Freehold Vs Leasehold
Freehold is always the better option if you can choose the property for investment purpose. As the land is simply dispensed to an owner for an indefinite time. Vice versa, leasehold tenure is only for 99 years. What’s more? Freehold entitles the owner the freedom from a worrying problem such as land tenure expiring.
The disadvantage also includes that the renewal fees for leasehold can be costly. With that being said, why there is still a group of people who purchased leasehold? Most of the reason is that it is cheaper for acquisition. Regardless of the process of transfer of the ownership can cost more time and effort.
Additionally, freehold titles are more expensive and limited in availability, which contributes to the higher price tag and scarcity. Property prices are based on many factors; economic and political factor may shock the cost as well.
In most cases, even if it shows as a favourable environment for your property investment, the investor still needs to consider the risk and opportunity that it entails. By understanding your financial capabilities and capacity to face the shock accordingly, if it occurs in any event.
Picking the Best Location
Lelong property can be the deciding factor for success or fail regarding your investment. Prime spots are always the most expensive, such as Damansara, Puchong and Cheras. Thus, numerous real estate investors will source for the high potential location that has future developments.
Although the crime rates of these prime locations may remain high, which may affect the demand. However, the convenience it can provide such as accessibility to public transportation is still outshined.
A golden lesson will be: don’t follow what people said, you shouldn’t follow the quick trend as you may end up in a property bubble in auction property. Do detailed planning and forecasting. Diligence will allow you to gauge the property values.
The Initial Capital You Need to Get Started
Below market value property investment requires a very high amount of capital for you to invest in. In most cases, a loan from the bank is required to make a purchase. In Malaysia, the most bank will approve the loan to fund your first two properties. It will be 90% approximately. Following on, it will be only 70% for the third one onwards.
Do not forget that you need extra capital to pay for a down payment, legal fees and administrative fees when you purchase the property. Another pain point would be if you are purchasing an existing property, you may need to spend money on renovation.
Summarising Up Everything
In the end, below market value property investment still provides good financial future and gains for you as it remains one of the most desirable options in Malaysia. The investor joining in this segment also increased for the past few years.
The type of properties you could invest in include houses, condominiums, retail shop lots or just pure land. Although there are a few million of unit’s features for you to choose, keep in mind not all are a good investment.
The criteria you have to include location, the reputation of the developer, type of property, the price charged, accessibility, facilities and amenities.
If you are striving for yields and cash flow, auction property may be more suitable for you as the capital growth potential is more ideal for the long term. The investor must keep in mind that no investment guarantees a guaranteed return on investment.
