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Top 7 Biggest Mistakes Property Investors Make

The beginning of any investors isn’t an easy one. You have to know what that business is about, how it generates money, and can the business expand in the foreseeable future.

This is applicable to being a property investor.

Being a property investor requires you to attend classes, get to know your mentors, and people who are successful in your respective investing fields. You would have to continually learn and apply the knowledge you obtained – constantly experiment and adapt your techniques around the market.

Why is this vital?

Certain people would think they are ready when they have attended one class but once is never enough. You must constantly learn (attend many classes) , talk to field experts, and mingle within your investing team members.

Hence, here are the top 8 biggest mistakes property investors make:

1. YOU BUY PROPERTIES ACCORDING TO QUALIFICATIONS AND NOT AFFORDABILITY

Well, many of us are happy when the bank loan officer approves our bank loan. Your salary plus side income seemed decent, your liabilities are pretty low – so he thinks, ehh why not…. But the monthly installment would take away more than half your salary?!

Is that a red flag? Should you worry? … The answer is – yes!

A safe principal to follow is 30% – 35% (where 1/3 of your total salary) of your total salary would go to payment of home installments. This is because 1/3 of our salary should go for savings, 1/3 to daily needs like foods and transportation, and another 1/3 for commitments and/or investments.

It is safer that way rather than having 2/3 of your salary dumped to pay your home. Well, some people can live under strict financial diets but what if emergencies happen? How would you survive? Worst off if you have kids! So buy properties that you can afford and not what you are qualified to buy.

2. YOU THINK YOU CAN FLIP (SELL) A PROPERTY RIGHT AFTER YOU BUY ONE

This is one of the dangerous tactics in the books of property investments. You think you can sell the house you just bought right off the bat. When you buy a property for the sake of flipping – that is not investing, it is called gambling.

Why?

Simply because you sell “in the hopes” somebody will buy that property. In investing, we rely on facts and numbers – not mere speculations without concrete reasons.

I understand that we always hear stories of people having able to sell their houses right after their purchase but sticking to the fundamentals would be a safer way to invest and make money. The risks associated with flipping a fresh property is too high to take. It would take years to recover from buying a wrong property.

Worst off – you may have a financial monster in your hands and would need to auction the property, which would not represent a good outlook on your financial backgrounds the next time you apply for loans.

This same advise is applicable to properties that YOU THINK can get high rentals and make good money!

Always go back to fundamentals and research well your markets and competitors. One key strategy to know if that area has good rental occupation rate is to make time and visit that area at night.  Observe how many lights are on in every units. If there are many units with lights on, that shows high occupancy – a plus point to buy a unit in that area! If it’s vice versa, you should consider other places.

3. YOU THINK GOING TO ONE CLASS IS ENOUGH

It is plausible that you make effort to attend property classes – that’s great. Then you will feel pumped up and highly motivated – and you feel highly driven to buy a property. You will think that you can make money with the current knowledge you have.

But little did you know that there are more aspects you need to know to buy the first house – which is the riskiest investment. That’s right, your first house is the most vital investment to make.

Read more:

5 things you should consider before buying your first house

Should I Buy Property For Investment First Or Should I First Buy To Stay? 

4. YOU DIDN’T MAKE SURE THAT ALL THE FACTS AND NUMBERS ARE PRECISED!

It will determine whether you can be on the fast lane or slow lane in property investments. Because you might get stuck with that property for at least 6 years or more as a result of bad judgement. But that’s alright, you will learn by experience.

Always ensure your knowledge checks are complete. Things to know or cover are mainly as below:

a) 3 Major Risks Of Renting Properties And How To Mitigate The Risks

b) 5 Traits of a good property to invest and get good rental

5. YOU DID NOT PERFORMED THE REAL ESTATE INVESTMENT CALCULATION

To be an investor, you must rely on facts and numbers – not hopes and rumours.

This applies the same with property investments. You have to know the basic calculations to know if your property can make money.

How do you make the calculation?

