By Alan Poon
Much has been said about “investing” in a place which most would call a home, a roof above our heads where we find solace, comfort and most importantly happiness.
Property is mostly touted as a lifetime “investment”, where a large chunk of our hard-earned money goes to. It is apparently a NEED or at least a way to grant our parent’s ‘wish’ of us having a secured future! Well, are we really “INVESTING” when we “PURCHASE” a property?
Let’s take a look at some considerations when purchasing properties and the differentiation between buying and investing.
1. Geographical locality
For home buyers, this is without a doubt an important criteria as location influence quality living. While entrepreneurs may like their home nearer to where their office is, the majority would prefer to stay away from the hustle and bustle of activities. That being said, most homeowners would choose a serene and peaceful surrounding for them to look forward to at the end of the day. Low density population, which means a less congested area is a dream come true for most dwellers within a residential community.
Investors, meanwhile, are spoilt for choices as they would prefer a location amidst the upcoming areas or hotspots, since that is the objective of their purchase. They look for ample opportunities to rake in from the growth of population and robust economic driver activities. For example, investors will choose properties within the prime CBD (Central Business District) like KLCC area where growth of property prices is very much in demand despite the congested traffic flow and accessibility.
2. Dwelling type
Home buyers can range from single to couple or even a family of different generation staying together. Hence the type of property differs based on the prime need of space utilization.
Investors would be keen to purchase dwelling type with the highest return regardless of the comfort or space requirement needed for own use, as long as the basic is deemed fit for occupancy. Hence, a small property which has a higher yield like SOHO or Studio units are usually favoured for rental return.
Having said that, it doesn’t mean that investing in landed properties with a lower yield is not a good option. If the location is good, a home buyer or investor will find that over time this piece of real estate may well be worth much more than they thought it could be – an equity that is locked in could rake in good numbers in % growth!
3. Entry pricing
The most crucial factor for an investor is making investments which have a lower PRICE TAG compared to the market value! While investors can attest to this indicator to ensure a higher yield and capital gain, most home buyers are unaware of this simple yet mostly overlooked subject matter when purchasing their property. Home buyers are more attracted to affordability rather than the entry pricing.
4. Furnishing – Renovation
When you own a property, you have the full rights to furnish and do whatever you want on the property (even when you are still paying for the housing loan!). However, home buyers usually put in hefty amount to make their houses look nice and comfortable even if it hurts the pocket as many see this as a necessity and one time need for the property – The pride of being able to own a DREAM home, finally!
Investor, on the other hand, are very strategic in spending every Ringgit and cents on their property. For the units sold by developers, they would even consider taking a fully furnished unit, despite a higher entry pricing, so as to ensure the unit can easily be rented out once vacant possession takes place. However, there are also situations where investors prefer to shop at DIY and renovate with budget furnishing, subsequently enjoy the savings for a higher profit or yield.
As you can see, it takes a whole different set of paradigm and approach when it comes to investing into a property. If you find this advantageous, do watch out for the Part 2 – Property Buying and Investing POV (Point-of-view).
Learn More About How to refinance your property, how to work around low property appraisals, Freehold, Leasehold and Bumi Properties, and Individual and Strata Titles. Otherwise Check Out PropertyGuru’s Guides For More Useful Information.
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Superior Wealth Mastery
Alan Poon is a Real Asset Value Investor, who focuses on tangible and undervalued assets, specifically real estate and precious metals as his choice of investments. He founded Superior Wealth Mastery, an organization dedicated to the mastery of wealth education as the cornerstone of success and happiness in life. Alan firmly believes in adding value through his lifetime passion of enriching one’s mindset in wealth creation, accumulation and preservation. During leisure, Alan turns to reading personal finance books, immerse in Cultural studies as well as devote his time in Chinese Metaphysics, practicing the ancient art of elemental and energy equilibrium in properties, whilst transforming lives of those whom he interacts and meets.
Alan conducts his signature program on auction property investment entitled “Auction Property Intensive” workshop. For those who are keen to know more, Alan does share his insights of this programme via his 2-hour content rich preview called “Profit from Auction Property Investment”. Please connect to: www.facebook.com/superiorwealthmastery to get updated on the next event.
For feedbacks and opinions on this article, please feel free to drop Alan an email at: alanpoon.official@gmail.com or connect via social media at: facebook.com/AlanPoon.Official
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