Are professionals needed in real estate investing?

It is undeniable that investment help can take some of the stress out of our life especially real estate investment which can help one in reaping big profits, in one single transaction. Investing in real estate can be extremely enjoyable and very profitable. Hence, in recent years many people are now involving themselves more and more with real estate investment activities. However, not everyone can make a profit investing in real estate.

We did not think twice about seeing a doctor or calling a plumber. And yet, when it comes to matters of real estate investment, most people feel that it is a road they are meant to travel alone. This is simply not true. Everyone needs help from time to time, for investing in real estate can be very risky.

So how can you tell when you need professional to help you meet your financial goals? The answer is very easy and simple. It is time to seek help from a real estate professional when you encounter loss in your real estate investment. Besides, you also need a helping hand when you are new to real estate investing, even if you have the energy and time to do it on your own. Instead of potentially losing money in high risk investments, you should consult with a professional. As a matter of fact, even high net worth real estate investors are likely to work with professionals. High net worth investors are most likely to seek financial help from a full-service broker, accountant, inspector or lawyer. 

Disadvantages of lease purchase

While there are many advantages to lease purchase, it has several disadvantages for a buyer and seller also. 

It usually takes 3 to 5 years before the option expires in a lease purchase agreement. Year after year, the property values may change continuously with changing economic conditions. Thus, the main disadvantage of lease purchase is that both the seller and buyer are locked into an agreement where the purchase price is not subject to change. The seller is locked into a lower purchase price even when there is a dramatic increase in the property price while the buyer will have to buy the property even when they found that the property is not worth the agreed upon purchase price due to a deep declines in the property value. Regardless of whether the property market price is going to up or down in the future, it is not fair to either party. Besides than property price, the interest rates are likely to change over time as well. If the market interest rates rise in the future, the buyer will sees his future monthly instalment going up. On the other hand, the seller is at risk of facing the situation where the potential buyer may not keep up the property as a result of not being able to qualify for a loan or being unable to afford to buy the house. 

Why lease purchase?

Lease purchase is a legal term for a contract, it binds both seller and buyer to the sale. The contract exists between a house owner and a tenant where the tenant agrees to pay the owner an increased monthly rental that is credited to an account for use as a down payment which gives the tenant the right to buy the house at the end of the lease period for a price established in advance. It is common for the purchase price to be about 10% above the market value. The lease is usually made for 3 to 5 years.

The major reason why the buyers are engaged in a lease purchase would be the buyers are not in an immediate position to own the house, but they have a strong intention to buy and would like to establish a right to buy at some future date. A lease purchase is therefore a perfect tool for the buyers to have exclusive right to buy the house rather than move again under the terms and price to which both parties have previously agreed after they have resolve their credit issues, paying off debts or qualify for financing. The lease purchase also appears to be favourable to the buyers when the housing prices could rise quite rapidly over the next few years. This will be a pretty good deal for them when they are locked into a contract for up to 5 years where the price has been established.

DNR: Is paying off a property loan as quickly as possible a wise move?

AT first thought, it might appear prudent to pay off a property loan as quickly and as soon as possible. However, is this really the wisest and smartest financial decision? Consider using cheaper home loans to grow your net worth. 

Home loans usually have lower interest rates than vehicle loans and other unsecured credit, because the use of a home as collateral reduces the lenders risk of financial loss.

People can refinance an existing loan and extract additional funds to pay off credit cards and other debts. Refinancing enables homeowners to lower their overall monthly payments or frees up funds for other purposes and simplify their lives by having to make just one payment.

Refinancing a RM1mil, 30-year loan from 7.5% to 6.5% would save more than RM240,000 in interest over the life of the loan, or more RM150,000 in today's dollars given a present value discount of 3%, all other elements remaining equal. Despite market turmoil, interest rates remain at attractive levels. If your home loan is costing you 5% but you can derive returns of 8% from your investments, you are growing your net worth by 3%!! Alternatively, consider investing the additional funds into solid, reputable investments (such as unit trusts, Amanah Saham Malaysia, real estate investment trusts, etc) that can potentially give you returns in excess of what your home loan is costing you. 

Start comparing loans from several different financial institutions before deciding and get information in writing. Carefully consider your cashflow situation, if you have the income to handle your new refinanced home loan obligations, it might just be more prudent to refinance that house of yours and start growing your net worth. Seating your assets and start letting them work for you.

Disadvantages of joint purchase

#1. Profit sharing

When the risks and losses are to be shared, the profits will also be shared equally or based on any previously agreed-upon ratios among all the parties.    

#2. Unpredictable uncertainties

What will happen when one owner dies? What happens when one partner wants to leave the partnership for some reason, such as bankruptcy or divorce? What if some partners decide to sell the property but some still plan to hold on? What if one or two partners refuse or not afford to pay the monthly mortgage installments anymore after months of negative cash flow? There are too many unpredictable uncertainties in the future and the problems can be very difficult to solve and it may waste a lot of time.   