Ensure that the property you want to invest is below market value approximately 10% – 20%

You can do this by checking the price offered by sellers against the average price people offer around the area.

Better yet, in Malaysia, we have a website that discloses the transparency of actual price transacted on the sales and purchase agreement (S&P). It was a partnership between a company and the local government to improve the property market business.

So if the seller’s offered price < average market price?

That clearly shows the property price is below market value.

However, to easily know that you can get a property below market value, have a go at auctioned properties. These are properties that have problems mainly due to previous owners having trouble repaying their monthly installments.

Read more:

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

6. APPLYING MULTIPLE LOANS FOR MANY PROPERTIES AT ONE TIME (MULTIPLE SUBMISSION)

If I would tell you one thing that is truly risky – the black magic in property investing; that is none other than multiple submissions.

Normally when you associate black magic with the practitioner, it would definitely harm the practitioner in return. The multiple submission technique applies the same consequences – it would do more harm than good if not applied carefully.

You might wonder why this is black magic?

Imagine you applied a loan for two properties because you think that you can flip (sell) the property right after purchase or rent it high – considering the fact that your income can’t sustain the installments for both units.

Remarkably, your loan gets approved probably because you combined loan applications with your wife/trusted partner. That’s great!

But……..

Things get scary when both the units can’t be sold immediately, or nobody would want to rent the units/ rented it at lower price!

What will you do when this happen?

Worse comes to worse you might have to auction the properties or you’ll go bankrupt. Would really hope this is the last resort.

There are times where you think that specific property promised a good deal, even if you know you can’t maintain it – it is recommendable to bolster your income or buy a property you can afford.

7. NOT BUYING PROPERTIES NEAR YOUR “COMMON AREAS”

Common areas are areas where you normally go everyday. It can be the area where you work, your neighbourhood areas, or the place you passed by everyday. The idea is to buy a property that you find easy to visit in case you need to be physically there!

What happens if you don’t buy a property near your common area?

One thing for sure…. you will find it hard to visit your property if you need to be there physically. Things like signing contracts with tenants or handing over of keys (if you are into Airbnb business) would be a challenge if you are not physically there.

However, the aforementioned challenges can be overcome by building contacts with the local janitors or neighbours  who can help you out – of course, with an additional pay. The key to implement this is to find people who you can trust to run your chores when you can’t be there physically.

With all that said, hope you will make wiser investment decisions! It makes a lot of financial differences between making the right decisions and a wrong one. 

3 Major Risks Of Renting Properties And How To Mitigate The Risks

So you have decided to invest in properties and are planning to rent it out. You have the capital, the knowledge, and a good sense of where you want to invest now. However, you must also prepare yourself mentally for the major risks that awaits you when the rental starts. Here are 3 major risks of renting properties I consider quite substantial during your journey ahead.

1. Tenant do not pay their rent

This is basically the major concerns of most landlords. Landlords screen out the right tenants – or so they thought, and maybe they get good rental payments on time for few months but things changed after a while. You don’t get back your rental income because the tenants keep on delaying their payments. Worse comes to worse, you don’t hear much from your tenants and their bills dued more than 2 months – you checked your house and found out your tenant is already gone. They stayed at your house for free which is being very irresponsible especially at your expense.

2. The house is damaged/ things stolen

Alright so maybe the tenant has left the house for good without making payments and you think – “well, that’s alright! I can always get me new tenants”. But things just got worse when you discovered that your TV is stolen! Or nothing else was left there unlike when you started the rental except for the built-in items which is really not moveable. These kinds of problems are landlords’ worst nightmares.

It happened to me once. We had a condo near KL and welcomed a new tenant. The tenants claimed that she’s married and will be living there with her husband and children. We screened through their background details and found no problems at all. The payments were going smooth sailing the first few months until we did not received it for a month and contacting her seems unreachable. We decided to go visit the condo and shockingly found that our tv and some of our furnitures went poof!! And the house was like a wrecked ship – not to mention the weird smell being left there. Since then we always opted for good property management companies and have seen better results in terms of home maintenance qualities due to good tenant filters. However, some property management companies are only in for the money ignoring their service quality, hence we always opt for well known companies. It is a bit pricey in their services but help reduce lots of unecessary stresses.

