Most horror movies always start with a similar storyline: The protagonist’s picture-perfect family moves into their new idyllic home, usually not knowing that the property has had its fair share of ‘incidents’ or ‘hidden secrets’.
In reality, property buyers will mostly steer clear of buying homes that are rumoured to be haunted, no matter whether the stories are old or new.
Not only will they feel uncomfortable living there (we can’t imagine the sounds they’d hear), but it might be challenging to sell the house in the future too.
Even so, since the property prices of these houses are generally lower than the average market price, this has been (and still is) an attractive factor for investors to purchase such homes.
The reason? Because they are a good investment option for those who are seeking to buy low, and then sell high!
However, is a haunted house truly worth investing in? What do you have to pay attention to when purchasing? What investment strategy should you follow?
In this article, we’ll uncover all the answers to these and more, including a couple of helpful things to know about investing in a haunted house!
What Is A Haunted House?
Generally, a haunted property is closely associated with something that has happened in the home, such as brutal and cold-blooded homicides, tragic deaths, suicides, and more.
In terms of Chinese geomancy metaphysics, there are three levels of ‘fiercely’ haunted homes:
1) Where residents died naturally or accidentally
The first level is a home where the resident has died a natural death due to illness, old age, or accidentally (such as a fall).
In a manner of speaking, it’s not fully considered a haunted house, as the deceased’s spirit does not hold any heavy grudges.
2) Where suicide cases have occurred
The second level refers to death by suicide on the property, such as jumping off the building or hanging themselves.
Although these deaths are committed on purpose, they can also be committed out of grievance and/or hatred.
Hence, the spirit may still be restless due to unresolved grudges while they were still alive. Although this type of haunted house may be relatively troublesome, it is not as severe and ill-bearing.
3) Where homicides have occurred
The third and most serious level is a home where a homicide or murder has occurred (especially the violent kind). The deceased’s grievance is deep and will most likely linger.
As such, it is advised to seek the help of a professional who specialises in the supernatural field to placate the spirit and remove it.
It is also recommended that new residents/tenants open the curtains every day once they move in, to allow better light and air circulation, which will help the spirit to dissipate gradually.
Unfortunately, there is no definite description of what a haunted house is in Malaysian law, even on government portals such as the Ministry of Housing and Local Government (KPKT) and the National Property Information Centre (NAPIC).
At present, these types of houses are mainly evaluated based on transactional data and property valuation records. Additionally, each bank has its own set of criteria to approve or reject mortgage loan applications.
How Did Haunted Homes Become A Popular Property Investment?
Whenever property buyers and even tenants hear the words ‘haunted home’, you can be sure they’ll run far, farrr away in the opposite direction! After all, who’d want to share with an invisible (and possibly dangerous) resident?
Nevertheless, there are still investors who see the potential in investing in a haunted house. Thus, a unique and profitable investment market appears – one that focuses solely on such property types.
This investment trend is especially prevalent in areas with many people, little land, and high property prices, such as major cities in Japan, China, Taiwan, and Hong Kong.
In these places where property is scarce and costly, residents would rather be haunted than poor, to the point that putting up with an unseen roommate is better than dealing with loan sharks and cutthroat banks!
Ng Goon-lau, Hong Kong’s ‘King of Haunted Flats’, says that he has transacted at least 200 haunted homes over the years. Undoubtedly, the benefit of a haunted house is its price: Anywhere between 30% to 50% lower than the market rate.
One of his successful investments was a flat he purchased at HK$1 million that was 30% lower than the market rate in 2010. Eight years later, the flat was estimated to be worth HK$4.4 million.
In Taiwan, there are even careers focused on this niche – homicide scene cleaners, real estate agents who specialise in haunted houses, and of course, investors who focus all their resources on these ‘special’ homes.
In Malaysia, Haunted Homes Are Estimated To Be 40% Lower Than Market Rates
What seems to be the #1 drawing factor for investors to rush to buy these haunted homes? The low prices, of course!
In Malaysia’s real estate market, Datuk Paul Khong, the managing director of Savills Malaysia, mentioned in a media interview that the valuation of haunted houses in Malaysia is at least 40% lower than the market rate.
Using a bungalow in Jalan Turi, Bangsar as an example (pictured below, where a cold-blooded murder occurred), he said that in such situations, a property valuator would be more careful with valuations and place a low price for the property despite its strategic location.
Why? He reiterated that this is because such properties are not high in demand, and there would most likely be additional demolition costs. Hence, the land price would be lower than 40% off.
Additionally, according to local real estate auctioneer Charles Tan, properties that would have to undergo ‘purification rituals’ or anything similar would generally be sold at least 15% to 20% below the market rate.
