6 steps on how to invest in properties & real estates
Topics:
Investment,
Property
Kiyosaki & Dolf De Roos revealed the 6-Steps how to invest in Properties and Real Estates
- Decide To Be Investor
- Find An Area
- Identify Properties
- Analyze, Offer and Negotiate
- Put together the deal
- Property Management
Property Investment 101 – Start with a Vision and Objectives
Topics:
Investment,
Property
So now you’ve decided to become a property investor. Investing in properties is just like running a business regardless whether you are in it for the capital gain or cashflow. Selling real estates is just like selling other products i.e. whether your strategy is low cost or differentiation or niche (read more about Michael Porter’s Generic Strategies), it involves you to sell your products (house, shop, office, factory, etc) or services (renting it out, managing the properties, etc).
Before embarking into any business, you should be clear of your Vision so that you can move towards achieving it. You should also lay down your investment objectives so that you stay on course and does not venture into areas that does not in line with your Vision, principle, ethics and risk appetite.
Vision could be something like...
Before embarking into any business, you should be clear of your Vision so that you can move towards achieving it. You should also lay down your investment objectives so that you stay on course and does not venture into areas that does not in line with your Vision, principle, ethics and risk appetite.
Vision could be something like...
“To invest in BLUE CHIP properties in choice locations so that I can have enough money for my retirement and child education”.The following should be clear when drafting an investment objectives:
- Minimum and maximum size of portfolio
- Investment strategy i.e. buy keep buy keep, buy sell buy keep or buy sell buy sell
- Choice locations
- Negative locations
- Minimum stream of income for each property invested
- Minimum discount from market value
- Type of properties invested
- Standard responsibilities of Landlord and Tenants for all your rented properties
- Source of financing, negative Bankers, etc.
- Continuous learning in property investment
- Etc
Property Investment 101 – Category of properties (By Utilisation)
Topics:
Investment,
Property
Utilisations of properties are predetermined as per their respective titles. In Malaysia, utilisation are normally categorised into the following:
1. Residential
Property for people to live in i.e. house. Residential properties can sit on the land (Landed) or sits on other people’s property (Non-landed)
a. Landed
1. Residential
Property for people to live in i.e. house. Residential properties can sit on the land (Landed) or sits on other people’s property (Non-landed)
a. Landed
- Terrace/link house - single, one and a half, double, two and a half, three stories, etc. Both left and right walls are shared with neighbours (except for end or corner lot units).
- Semi-detached house (Semi-D) - single, one and a half, double, two and a half, three stories, etc. Only one of the walls is shared with neighbour.
- Semi-D (Cluster) - single, one and a half, double, two and a half, three stories, etc. One of the walls is shared with a neighbour and the back wall is shared with another neighbour.
- Bungalow - single, one and a half, double, two and a half, three stories, etc.
- Bungalow Lot - empty land for building house varies in sizes.
b. Non-Landed (strata)
- Apartment/Flat – limited facilities or no facilities, walk up or with lifts, low cost or medium low or medium cost, dedicated parking or free parking, etc. Shared left and right walls (sometimes back wall), ceiling and floors (except for end units, top floor units or ground level units).
- Condominium – with facilities like security guards, clubhouse, swimming pool, sauna, gymnasium, convenient store, laundry, nursery, surau, tennis court, community hall, dedicated parking, cctv, smarthome system, etc.
- Townhouse – with or without facilities and some are even within a gated community.
2. Commercial
Property that can be used for business purpose i.e. shop, office, hotel, etc.
a. Shop
- Retail outlets at shopping centre
- Landed shoplots
b. Office
c. Combination
- Service apartments
- Shop office, shop house, etc
- Commercial land
d. Hotel/resort units
- timeshare based, leaseback, etc.
e. Car Park
f. Warehouse
g. Air space
3. Industrial
Properties that normally located within industrial zone and used for manufacturing purpose
- Terrace factory
- Semi-D factory
- Detached factory
4. Agriculture
Land for agriculture and maximum of 1 house can be built on a piece of agriculture land.