3. Rental income does not cover your monthly housing installments

Whenever you are renting out on properties, the best strategy would be to get rental incomes higher than the installments. This is how you make money out of your investments. This is also a reason why you need to consider your housing investments carefully, that is to buy a property that is not too expensive so that people on majority will be able to pay you rentals that they find affordable and in a way helps you generate extra income out of the rentals. One of my property coach who is also my father once advised me, “when you are investing in rental property – go for the people in majority”.

This simply means that you buy property which can cater to the affordability of most people around that area or country. If you think that area is of high income earners then you may consider buying a quality apartment/condominium because people around there have the financial means.

However, if you find that the people living in that area consists of middle to low income earners then you might as well consider the lower range properties which caters to the affordability of the surrounding society. This way, if you are not earning positive cash flows from the property – at least you can get half of the installments covered, even though that would be our last resort. That’s a way you can minimize your risks to this matter.

So how are you going to minimize your risks during rental period?

1. Hire a property management company to manage your property

2. Research your property in depth before you make the investment in order to get the most out of your returns

3. Get your property insured for rental business purposes (there is an insurance specially designed to protect your property provided by the banks)

All and all, provided with great insurance coverage and the right knowledge – any property investments will be a good investment and a worthy one for sure.

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

Have you been walking passed that same house – that gloomy, window broken, cracked door house for countless times and has never been occupied? You might think there is no hope at all to restore that property into good function – you might have to think twice!

Why are abandoned properties considered an amazing investment opportunities?

Simple, normally an abandoned property is sold below the market value! This gets even better if it is auctioned by the bank because it will be auctioned by higher margins below market value. Even though you might need to incur some costs to repair – hey, you got the house way the market value, meaning you are buying it cheaper than most people bought the same unit in the same neighbourhood. On a side note, “Lelong” is a term called by Malaysians as auctioned house.

According to Leslie Low, an auctioned specialist from Malaysia stated that an auctioned property would offer 30% to 40% below the market price based on The Star newspaper. Who would give you a property offer of 40% below market value? A decent newly launched terrace home these days costs RM 500,000. That means you’ll get an offer of RM 300,000 for the same property type – or even better.

How would you know if that property can make money?

Then you might ask, how do you buy a property that will make good investments? It’s simple! So long as it’s below market value, returns positive cashflows during rent, potential capital appreciation, within your usual place of hanging out or work, good neighbourhood and…. that area have a 5 year upgrading/expansion plan (check with your local developer) – then you are all set!

All the good signs are there already giving you the positive signals. Sometimes only that particular house looked all scary and dark but the other houses looked neat and tidy, that’s a sign of a good neighbourhood. Especially if it’s nearby public transport, malls, offices or any kind of public attraction. All these characteristics will definitely drive high population into that area making it having high demands for basic needs and wants – in our case it’s a roof over our heads. People would definitely need a place to stay.

How much money can an abandoned property make?

That actually depends on many factors. One of it is the marginal percentage below market price you are purchasing it. Let’s say you are buying a RM 500,000 worth of property at RM 300,000 during auction, you already have a capital appreciation gap of RM 200,000 there! Even though that capital appreciation will slowly catch up to the market value once the function of the house is fully recovered – hey, that means you are investing at a lower capital.

Wouldn’t it be great to invest a lower capital and have a high return? Everybody else is investing at higher price but still have a return approximately close to yours. Whose the winner? You are! But you still have to do your homework. You must know how much Return on Investments (ROI) that property makes, the future developments that area will undertake, who will be your target customers, and your overall costs short term as well as long term.

Not all properties can make great returns, what is a good property for you may not be the best property for another friend – always keep the foundations in mind. Have a read on 5 Traits of a good property to invest and get good rental to get general ideas on what is a good property to invest.

What is the best way to take advantage of the capital appreciation and low purchase price?