Investing In A Haunted House Is Just Like Investing In A Regular House
Is a haunted home really haunted? Or is it just a witch’s controversy created to stir the cauldron? The truth is, that many houses are considered haunted, but a good majority of them are merely just rumours.
These haunted properties are only referred to as such because of their gloomy and dilapidated appearance, such as overgrown trees and weeds, stains, and broken walls that stray animals call home.
If an unfortunate incident occurred to warrant it being called a ‘haunted house’, you can seek the help of exorcists, priests, and monks to perform rituals and ceremonies to ward off evil (according to your religious beliefs).
You can also opt to demolish the entire property and rebuild it from the ground up. Not only will that give you better peace of mind, but it could help to ‘cleanse’ the property as well.
Investing in a haunted house is the same as investing in an ordinary house – you’ll need to take into account the fundamentals like its location, your needs, the property type, and so on.
2 Common Strategies You Can Consider If You Want To Invest In A Haunted Home
The investment strategy for haunted houses is based on the main fact that their prices are much lower than the market rate.
Thinking of hopping onto this trend? Here are 2 of the most common strategies used to invest in these types of properties:
1) Buy low, sell high
Since the beginning, buying low and selling high has been a strategy used by real estate investors as they’re able to make a good profit from the price difference.
Since the valuation of a haunted house is typically very low, it provides investors with an opportunity to buy at an even lower price to be resold even higher in the future.
Will this strategy even work? It’s likely to, but only if you’re able to hold out for many years, because the hot news of a haunted house and its related stories will eventually fade over time and be forgotten.
In case you’re wondering what’s the best starting price, Ng shared that the ideal purchase price should be at least 30% to 50% lower than the market price, so that there will be room for profit.
2) Renting/subletting at a high price
Aside from buying low and selling high, a haunted house can also be purchased as an investment to be rented out to achieve profitability.
Some investors might find tenants just to shut down any ghoulish rumours, and then sell the property at a higher price within a short timeframe.
Of course, compared to a normal, non-spooky property, a haunted home will need to have a strong pull factor for tenants to be keen to rent it, like flexible rental rates, close proximity to public transport and amenities, etc.
To increase the property’s appeal, the interior and surroundings would need to be beautified, especially the room or area where the incident occurred.
Transforming the affected area into a living room or office area (where people usually come together) can reduce the overall negative impression of the property.
If the property’s layout is relatively large with more than two rooms, investors can lease the rooms to different tenants at a higher price. This would be a cheaper alternative for tenants, and it’ll be easier to find tenants too.
Besides that, if the property is in a really good location, it can also be catered to foreigners, as they would usually value convenience and accessibility above other factors.
Whether the property is for sale or rent, investors should be truthful and inform the tenants or buyers of what has happened to the property to avoid any future disputes.
3 Things To Consider Before Investing In A Haunted House In Malaysia
Based on the investment strategies from other haunted property hunters, interested investors are encouraged to focus on these three key things beforehand, to ensure their investment bears fruit:
1) Choose the location carefully
Looking at the investment examples of haunted houses abroad, you’ll notice that most of them are located in urban areas with high housing demands, such as Taipei and Hong Kong.
Therefore, if you’re thinking of replicating the same investment strategy in Malaysia, you’ll need to choose the location very carefully. Look for properties in densely populated urban areas with a short supply of housing.
Remember, only when homes are hard to find, will a haunted property have a higher chance of being a choice!
2) Prepare additional funds
For those who believe in the supernatural (and depending on the incident that has occurred in the home), investors may need to prepare additional funds to clean and renovate the property, or even perform religious ceremonies and rituals.
This is so that you, your buyer, and even tenants can feel more at ease with the property. It’ll also help the house feel like a new, fresh start.
Even if you’re a non-believer, you’d still need to have some cash on hand to renovate or restore the property, given that it’s probably old and in need of a nice makeover so that it gives off a good first impression.
3) Ensure you have the financial ability to retain it for a long time
Properties take time to sell, especially during an economic downturn like the COVID-19 pandemic; it isn’t as simple as listing it on a property website, and then the offers start rolling in.
This is even more so for a haunted one, especially if you come across potential clients who believe in the supernatural, as you would need to wait until the incident has been forgotten before it can be sold or rented at a good price!
Hence, in case of a situation where the property cannot be sold or rented out just yet, the investor must ensure that they have sufficient funds to continue holding onto the property till the time is right.
At the end of the day, as long as you do your homework, lots of digging in advance, and plan your investment strategies well, it’s not entirely impossible to make a profit off investing in a haunted house!
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