#3. Joint liability

If the partners did not make his or her share of the installment, then the other partners would still be held responsible for the payments and would endure the credit-related consequences of any late or missed payments.      

DNR: Legal action against developers who advertise without permits

Housing developers who advertise their projects in newspapers without permits from the National Housing Department (NHD) will face a maximum fine of RM250,000 if they are found guilty. There are developers who already received notices from the ministry for breaching the Housing Development (Control and Licensing) Act 1966 by not applying for the permits but so far, no one has been fined. 

Taman Sri Derga was the 113th out of the 178 abandoned projects in the country since 2009 which had been successfully revived by NHD. Chor, who is Alor Setar MP, also said that of the 11 abandoned private housing projects in Kedah, six had been revived by NHD. The rest were under rehabilitation status. He encouraged developers to implement the build-and-sell concept by starting with small projects involving about 10 to 20 units of houses.

Earlier, Chor attended a briefing on Duties and Responsibilities for Licensed Housing Developers Northern Region organised by the Real Estate and Housing Developers’ Asso­ciation Malaysia Kedah/Perlis branch. In his opening speech, he said the Housing Development (Control and Licensing) Act 1966, which was approved by Parliament last year, was expected to be implemented early next year. He also urged developers to be more responsible when undertaking housing projects as legal action would be taken against those who abandon the projects.

Why joint purchase?

Joint purchase is a method of purchase whereby the purchase of a particular property is made by two or more parties. There are a number of reasons why we choose joint purchase option in real estate investment.

#1. Shared risk

A joint purchase is an effective risk diversification strategy, for all risks of investing in real estate funds will be shared among all parties. For illustration, the profit or losses are shared among all parties based on previously agreed-upon ratios.   

#2. Greater cumulative purchasing power

The creation of cumulative purchasing power through joint purchase comes from greater capital. When there are two or more parties who are willing to buy a property together, they can start looking at properties with higher price tag that they otherwise would not be able to afford individually. They have more selection now.   

General property auctions information

Generally, there are 2 types of auctions in Malaysia property market.

#1. Juridical – public auctions

Most auctions in Malaysia are inevitably juridical properties. The juridical ones are foreclosure auctions meaning that the properties are being auctioned due to default payments with banks. Auction is ordered either by the Land office or High Court depending on the type of title. It can also be done by the banks respectively. It is frequently called as high court auction as the majority public auctions are always handled by the High Court.

There are 2 types of public auction emerges in recent years that are LACA auction and non-LACA auction due to the problems in late issuance of individual titles. The acronym LACA refers to Loan Agreement Cum Assignment. LACA auction is done by banks for properties without individual/strata title issued and usually in bulk sales while non-LACA auction is done through High Court for properties with individual/strata title issued.

DNR: SP Setia keen to expand property portfolio in Australia

Property developer SP Setia Bhd is keen to expand its property investment portfolio in Australia, said its president and CEO Tan Sri Liew Kee Sin. He said the group was also interested to expand its footprint in the UK and China amid its venture in the development of the China-Malaysia Qinzhou Industrial Park. 

"SP Setia's focus for the moment will be on property investment amid growing demand, especially from Asian investors. "Asians love to buy properties and SP Setia wants to be part of the market," he told reporters on the sidelines of the Fourth World Chinese Economic Forum (WCEF) here today. Liew said SP Setia's customers continue to show interest in its properties in Australia, Singapore and the UK amid the improved lifestyle and a good long-term investment. 

SP Setia has two property projects in Australia                             

#1. Fulton Lane -- its first Australian venture.

#2. St Kilda Road -- its second commitment when it bought a significant site in the city's premier residential boulevard.

The Australian operations contributed about 10% of the group's total sales of RM4 billion expected for the financial year 2012 ending October.

Some pros and cons of auctions in Malaysia

Pros

1.Auction prices are normally lower than market value. Under normal circumstances, the price will reduce 10 per cent from the previous reserve price if nobody turns up to bid for the property. Sometimes, the property price can be as low as 30 per cent below the market value.

2.Free legal fees on the Sale & Purchase (S&P) agreement.

3.Auction property purchased through the Land office or High Court will be free from restrictions in interest.

4.All outstanding maintenance charges and other statutory charges will be deducted from the auction price.
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Cons

1.Buyers require cash in hand, in case they cannot get mortgage loans from banks to settle the balance purchase price within 90 days or 120 days, with no extension allowed. 

DNR: Paramount will go for niche housing due to scarcity of land in the Klang Valley

Paramount Property Development Sdn Bhd, one of several property subsidiaries of Paramount Corp Bhd, will be repositioning itself from its focus on township development to niche housing going forward. Managing director Datuk Ricque Liew said this was due to the scarcity of land in the Klang Valley. The company has been incrementally replenishing its land bank since last year and, in the next four to five years, it is expected to have projects with a gross development value of between RM4bil and RM5bil. “We are looking into 50 to 60 acres or even down to five acres. 