The magic word is “refinance” your house. The gap between market value (bank’s value of the said property) vs property purchase price = extra cash! There are two ways that I know of which is available in Malaysian and international banks – you can use term loans or an overdraft. Take an example of the same RM 500,000 property bought for RM 300,000 and after some time your property value had a capital appreciation to RM 700,000 because there is a new train station built in front of your neighborhood.  Then you decided to settle your loans fast and you apply “refinancing”.

The banks will reimburse you loans at the current market value of RM 700,000 – this will give you extra money to settle your old loan of RM 300,000 and on top of that, getting extra RM 400,000 (RM 700,000 – RM 300,000) that you can use to settle other outstanding loans (education or car) and you even use the extra money to invest in another property or open a new business!

But always bear in mind that the banks will always win. The amount of loans you get will need to be repaid on top of bank interest. Have a backup plan on how you will repay the bank loans before and after you utilized your loans. A good way to utilize your loans is to use it for matters that will improve your life financially such as settling outstanding loans (to avoid long term interest incur), start a profitable business, or to buy assets that can give positive cash flows in the future which outruns the bank loan installments itself. Good luck fellas!!

‘Should I Buy Property For Investment First Or Should I First Buy To Stay?

Before I started to get serious with property investments, I always have my mind set to buy a house but am always confused – should I stay right away? Or should I rent it out first? Then I think, “maybe..just maybe I can find a house that can do both! One that can be easily rent out and I can always choose to stay there when I’m ready – or so I thought”.

Turned out it wasn’t so easy to decide because if I choose to rent first, I might have to buy a smaller property first which is not in my interest. I don’t have much time to accumulate enough money to buy a landed house at that time – a landed house in a good location that can  be rent out while I hold no serious commitments and when I’m ready then I can just decide to move in.

On another hand, if I decide to buy my first house to stay then I might have to wait longer time to gain enough money to buy one decent house. Might take me another year.. Might take another 2 years – anything can happen within those years. I have this landed house that I marked my eyes on for quite a long time. It was in a neighbourhood I once grew up – it’s a peaceful place and located strategically in the centre of the small town I live in. But I know that by the time I accumulated enough money, the value of the houses there would jump higher than now.

The probability of not being to buy that house would be quite high and I might missed out better opportunities not buying cheaper properties for rent now. Why? Because the other property I had my eyes at that same time was another awesome apartment, quite small about 650 square feet, but in a prime area of Kota Damansara – a great place with many property boosters like hospitals, universities, malls and strong rental power.

It was quite a dilemma to decide which was the better options. So I studied how many property gurus who started from nothing and now end up making millions. I discovered that most of them started out by renting their homes – it was their first step to a financially free life. One of them was my coach who started from a small business helping his mother selling foods in a school canteen. He bought his first house before turning 25 and rented the house for 3 years before buying another one. All the hard work paid off as he became a property millionaire when he was already 30 years old by diversifying his rental incomes into various businesses and keep buying more properties along the way – pretty smart eyy!

All in all, it is actually up to you to decide whether you want rent first or stay first, why? Because everybody is different – if you have extra money, why not buy two houses (one for rent and one for staying), if you have limited funds then maybe you can consider renting it out first, or.. if you think you want to start a family then it may be better to buy for stay. There’s no right or wrong to this question because it is all up to your own preferences. The type of property that is the best for me may not be the best property for you.

The key takeaway I learnt is to use whatever you have..whatever was given to you – be it skills, money, assets, or anything you have and try to use them to provide value in the market. I listened to a talk by Jim Rohn – an exceptional motivational speaker, he advised that the fastest way to make huge money is to provide value to the market. I think that’s a good way to tune our minds to do good in life. When we provide value to the markets, we are practically solving societal problems. I hope this article helps you to have an idea of what you should do if you are ever in this situation because I did! Despite all the decisions you have to make, I know you’ll make the right choices – best of luck!

