Malaysia Property

Most of the companies today are equipped with a web site, some use it to disseminate company information while other use it to promote their products. Web site is particularly useful for housing developer to introduce their new project to complement the traditional or conventional ways of advertising through the newspapers, radio or TV. By using web site to disseminate information about the new housing project, developers are able to advertise in a very cost effective way as advertising over the web is very much cheaper compared with the conventional media, not to mention the worldwide exposure 24 hours a day, 7 days a week, effectively everyday until the information is taken down from the web.

In today globalised world where many foreigners invest in Malaysian properties, many potential buyers could actually gather as much information about the properties before they actually visit the showroom. The case mentioned does not only apply to foreign buyer, but also apply to out station buyer from within our country. A typical case would be if a person from Penang interested to purchase a property in Kuala Lumpur, he or she can surf the web and visit the web site of the developer and view as much information as possible before making a trip down to the showroom to visit the actual location. When the potential buyer visit the showroom , he or she may already be very familiar with the subject property and thus saving the sale person a lot of time and effort as the sale person is saved from explaining the various details.

In fact, there are many cases where potential buyers have already got a decision in their mind and they visit the showroom just to close the deal. Therefore it is extremely important for developer to include a well planned web site in their marketing strategy as having a good web site will surely make selling much easier.

Debt is good, how can that be, but debt is really good especially if it is going to be paid back by others.

Debt is good when it is being used to invest in asset that can appreciate and at the same time generating rental income to the investor.

Lets investigate in an example, assuming that an investor purchase a 1400 square feet condo in Mont Kiara from a developer during an initial launch at RM400-00 per square feet and assuming that he take 90% loan from a bank.

Cost of condo = 1400 x RM400-00 = RM560,000-00
Down payment = RM56,000-00 (10%)
Monthly repayment for loan at interest rate of 5.99% for repayment period of 30 years = RM3018-50

Interest rate of 5.99% is derived from a post of our property forum
Monthly installment of RM3,018-50 can be calculated using our loan calculator

Monthly rental = 1400 x RM3-00 = RM4,200-00
Monthly maintenance charges = RM0-27 x 1400 = RM378-00
Net monthly rental = RM4,200-00 - RM378-00 = RM3,822-00

Return per month = RM3,822-00 - RM3,018-50 = RM803-50
Return per year = RM803-50 x 12 = RM9,462-00

Amount of equity invested = RM56,000-00
Amount of return per year = RM9,462-00
That works out to be = 9,642-00 x 100 / 56,000-00 = 17.2%

Of course there are still some minor charges that have been taken into account such as assessment, quit rent etc but the gross return based on small equity of RM56,000-00 together with leveraging effect of using a bank loan to finance the purchase when planned carefully can bring meaningful return.

On top of that, the purchaser is bound to reap the capital gain over time when the property appreciate, healthy rental income enable the owner to hold the property longer to enjoy capital appreciation

Buying auction or foreclosed property is regarded as a way where people can create a stream of income according to some famous authors. But buying an auction property is by no mean easy, there are many things one should look for when buying an auction property. Normally a notice for an auction sale is advertised in the local newspaper two weeks prior to the actual auction date and buyers are to do the necessary inspection before going to the actual auction. When the property is to be auctioned off, normally some of them are already abandoned by their owner and locked and this make inspection rather difficult unless the buyer want to enter the property in an unauthorised manner. Another possible case is that the owner is still occupying the property and inspection under this circumstances is rather impossible as normally owner would not welcome buyer to enter their property knowing well that if a successful sale occur, they will have to move.

Prospective buyer is also advised to do the necessary search at local land office to confirm the rightful owner of the property. To qualify for the auction, prospective buyer are required to prepare a bank draft or banker’s cheque equivalent to 10 percent of the reserved selling price.

During the actual auction day, if the property is priced at a very attractive figure, prospective may have to fight with others by bidding for a higher figure where quick decision are required at the auction hall.

