Investing in Malaysia Property 101 - Where to start?

You are the boss. You can make it as big as you want it to be.

 

You can also divide your own time so in addition to growing your own business is deciding when and how much you want to do so.

 

But where do you start with property investment?

 

Most would say start with investing a residential property first because of rental income, but sometimes commercial properties might be better in terms of earning potential :)

 

But where to start?

 

1. Check and research the obstacles.

desk research

 

Setting up an investment isn't that easy or simple. There's a lot more to buying a place and just, you know, like renting it out. Depending on the place, their building regulations might be different. Not to mention the culture, processes, administration and so on too.

 

Here're some things that you should look at:

 

  1. How long can I rent out the property?
  2. Is there a fixed amount of time for the tenancy?
  3. Will it be taxed? If so, for how long?
  4. What's the average rental income and occupancy rates? How is the competition like?

You should also see if there's a homeowners' association. If there is, there might be rules and regulations that you have to abide by. If you can sublet the property or not, if there's going to be an impact on your taxes and stuff - the list goes on.

 

Better to check than never :)

 

2. Make a list and see if there's additional expenses.

list desk investing

 

Grab a notebook and pen. Start writing down a list of expenses - water, electricity, plumbing and everything you can think of that you need to budget for. If you have other things like loan installments to pay, mortgages and others, add those too.

 

You also need to factor in costs like:

  1. Cleaning services
  2. Landscaping
  3. Repairs

Ask if you can afford to maintain it over a period of time and consider if you can't rent it out ASAP. Some homeowners don't realize how huge the responsibility is and miss out on considering these factors, which can lead to loss of income or overspending on repairs for example. Theft and the just-in-case risk of your tenant getting injured.

 

Don't underestimate the expenses and make sure you can afford the bills AND to have savings!

 

Investors who are looking at investing in retail should note...

That retail properties are really not meant to be short-term investments. They're long-term, for people who want to hold onto it for a long time.

 

Depending on your goals, do you just want income? Or do you want a long-term asset?

 

While investing in a residential property and renting out to tenants generates income, retail properties are income generators and means sustaining a business as well.

 

So for retail, it's not just about collecting rental. It's also maintaining a business :)

 

3. Leasehold VS Freehold

leasehold

 

Leasehold properties are properties covered by contracts and on land owned by the government and leased out to the public. Ultimately, the owner of the land is the government or state authority. Leasehold land have a limited tenure, so there's that >_>

 

Oh, and they also tend to be more expensive in terms of renewal.

 

Freehold properties, on the other hand, are the opposite and are owned by private parties.

 

Despite sounding kinda really evil...

Some people do choose to start out investing in leasehold properties even though the process of transferring ownership takes longer. Why? Because leasehold properties are cheaper to get compared to freehold land.

 

Freehold titles are wayyy more expensive. And very exclusive unless you have the means to buy it directly from the developer or primary market. Freehold titles are basically very in demand (desirable).

 

Interested in buying property? Check out our exclusive home listings here.

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