3 Surprisingly Creative Ways To Make Money From Properties

Generating money from property rental is always what most people will think of when they see a house. These days property investors must stretch their imagination and challenge themselves beyond the common investing paths. Just few months ago I came across an amazing book titled “Propreneur” which was published by MasteryAsia Property Series – I find the book brilliant! The book shared many ways of utilizing your properties to make profitable businesses and it’s a collaboration of many property experts from their respective area of expertise. Here I will share 3 creative ways to make best use of your property and make good money out of it.

Group of people working in a home space

1.Virtual Office and Serviced Office Business     

When it comes to virtual office, this would mean that the business entity or individual subscribing are only interested to obtain the corporate address and call handling services. Normally, those who subscribe to this services is due to its very low cost. How much? It can cost to only RM 35! But having a virtual office would also mean not having a physical office space such as meeting rooms, office spaces or the pantry. The type of people subscribing to this service are freelancers (ie. photographers, graphic designers, etc.), branch representatives (people who open branches in other areas but have too little staffs in the new branch), and startups (ie. friends who just started their first business after graduating). These people generally would not need physical space but they need the office address which is from their subscription of services with virtual office providers. Why is this important? When they present their business cards to their clients, they need a corporate address to attract clients’ confidence which is an important aspect to grow their business.                                                                                                                                                                                                                                                                                               Service Office     

 With a service office, customers would be able to enjoy their personal physical space. This is surely better than virtual space and the advantage spans from readily available phone system, IT infrastructure, network coverage, and basic amenities such as water and electricity.  Renting a space will definitely have way better perks than just subscribing for a virtual office space. Normally such spaces are rented by multinational companies, branch or sales offices. However, buying such space to carry on this type of business would require an ideal location and have the right size of office depending which type of target customers you are aiming. Maybe you can start to have a look around for properties that can maximize your rental as a start – this is because running a service office would require similar booster indicators when you rent it out.

Dinosaur skeleton in a museum 

2. Tourist Attraction                                 

You may came across vacant properties when you were walking down the usual street to buy your daily groceries and you might think “who would stay or make even make use of this place?”. The windows are broken, holes in the ceiling, and high grasses all over the unit but truth is – you can turn it to better use! You just have to think outside the box.  We have a look at Steven Tan, a CEO of Inpromastery Sdn Bhd which he started at age 24 and has a vast portfolio of 158 properties within 7 years through group investment model – how did he do it? One of his project is turning a property into the first 3D art museum in Penang, Malaysia – a place that is famous with tourism. According to Steven, they receive approximately 1000 visitors on a normal day but the number boosts to 3000 visitors a day on festive seasons in addition to be able to achieve their ROI within a year.                                                                                                                                                                                                                                                                                                                                                  Now that we know about the idea, what about the costs? From my personal view, I believe the costs of setting up these kinds of business depends on how big you want to launch your business. However, Steven’s business costs RM 1 Million which took about 5 shop lots to be able to cater up to high traffic in Penang. You might wonder, “how about recurring costs?” – well, it will take up RM 35,000 to RM 40,000 which covers areas such as staff salaries, property
rental, maintenance, and others. Making this business a success would require a great deal of research, know your target market, have a unique business idea, and a great mindset. You may even have to liaise with local taxi or bus drivers as part of your marketing to get the word spread about your business. None the less, the fun is seeing you and your business grow and feeling satisfied through the process.

Vacation home on a forest hill

3. Airbnb

Started since 2007, Airbnb has topped their revenue up to 2.6 Billion USD! I remembered what my property coach taught me, “when you venture into Airbnb, you have to think tourism!” – and in tourism, the best location to have your property is at places with entertainment, business, tourism and/or hospitals. In terms of which type of property to invest in for airbnb services would be apartments or small houses – why? On general, people who opts for airbnb services would normally prefer cheap places to stay but also offer an experience of living in another person’s home. However, there is no right or wrong to this – I have even met successful airbnb hosts that makes great ROI from his property and its a landed unit. However, I noticed that successful landed unit airbnb hosts are able to obtain such great ROI because their homes offer unique perks such as near to the beach or university where parents or families from other countries or states can have an overnight stay before their children’s graduation at the university. But then again, demands for vacation has always been there – the question is whether you want to make a serious business out of airbnb or doing it for fun, it can be either way or both! 