- Some of the Kampong land are still agriculture land.
- Plantation
- Farm
- Ranch
- Orchard – fruit trees, some even come with matured trees, maintenance, water supply, electricity, etc.
5. Raw Land
Land yet to be converted to any of the above.
Property Investment 101 – Category of properties (Types of titles)
Topics:
Investment,
Property
The type of titles that normally up for sale in Malaysia are as the following:
1. Freehold
1. Freehold
- Ownership in perpetuity (unless the Government wanted to acquires it for development purposes).
- This is the most preferred type of property as it can be passed down to generations.
- As there is a high demand for it, it is the most expensive among the 3 and potentially has a better and more stable capital appreciation.
- Ownership ceased when it was sold to a third party or acquired by the Government (at market value).
2. Leasehold
- Ownership for a limited number of years i.e. up to 99 years, 60 years, etc.
- Lease term can be extended upon approval by the State Authority, which comes with a fee (normally calculated at market value).
- Can be converted to a freehold (a bit complicated for strata units like condo, apartment, flat, etc) and yes it comes with a fee and upon approval by the Authority.
- Transfer of title needs approval from the State Authority and the Developer. This process can sometimes takes a considerable amount of time.
- Usually it is challenging to get Bank financing for property with leasing term less than 60 years.
3. Malay Reserve/Bumiputera Units
- Limited to Bumiputera.
- Bumiputera units are normally sold at a discount (5% or more).
- Market value are usually well below than “Grade A” units (open for all). Although the purchase price is 5% cheaper, the resale value can be more than 10 – 20% below market value due to limited market.
- Bumiputera units can be sold to a non-Bumi with the consent of the State Authority.
- Some Developers may already pre-determined the location of the units.
- Units that are earmarked as Bumiputera units can sometimes be located at unattractive locations i.e. facing a T-junction, next to TNB station, next to the reservoir, unit number 4, odd units (normally a link house), etc that would reduce the property value further.
- Some Developers even sold units that are not earmarked as Bumiputera units at market price although it was bought by a Bumiputera.
Property Investment 101 – Why people invest in property?
Topics:
Investment,
Property
1. Land is scarce
“Buy land. They are not making it anymore” – Mark Twain
Land is scarce. For instance, when people sought for residential along East Coast of Penang Island, property developers either reclaim the sea or convert traditional Kampong into high rise residential. The same happens everywhere when there is not enough land for development but the demand consistently exists.
2. Property fulfils one of the basic needs
Besides food and clothing, everyone needs a shelter. A roof over your head is to protect from rain and shine, and home is where the heart is. By buying property, not only you provide basic needs for your family, but also help others to satisfy their basic needs buy providing your property for rental. Demand for a house will always be there as long as it is one of human’s basic needs.
3. Property is in an inefficient market
Stock prices are quoted. Nobody’s buying stock at other than the quoted price (unless they have a lot of money to tender a block of shares). Unlike stock, property price is not fixed. Even a similar house next to one another can be transacted at different prices. As such, you can take advantage of inefficient market to get a good deal of good properties.
4. Best hedge against inflation
Market value of property always move in tandem with inflation. Whenever the price of consumer goods increses, the property price increased, at a higher rate. As such, you can expect that each RM1 deposited in a fixed deposit account today may not worth the same in 5 years down the road but each RM1 invested in good property today may worth much more than that.
5. Fantastic leverage
With a 10% downpayment, you can own 100% of the property and enjoy the full benefit of the ownership i.e. rental income.
6. Easy to add value at minimal cost
The value of a property can easily be increased with a little effort and minimal cost i.e. new coat of paint, upgrade flooring, change of old doors, windows & locks, adding kitchen cabinet, cornice ceiling, etc.
7. Money making machine
Property can generate money, just like business. Better, it is like a double edge sword where you can collect rental and enjoy capital gain. Good strategy and professionally managed properties will entitled you automatic stream of income.
“Buy land. They are not making it anymore” – Mark Twain
Land is scarce. For instance, when people sought for residential along East Coast of Penang Island, property developers either reclaim the sea or convert traditional Kampong into high rise residential. The same happens everywhere when there is not enough land for development but the demand consistently exists.
