What Factors affecting Rental Property Income Depreciation and Appreciation

August 2, 2009 · Filed Under Property Investment · 2 Comments 

Dr. Peter Yee, one of the most famous Malaysia Property Guru was sharing on the factors affecting rental property income in a free property investment seminar at KLCC recently. What is your consideration before make decision to buy a property purpose to make money from rental income? How do you define your own rental property hotspot? Is it property nearby college and university targeting to rent out for students? Or property nearby multinational company offices targeting to rent out for expatriate?
make money from low cost apartment

Factors Affecting Rental Property Income

(notes taken from Dr Peter Yee’s property investment seminar)

  • Ready Built
  • Population Growth
  • Income Growth Area
  • Rural Urban Migration
  • Foreign Migration Expatriation

The points stated on above sound like normal understood general knowledge for everyone. In fact, it’s useful to use as rental property guidelines to decide which property is the best for you to invest your money in. Different investor different strategy. It’s all about how you implement the ideas into your own investment plan.

Below are the examples how I adopt Dr. Peter Yee’s point of view into my own rental property investment strategy for property nearby college / university to make money from rental paid by students:

  • Ready built: Depending the college / university is operating or still under construction? Ready built property shall be preferred if the education center is operating and demands are there. New launch project probably can be considered to get cheaper property while waiting for completion of the college / university.
  • Population Growth: Study on the student’s population growth since past few years and maximum students can be adopted into it. It’s important to estimate the supply and demand factors which will affect the property rental market.
  • Income Growth Area: Study income background of the students. Different incomes of family background decide the living quality expectation on your rental property.
  • Rural Urban Migration: Study origin of the students. They are majority from high or low income family background? Low income family’s student may not mind to share a house with many housemates for cheapest rental accommodation. In the situation, you should consider to renovate your property into more bedrooms to maximize the rental income. But, the same idea might not work for those students who expect for better quality living standard.
  • Foreign Migration Expatriation: Local student or foreign student. It determines your rental property investment strategy. Different needs and wants between local and foreign student.

Another good point I have learned from Dr Peter Yee was the ‘town growth direction’. It is growing 1KM per year (I could not find any data yet to support the statement. But, no doubt, our town especially KL, PJ and others major towns are growing outwards rapidly). Anyway, the information is useful for property investors to have better idea where to buy now and future based on the estimated development growth direction and timing.

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What to Consider for Property Dummies before buy First Property

June 23, 2009 · Filed Under Property Investment · Comment 

What to consider before move the first step to own your first property? There are so many worries are concerned for first property. Especially for property dummies, they worry the project can’t be completed and be abandoned halfway of construction? Worry the home loan installment burden is too heavy? Worry wrong location is decided? Worry poor quality of property? Worry the decision to buy the property is a mistake?

Things to be Considered for Property Dummies Buy the First Property Right
  • Objective
  • Budget
  • Investment Strategy
  • Developer
  • Location
1. Objective

To be clear on your purpose to buy the first property

  • Buy for Own Stay only
  • Buy for Investment only
  • Buy for Own Stay and/or Investment

Suggestion by Horlic Lim:First property is a low risk deal/investment because “First Property can be either used to Attack or Defend” attack = sell the property if good capital appreciation, or rent it out if good rental market during good market; defend = use for own stay if neither good capital appreciation nor rental rates during bad market

2. Budget

To be clear on your affordability and qualification to get a home loan from bank
Basic guideline of how much you can borrow money from bank for home loan:
Monthly installment should not more than 1/3 of your monthly income after deducted others commitment like car loan, personal loan and etc.

Suggestion by Horlic Lim: Don’t waste time on those properties which are priced out of your budget. Because that might cause you go for higher price property and further heavier your burden as human being. Nobody doesn’t like better thing. Get the FREE Online Consultant’s Advice for Home Loans and Compare all the home loans in Malaysia.

3. Investment strategy

Your investment strategy is affecting which type of property you should buy. Example: Landed property (like single storey / double story link house, Semi-D, Bungalow) or high-rise property (like apartment and condominium). Study and understand all the investment strategy.

  • Cash Flow
  • Capital Appreciation
  • Holding for Long-Term, Mid-Term, or Short-Term
  • Buy to Keep
  • Buy to Sell

Suggestion by Horlic Lim: A unique investment strategy should be custom made especially just for yourself to suit your own personal financial status, earning power, cash holding power, financial commitment, and etc.

4. Developer

Bear in mind, it’s just too important to select a good property from a good reputation developer, especially for those developers with proven past track record. This is mainly to minimize the risk such as abandon project, quality issues and etc.

Suggestion by Horlic Lim: Look into the project launched by Top 10 Property Developer in Malaysia ranked by The Edge if possible. If really keen to buy a new property which is developed by bad reputation developer, then I prefer to pay higher price for sub-sales after completion of the project rather than take the unforeseen high risk.

5. Location

Search from internet. There are more than enough information can be found via internet regarding hot spots property for investment in Malaysia. Go Google about Malaysia Property Investment Guru like Ho Chin Soon, Azizi Ali, Milan Doshi. They did highlighted many good locations and property hot spots either for investment or own stay.

Suggestion by Horlic Lim: Google the hot spots for property investment and go for an actual site visit. Survey the surrounding. Sense and feel the environment surrounding. Ask yourself, will I enjoying staying at a place like this? Bear in mind, over commitment as described and designed either in the brochure or by those irresponsible property sales agents is always not reflecting the real picture as actual site.

Conclusion

Move your first step to own your first property if you have all the answers in your mind for consideration stated on above. Ohya, write in down to have clearer picture rather than just put into your mind! Happy investing!

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