 

4 Secrets You Should Know to Get Your Loans Approved

Before you head out straight into applying bank loans, there are few checks you must make to ensure high chances of approval. I previously had the chance to have a conversation with a banker who now becomes a businessman and he shared something incredible. You might be wondering “how do I know what to check?” or “how would I know my chances of getting approved?” – well good thing is it is not rocket science. Here are the 4 major checklist you have to follow through.

1. Application Score

In the old days you will normally have to meetup face to face with bankers at the banks. Banks no longer have to see you or you seeing them which may cause biased loan approvals. But things changed, banks have a system these days to screen your loan application. The system is like a score engine that sees through your profile demography such as, your:

  • place of work
  •  home address
  • salary
  • work experience

However, a brilliant tip to get your loan approved is to change your home address. Change my address?! When I say change your address does not mean you have to move to a new home or change your address in your personal ID – it simply means using your parents’, siblings, or spouses home address when you apply your loans in the bank form. Why is this important? Believe it or not banks will also assess your financial strength by the place you stay. In Malaysia, places like Bangsar or Central Kuala Lumpur are expensive places. Banks may fare better for people who stayed in Bangsar compared to those who stayed in a lesser developed area. Bank’s logic is that when you stayed in developed areas means you can afford the lifestyle there which also reflect your financial strength. However, this all depends on where you buy your house, you may get a better approval chance if you buy a house in less developed areas if you stay in there – just try your luck, we’ll never know.

2. Banks Will Assess Your Income Level

This is important because the bank would like to see how much you are earning which also determine your loan payment capabilities. If you don’t meet the banks’ income criteria then you will be rejected – as upset as it sounds. Another good advice is to choose the right bank! What do you mean choosing the right bank? It simply means you will have to ask the magic question to banks, “how much percentage of my income do you recognize to process my loan? “. That’s right! Some banks only recognize 70% of your income instead of 100% for your application. Let’s say your salary per month is RM 3000, if the bank only recognize 70%, that means you are applying your loan for RM 2,100. If a RM 3000 can get you a RM 160,000 worth of property, you might need to rethink your decisions if the bank allows only 70% of the total RM 3,000. The key take away is to ensure that you ask the banks how much percentage of interest do they recognize on customers’ loan applications.

3. Credit Score Report – CCRIS

When it comes to your credit report which have all information regarding your credit score, banks will know everything which in this case recorded in the, “Central Credit Reference Information System (CCRIS)”. CCRIS knows all about your credit facilities such as PTPTN, car loan, home loans and whether or not you are a good customer – a good customer would mean a good payer from bank’s perspective.

If you are a credit card user, you may wonder, “how am I to know if my credit score is good?”.  just make sure not to use more than 50% of your credit limit –  as simple as that – well, theoretically. But you may also wonder, “what if my credit score is clean? like a piece of white sheet with stains on it” – that won’t be good as well because banks cannot judge your financial behavior such as your spending patterns or how well are you committed to paying any financial commitments.  A good tip is to take up an ASNB loan which has a compounding effect in it since it does not disrupt any of your CCRIS. Not only will it help you saves money, it will also grow while you sleep! you have nothing to lose. However, try minimize using unsecured loans such as credit cards – why do I say this? Banks will think that you are a “credit hungry” person or you don’t have much cash with you when you use or apply many credit cards and this gets worst if you don’t pay on time.

and last but not least….

4. Monitor your Debt to Asset Ratio (DSR)

Let’s say you run short on cash that month but you still swipe your credit card for few non-needful items just because it has huge discounts – Oh man, I haven’t paid my credit cards yet this month! Worst, the bank called you and ask for your payments and it has going like this for few months. Chances are, your DSR is already quite critical because you find it hard to pay your own commitments or are poorly managing your finances which may need your financials restructure.

