THERE are a few tell-tale signs you can use to determine if a property is worth the buy, namely by comparing it against recently sold and unsold properties, following the one per cent rule, as well as noting the future prospects of a neighbourhood.
When it comes to buying a property in Malaysia and snagging a great deal, it isn’t just about getting the lowest price possible. There are other considerations such as appreciation potential which could be a factor.
Experts claim that it will take at least five years to enjoy significant capital gains from property investment. Perhaps even a shorter amount of time for established regions.
Here’s a list of useful tips that will help you tell whether you’re getting a good property bargain or not!
1) Compare against recently sold properties
When buying a property in Malaysia, comparing a potential purchase to recently sold properties is one way to gauge whether the selling price is reasonable.
Note that the properties should, however, be comparable in terms of their size, condition, and location.
Your real estate agent should also have a list of recently transacted properties at his/her disposal, so don’t be afraid to ask.
If you find out that a property is being sold to you at a much lower price, you may want to dig a little deeper. Is the property being sold at a lower price due to its old age? Are there defects in the home that you’re unaware of? Or some something had happened to the previous people staying at the unit.
2) Compare against still unsold properties
When deciding to buy a property, you should want your real estate agent to offer you the best price (note that again, we didn’t say “lowest”).
If you suspect that the property is overpriced, take a look at other comparable properties that are still currently on the market.
A high number of vacant properties in the vicinity might be an indication that the neighbourhood is unsavoury, or has low demand.
Armed with this knowledge, you’ll have a clearer picture of whether the property investment will be worthy or not.
3) The one per cent rule
Many homebuyers have used the one per cent rule to assess a property’s profitability. The rule of thumb is that the property should generate at least one per cent of the property’s selling price every month.
Say you’ve recently invested in a piece of real estate that costs RM2,400,000. If you apply the one per cent formula, the property should ideally produce RM24,000 for you.
This money that rolls in on a monthly basis serves as your rental income that goes towards covering all of your other expenses.
If this property is able to generate one per cent every month (or even higher!), then it might be a good deal.
4) The future prospects of a neighbourhood
The value of property depreciates with time, and nobody wants a property that loses its value over a short time span.
The crucial question now is how do you know if the property you buy now will still be valuable many years later?
Keeping yourself informed with the latest property news is one method that’s proven to be helpful.
For example, you might learn that certain areas in Malaysia are, or will soon be, undergoing urbanisation and redevelopment.
This means that properties in the area could see a rise in value over subsequent years.
SOURCE – Article and photo by PropertyGuru