How Do You Tell If A Property Is A Good Deal Or Not?

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 1% rule, as well as noting the future prospects of a neighbourhood.
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When it comes to buying 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 a property investment. Perhaps even a shorter amount of time for established regions.

So, without further ado, 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 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.

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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?

 

2) Compare against still unsold properties

When buying a property in Malaysia, you 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.

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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 1% rule

Many homebuyers have used the 1% rule to assess a property’s profitability. The rule of thumb is that the property should generate at least 1% 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 1% 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 you’re looking at buying a property in Malaysia that’s able to generate 1% every month (or even higher!), then the property might be a good deal.

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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.

But, (and this is the crucial question) 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.

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If you aren’t sure which locations to start looking at, here are some notable neighbourhoods in Malaysia that you could consider:

Located on the outskirts of Kuala Lumpur, Bangsar is an affluent neighbourhood about five kilometres away from KLCC.

Many homebuyers are eyeing houses there because of Bangsar’s great location, and also its plentiful amenities.

Within the same area, you can find food places, shopping malls, schools, a sports complex, and even a hospital.

Araville, Bangsar Peak, and Inara are just some of the high-end condominiums found along Bangsar Hill. 

According to Savills’ data, houses in Bangsar appreciated between 2010 and 2017 by a staggering 239%!

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Puchong is in a central area of Klang Valley, and has entertainment places such as IOI City Mall, KL Sports City, and Pavilion Bukit Jalil.

These developments aside, the neighbourhood is highly accessible by a well-connected road system.

Due to such factors, the working population from other states have been flocking to Puchong. 

Some of the most established residential areas include Taman Kinrara, Bandar Kinrara, and Puchong Perdana.

Between 2011 and 2017, properties here enjoyed an all-time-high appreciation of 242%.

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Cheras is one of the biggest, oldest, and more well-established residential areas in Klang Valley.

Thanks to a few commercial developments in the neighbourhood, residential real estate there has been enjoying a high return on investment.

Notably, the EkoCheras integrated development is one development that’s likely to further drive the growth of property prices in areas near to it.

Now, if we were to analyse PropertyGuru data in the last 24 months up to June 2020, it shows that the local market in Cheras has been broadly buoyant over recent years.

The average property prices in the area demonstrated a compound annual growth rate of 9.3%, with the median price across more than 73,000 properties sold in Cheras standing at RM827,000.

That figure is less than the median price which was recorded in Kuala Lumpur of RM1.4 million (over 600,000 transactions) in the past 12 months!

So, it just goes to show that this well-established neighbourhood, with all its matured amenities and ease of access (highways and public transportation), fuels its popularity with homebuyers.

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If this list has helped you to identify a few properties that are worth your hard-earned money but you're unsure when is the best time to buy, then we've got just the guide for you!

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