The standard DSR formula is “all your commitments + any new loan application (in RM) divide by your net income (after tax and EPF deductions)”. Different banks have different DSR acceptance rates. Some banks will approve people with DSR maximum of 60% while some banks prefer 45% (which is quite a good percentage). This apply same to applying housing loans, have read on 4 Great Tips For Getting your Loan Approved !

All and all, my advice is to bite what you can chew – don’t take loans with commitments higher than what you think you can pay. Settle for things you can afford so long as you can have a peace of mind. You are not enjoying life if you get financial headaches to maintain your big houses or great cars – the important thing in life is to be happy and to always know that you have extra money to live off comfortably at the end of the month or as I call it “financial abundance”.

5 things you should consider before buying your first house

Nothing beats one of the best feelings rather than having a roof over your head but the greatest thing to know is – you own it! After working for about a year right after college, I managed to buy my first house. I went through all the process – finding the right house at the right place, did my credit checks with the banks, and arranged a house visit with a property agent which I get to trust. Overall, it was not a straight forward process as there were many questions I asked – whether the land title has been issued, the current unit’s market price , or even the issue of why the current owner is selling the unit. Here are the 5 things you should know before buying your first house.

paola-aguilar-683317-unsplash

1. Do you want it or do you need it?

Whenever you decide to buy a house is always to determine whether you need the house? or do you want the house? .Need and want are two different things and are quite simple to distinguish, that is in theory. A need is something that you really require to carry on your daily life; a want is something that springs out of your desires and may not be very crucial to your current life.

If you think you can finally buy a property without stressing out your life too much – then you are all set! However, in some cases buying properties may get you in heaps of trouble – having to settle the loan installments late or always on a tight budget, then maybe you need to reconsider your purchase decisions.

hugo-sousa-383214-unsplash.jpg2. Is the house for investment or for your own stay?

This question changes a lot of things if you ask yourself. If you consider to buy it for own stay, you might want to buy the house in a descend environment, be it in a suburban area or the city. You might also prefer a better house condition if that’s the case, Then again this is all up to personal preferences. However, it will be quite different if you buy a house for investment purposes because you would need the house at places with high population, malls, offices, public transport, and etc. to get good rental income.

 

jacob-townsend-771573-unsplash.jpg3. Do you have an exit plan?

An exit plan should always be the planning stage in case if your property purchase could go haywire – fake property agent or owner, or maybe unsettled installments down the road. These possibilities must be simulated so that you will be able to anticipate preparations if these scenarios happen – yikes! But at least you will be able to know just what to do and panic less if it does happen, right?

rawpixel-252130-unsplash4. Do you have enough money?

As cliché as it may sound, yes, it is important to assess your ability to purchase the said unit. This is because there are times where property agents only wants to secure their share of bargain, their booking fees of 3% out of the total 10% deposit. Sometimes, these agents do not assess our financial credibility. It is up to us to assess our own so that we won’t lose out.

Let’s give an example,

You want to purchase an apartment costing RM 170,000 and you have a salary of RM 3,000 – which is still alright. You also have in your savings RM 17,000 which is just enough to pay for your 10% deposit of RM 17,000 from the apartment’s total cost. There is still to pay for the legal fees which is by the lawyer, oh no! this will normally cost around RM 7,000 that needs fork up. Hence, always take into consideration all costs associated with purchasing a house including the hidden costs and you will do fine.

florian-van-duyn-511440-unsplash5. It is alright to wait.

Sometimes it is just better to hold your purchase. I am not saying that you should not buy a property at the soonest, sometimes if you hold for a moment and reassess your decisions then you might think – nahh maybe this property is not too good a deal or you might just realise that you may be in a worsen condition if you proceed with the purchase. Being in a situation where you don’t have to worry about your daily finance is better than having to maintain a house and constantly struggle to meet ends meet – but that is just my personal opinion. Not all property investments makes great money – some of the investments might get you into serious financial trouble, learn and plan right. To sum up, buying a property is always a great idea especially if you have the stable financials and the right knowledge.