and you find it's brand new without any renovations done (the lights and fan are not even installed). The buyer has just gotten the keys from the developer and is planning on flipping it for a quick profit. First of all, he probably bought the property for 400k during the property's launch 3 years earlier and yes, if you are buying that property, you just helped him make RM100k. Completed properties will usually fetch a premium of between 20-25% upon VP depending on the demand for that property in the market.

However, for a completed project, one advantage is you have a wide choice of units to choose from. You don't necessarily need to agree to buy the first unit you see unless you really like that unit. The reason is because in a newly completed project there's usually hundreds of new units in the market with various sizes and prices. Some of them you can easily bargain down depending on how desperate the owner is to let go of his or her unit. Sometimes circumstances require them to liquidate their units fast for cash like a family emergency or a divorce.

For a first time home-buyer or a serial property investor, I believe entry cost is an important factor. Buying a sub-sale unit requires you to put down a 10% deposit, which in the case of a RM500k unit is RM50k upon signing of the S&P within 14 days. You can pay the 10% in cash and get the necessary documents to go to EPF to get it from your Account 2 later on. The 90% margin of financing depends on the bank valuation. From my experience, usually if the property is too new and there is not so many transactions, there might be difficulty getting a high valuation for that property.

Consider this scenario; A 90% valuation for a RM500k property is RM450k. What if the bank doesn't feel that RM500k is the market value of that property and values it at RM480k? Your 90% MOF is now RM432k and you are required to fork out an additional 18k in cash to pay for the shortfall if the seller insists on selling the property at RM500k. Sometimes, depending on your luck, the bank doesn't feel you qualify for a 90% MOF but a 85% instead. So now a RM500k property, valued at RM480k and the bank gives you a 85% loan on it (RM408k), you need to put up RM92k in cash to buy that property, a far cry from the RM50k you were planning to in the first place. The extra RM42k could go a long way to renovate the place and get some nice furniture for it to live in comfortably.

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Calculation (All in RM - Ringgit Malaysia):

Property Asking Price: 500,000

90% MOF: 450,000

Down-payment: 50,000

Valuation price: 480,000

90% MOF on valuation price: 432,000

Difference if owner insists on selling for 500k: 68,000 (Your original budget was 50,000)

On top of that, you still need to pay legal fees for the S&P and loan. Here's the rough calculation:

Purchase Price : 500,000

Loan Margin: 90%

Loan Amount: 450,000

S&P Agreement:

Stamp Duty: 9,000

Legal Fees for SPA 5,000

Total: 14,000

Loan Agreement:

Stamp Duty: 2,250

Legal Fees Loan: 4,500

Total: 6,750

Total Legal fees for Loan and SPA: 20,750!

So the total you need to pay in this scenario is RM68,000 (Valuation price: RM480k, MOF 90%) + RM20,750 Legal fees for Loan and SPA = RM88,750

or RM50,000 (Valuation price: RM500k, MOF 90%) + RM20,750 Legal fee for Loan and SPA = RM70,750

and the worst case scenario RM92,000 (Valuation price: RM480k, MOF 85%) + RM20,750 Legal fees for loan and SPA = RM112,750!!!

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Of course you are not tied down to the deal and can walk away from it if you don't find it favorable to you financially but trust me, sometimes real estate negotiators can be very persuasive and insists on an earnest deposit right away to process your SPA and loan to 'secure you dream property' before anyone else gets it once you show the slightest inkling of interest.

As for a new property, the down-payment can be as low as 1% to own the property. Booking fees range from 500 to 5000 depending on which project you are considering and this booking fees usually forms part of the down-payment you are supposed to pay upon signing of the SPA (Sales & Purchase Agreement) at the lawyer's office within 14 days of placing the booking fee. A booking fee is a commitment to purchase the property and for the agent or developer to proceed with the documentation for your loan application.

With so many new projects coming up nowadays, it is not uncommon for projects to be advertised with legal fees (for SPA and loan agreement) included. The stamp duty (or known as memorandum of transfer or MOT) and loan disbursement cost may or may not be included in the sales package.

So, for a 500k new property with a 1% down-payment sales package (9%) rebate promotion from developer with free legal fees for SPA and loan:

Purchase Price: 500,000

90% MOF: 450,000

Down-payment: 5,000 (with 9% or 45,000 rebate from developer)

Other fees payable: 9,000 if no stamp duty (MOT) included in sales package

Buying a new project property is more straight forward than buying a sub-sale property. I am not putting sub-sale units down but the entry cost is much higher than if you were to buy a new unit. Furthermore, if you are buying a 'new' sub-sale unit, you are already helping the seller to make a handsome profit which you will be paying the next 30 years for with interest!

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Banks are also more receptive for loan applications for new projects and the chances of you getting a margin of finance of 90% is higher with the developer's 'panel banks'.

You might need to wait 2-4 years (average 3 years) for a newly launched project to obtain vacant possession, do some renovations and move into your own home. Some new projects even comes with air-conditioning, water heater, wardrobe, kitchen cabinet and some appliances thrown in so you don't have to spend extra money to purchase them thus saving you thousands of RM. Buying a new unit is paying today's price for a property in the future which is not necessarily bad if you currently have a place to stay but if you are the type who wants to own a house right now then your only option is to buy a sub-sale unit.

So, as illustrated, buying a new under-construction property will cost you less in entry cost (which is the cost of acquiring the property) than buying from the sub-sale market. For me, if I had that much of extra cash, I'd like to keep it handy to do renovations, pay installments or even pay more in down-payment (after rebates) to reduce the loan amount and save on interest and repayments.

Contributed by: David Geh, MBA(UK), BCom(Curtin)

Our mission is to help home buyers and property investors find the best property deals in Malaysia! We believe all our clients are VIPs and should be treated as one. We are the VIP Property Advisors team.

We market new projects for top developers in Kuala Lumpur and Penang. We have freehold properties in newly launched projects that start from RM395k with down-payment as low as 1% and booking fees from RM500 to own your dream home. Completion in year 2021. Call/SMS us at +6010-353 9911 or Whatsapp: +6017-366 9288

If you are a first time home-buyer, here are some entitlements, privileges and benefits you might like to check out. Click here.

⚡ Pre-launch Service Apartment Right Next to MRT Station From RM360k. Click here for details! ⚡