If there is no bidder on that faithful auction day, then the property will be auction again with a cheaper price, normally 10 percent below the previous tender price. So if there is no bidder, you may want to wait for the next auction but bear in mind lower price may attract more bidders.

Successful bidder is normally given 90 to 120 days to settle the balance of purchase price. Sometime for a property to reach a stage of it being auctioned, there may be many outstanding bills like assessment, quit rent, maintenance charges or utilities bills that have yet to be settled. Apportioning those outstanding payment between yourself and the financial institution that called for the property to be auctioned may take some time. This coupled with some other red tape may make release of payment from your financing bank rather slow and make 120 days seem like a very short time. So it would be easier if prospective buyer has some kind of financing ready like having some other property to charge to the bank for ready financing in which case the purchaser would be able to purchase with cash obtained from the other financing taking the burden off the purchaser to obtain financing using the auction property itself within the very short time frame of 120 days.

Another thing the buyer should take note of is that if the buyer is buying the property for trading purposes with the intention to resell it to third party for a profit, then the buyer should take note that the transfer of the auction property cannot be transferred to the third party directly. The auction property must be transferred to the name of buyer first by the court before the buyer who is now the new owner can transfer the property to whoever that buy the property from him which mean that buyer who buy the auction property for trading should take into account the government stamp duty and legal fees involved in transferring the property into his name first. The transferring process can take quite a long time too therefore if the buyer of the auction property resell it to third party, he will probably have to wait quite a while before full payment eventually materialised. Because the long period of time involved, interest and financing charges have to be taken into account too. Otherwise the person who trade the auction property may find that trading auction property is not as profitable as he initially thought.

As there are difficulties involved in inspection of the auction properties as mentioned above, prospective buyer who want to buy the property for whatever purposes has to allow for repair cost as sometime the exact condition of the property cannot be ascertained.

Prospective buyer should also check whether there is a caveat on the property as removal of caveat may require court order and therefore incur cost.

If the original owner is occupying the property, there could be a case whereby the owner may refuse to vacate the property when the bidder has successfully bought the property in which case, court order may be required to evict the occupier and therefore the cost involved.

It is because of the uncertainty and hassle involved in buying the auction properties that make the general public reluctant to even try, therefore sometime even when the property is priced very cheap, there may be not many or no taker. However for those who are daring, with strong heart and financially sound, the auction may just present an irresistable opportunity for fantastic return on investment.

In our daily life, we are flooded with a variety of advertisement from the various mode of media such as newspaper, television, radio, magazine, billboard, flyer, email marketing, internet etc.

Advertising is an integral part of business as business owner need to reach out to consumer to promote their products or services.

However for the advertising to have an impact, the advertising will have to be placed or aired on a consistent basis as there are simply too many advertising in our daily life and it is simply not possible for us to notice or absorb all of them. One of the example is the real estate advertising whereby one can find at least 10 pages of property classifieds in our local newspaper. As advertising cost money, many or most house seller resort to placement of smallest classified possible and this results in the classifieds section of local newspaper look like a flood of fine print, it is not possible to read through or sieve through all listing simply because there are too many of them.

Moreover, to increase the chance of the listing being noticed by house buyer, house seller would need to advertise more than once as potential buyer may not read their advertisement on the day the advertisement is posted. The longer they post their advertisement, the more they would have to pay.

That is where internet advertising excel. For a start, internet advertising are mostly free, there are quite a number of property listing web site and classifieds web site that allow house seller to post their house for sale without charging a fee for listing. Some web site allow free listing up to a year period and even if the house is not sold after a year, the user can repost his listing until his property is sold or rented.

Most of the property listing web site is equipped with advance search function whereby house buyer can search for the property they wanted based on certain criteria such as location, price, type of house etc, the search engine will search through the database and list out only listings that fit the search criteria, therefore the buyer does not need to read through the entire database, the search engine carry out the short listing, thus saving time.