2. Property fulfils one of the basic needs
Besides food and clothing, everyone needs a shelter. A roof over your head is to protect from rain and shine, and home is where the heart is. By buying property, not only you provide basic needs for your family, but also help others to satisfy their basic needs buy providing your property for rental. Demand for a house will always be there as long as it is one of human’s basic needs.
3. Property is in an inefficient market
Stock prices are quoted. Nobody’s buying stock at other than the quoted price (unless they have a lot of money to tender a block of shares). Unlike stock, property price is not fixed. Even a similar house next to one another can be transacted at different prices. As such, you can take advantage of inefficient market to get a good deal of good properties.
4. Best hedge against inflation
Market value of property always move in tandem with inflation. Whenever the price of consumer goods increses, the property price increased, at a higher rate. As such, you can expect that each RM1 deposited in a fixed deposit account today may not worth the same in 5 years down the road but each RM1 invested in good property today may worth much more than that.
5. Fantastic leverage
With a 10% downpayment, you can own 100% of the property and enjoy the full benefit of the ownership i.e. rental income.
6. Easy to add value at minimal cost
The value of a property can easily be increased with a little effort and minimal cost i.e. new coat of paint, upgrade flooring, change of old doors, windows & locks, adding kitchen cabinet, cornice ceiling, etc.
7. Money making machine
Property can generate money, just like business. Better, it is like a double edge sword where you can collect rental and enjoy capital gain. Good strategy and professionally managed properties will entitled you automatic stream of income.
Money Saving Tip #11
Topics:
Financial,
Saving Money
When the time is right...
Did you ever went to Pasar Malam at 10.45pm or just before the hawkers packed up? Did you ever go to the Pasar Ramadhan few minutes before break fast or after break fast? What did you noticed?
During those times, most of the items especially food are marked down and sometimes they came with free food or extra content. Instead of buying 5 nasi lemak, you may end up buying just 3. Some supermarkets do marked down their sushi after 6pm. Some cafes marked down their pastries after 6pm.
Knowing their pricing strategy can save you a lot of money. Nevertheless, be aware of the food quality, and make sure you consume them as soon as possible, as some of these products may not be able to last long.
Buying food with empty stomach or when you are feeling down is not a good idea. You would most probably want to buy everything but can only consume some. The rest go to waste. Learn from your Pasar Ramadhan experience.
Bringing kids for shopping is also not a good idea. They will be tempted to a lot of things from chocolate to toys. As such, try to keep them at home or distract them from toys, chocolates, junk foods, etc. You can also teach them how to shop the smart way i.e. how to know whether the fish is fresh, whether buying 2 packs of 1kg of Milo is better than buying 1 packet of 2kg of Milo, etc. By doing this, you can also increase their general knowledge and improve their maths skill.
Did you ever went to Pasar Malam at 10.45pm or just before the hawkers packed up? Did you ever go to the Pasar Ramadhan few minutes before break fast or after break fast? What did you noticed?
During those times, most of the items especially food are marked down and sometimes they came with free food or extra content. Instead of buying 5 nasi lemak, you may end up buying just 3. Some supermarkets do marked down their sushi after 6pm. Some cafes marked down their pastries after 6pm.
Knowing their pricing strategy can save you a lot of money. Nevertheless, be aware of the food quality, and make sure you consume them as soon as possible, as some of these products may not be able to last long.
Buying food with empty stomach or when you are feeling down is not a good idea. You would most probably want to buy everything but can only consume some. The rest go to waste. Learn from your Pasar Ramadhan experience.
Bringing kids for shopping is also not a good idea. They will be tempted to a lot of things from chocolate to toys. As such, try to keep them at home or distract them from toys, chocolates, junk foods, etc. You can also teach them how to shop the smart way i.e. how to know whether the fish is fresh, whether buying 2 packs of 1kg of Milo is better than buying 1 packet of 2kg of Milo, etc. By doing this, you can also increase their general knowledge and improve their maths skill.
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