Apart from the above, the property listing web sites are also regularly being indexed by the search engine such as google.com, yahoo.com, msn.com and many others. All listing details are also picked up by these search engines and when web users search for a particular property, the search engine can also return results that originated from the listing at the property listing web site.

As internet listing exist in the cyberspace over a long period and with the availability of search engine, there is an increasing chance that the subject property will be noticed by potential buyer. Most important of all, it can be done at almost zero cost except for the internet connection which is anyway needed for other purposes.

In the future when the chidren of this generation grow up, one can expect that internet advertising to take over the conventional classified as it is unlikely that the children of today are not exposed to internet.

Mimosa Avenue, soon to be launched by developer Garden City Realty Sdn Bhd is now open for registration. The development featured 50 units of semi-detached in a gated community in the heart of Sungai Bakap town, close to all daily amenities such as school, post office, bank, hawker centre etc.

Location plan:

Site plan:

Floor plans:

Project description:
Location : Sungai Bakap Town, Seberang Perai Selatan, Penang.
Type of house : Semi-detached
Number of units : 50
Size : Land (from 2700 sf), Built-up:2622 sf
Developer contact number : 016-4158222 (Joanne), 016-4159222 (Terry)

A few recent newspaper articles reported that the price of condo within the KL city has continue to set record height and it was reported that some of the high end condo are being sold at RM2000-00 per square feet. Most of the condo have registered increase in price compared with their original price during the initial launches, some have increased by 100% from RM1000-00 per square feet during launching to a reported of RM2000-00 per square feet at current market value.

The question is whether the selling price of RM2000-00 per square feet is justifiable. There is no straight forward answer to it as it all depends on from which angle one look at it. If you compare the price with prices of condo in other countries such as Singapore or Hong Kong, then the price of RM2000-00 per square feet is still cheap by comparison. If the price is going to be affected by the effect of globalisation where there will be a lot of cross investment by citizen of various countries where many foreigners will invest in Malaysian property and if the Malaysian government continue to promote foreigner buying of Malaysian properties, then one can expect the prices of KL condo to rise further as the balancing act of money flowing to cheap properties in Malaysia or rather properties in Malaysia that is still considered cheap by many foreigners will result in demand that will sustain the rise in price of KL condo.

As for ordinary Malaysian, how should they react to the current pricing of KL condo, I guess it all boils down to return. If a condo can generate reasonable financial return, then it would be a worthwhile investment.

To quote an example, lets look at condos in the popular Mont Kiara area which are investor favourite. The average rental at the moment in Mont Kiara is about RM3-00 per square feet per month, monthly maintenance charges is about RM0-30 per square feet, therefore the net rental after taking into the account the monthly maintenance charges is RM2-70 per square feet.

Rental return for whole year = RM2-70 x 12 = RM32-40 per square feet.

Assuming an investor purchase a condo in Mont Kiara at price of RM400-00 per square feet by cash and assuming he spend additional RM50-00 per square feet in renovation and furnishing bearing in mind only furnished condo can fetch gross rental of RM3-00 per square feet per month, then his cost of purchase would be RM450-00 per square feet.

A return of RM32-40 over a purchase price of RM450-00 per square feet would be equivalent to return of

32-40 x 100 / 450 = 7-20%

which would be sufficient for ordinary investor. However the calculation does not take into account the quit rent and assessment charged by land office and local council respectively, the actual return could be slightly lower than the above.

From the above illustration, the higher the purchase price, the lower will be the rental yield or the monthly rental would have to be increased to maintain yield.

However, not all condo are purchased for rental yield, some are bought for own occupation because of their spectacular city night view, some are purchased for their prestigious address, some are purchased for flipping over the short term for capital gain. Some investor purchase because they fear that if they do not purchase now, they would not be able to afford it in the future.

If you are purchasing one for investment for rental return, then it would be wise to do some calculation before the actual purchase.