"We have to move away from the traditional landed housing and go into integrated developments with commercial, residential and retail elements,” said Liew, adding that the firm had to take this step because the available land sizes were getting smaller today.

Some interesting quotes/notions about real estate investment

#1. Don’t wait to buy real estate, buy real estate and wait.

People often do a lot of thinking on property purchase. Is now a good time for me to buy a house? Should I wait until the housing prices come down from their record level? How much money will I have to come up with in order to buy a house? Should I hire a real estate agent or can I actually do this by myself? How much does it cost to use a real estate agent? What are the other costs that may arise when buying a house? This is very normal. They do not want to make even a single mistake in the process of buying a home, for mistakes can be very costly. However, thinking too much about a decision may prevent us from attaining what we really want. Thinking will just makes the time pass. Bear in mind that waiting could be costly. What is the point of waiting when the housing prices may decline further but may eventually come with an expensive price tag due to higher interest costs?

#2. Never ever start by buying your own house.

We must not think of our traditional concept of buying house today. We should not expect we will only get one house in our whole lifetime, and then assume we will stay there forever. When it comes to real estate investment, it is advised that we should begin with buying some low-medium cost houses, either to flip or to rent out. In this way, we can make some money and good experience. We can then use this money for second, third or fourth investment and finally finish with our own house. 

#3. The more you borrow, the richer you get.

Have you ever heard of “the more you borrow, the richer you get" – a popular quote from property guru, Mr. Milan Doshi? This quote teaches us not to take money out of our own pocket when buying a house even if we have the money. We can just borrow from the bank, the more the better. Stop immersing yourself in the wrong impression that borrowing money was extremely risky. Borrowing money also makes sense when we can deduct the interest payments. You can actually retire within the next 5 years by having 3 million in property loans proven by Mr. Milan Doshi, provided it is a good debt. If you choose to believe this, I think you will now have a hard time convincing your parents and spouse who might still remain committed to the notion that the less you borrow the better.       

Stay tuned for more interesting notions about real estate investment. 

DNR: Bank Negara: Key rate to be maintained at 3%

Bank Negara has announced that the Monetary Policy Committee (MPC) has decided that it will maintain the overnight policy rate (OPR) at 3%.

In a statement issued by Bank Negara, it said that the MPC considers the current stance of monetary policy to be accommodative and supportive of the economy. Additionally, the committee will continue to assess the global economic and financial developments, including its implications on the overall outlook for inflation and growth of the Malaysian economy.

As the global economy is expected to continue experiencing slow growth, the growth prospects of advanced economies remains uncertain. Despite the weaker external demand, Bank Negara said in a statement that growth in the regional economies would remain supported by domestic demand.

In the local economy, the sustained expansion in domestic activity has offset the weaknesses in the external sector. Moving forward, Bank Negara believes that income growth and stable employment conditions will support private consumption.

“Investment is expected to remain firm, led by increased capital spending in the domestic-oriented sectors, the oil and gas sector and the on-going implementation of infrastructure projects,” the central bank said.

Bank Negara expects headline inflation is to remain moderate for the remainder of the year. “While inflation may increase in 2013, it is expected to remain modest given the excess capacity in the economy. Global energy and commodity prices are also likely to be contained given the weak global conditions. Upside risks to inflation could, however, emerge in the event of supply disruptions that results in higher global prices for commodities,” it added.

DNR: Distinctive in RM1.5bil property project

Iskandar Investment Bhd has signed a lease purchase agreement with Distinctive Ace Sdn Bhd, a member of Distinctive Group, for the latter to develop a parcel of land in zone A of Medini into a mixed commercial development project with a gross development value (GDV) of RM1.5bil.

The 99-year lease purchase agreement between the two involved the purchase of a gross floor area 2.75 million sq ft over 18.05 acres of land at a consideration price of RM99.9mil.

Distinctive Group chairman Datuk Dr David Koh said the entire project would be undertaken in four phases over the next five years.

“The first phase, comprising shop office and service apartments, would be launched in the second quarter of next year. The first phase will involve the development of a gross floor area of 957,000 sq ft with a GDV of RM500mil.

Koh further elaborated that the development, dubbed the 18@Medini, which would be close proximity to Legoland, would be at the very soul of Medini Iskandar with its colourful and diverse offerings to include retail spaces, small office home office, small office versatile office, corporate offices, show rooms, food and beverages outlets, business and entertainment centres, an indoor sports and exhibition centre, service apartments and hotels.

Projects of Distinctive Group in Iskandar Malaysia:

1st projectt: 1 Tebrau on Jalan Tebrau - a modern lifestyles mixed commercial project 

2nd project: 2 towers of 39-storey and 28-storey luxury apartments over 6.31 acres in the heart of Medini - joint venture with Medini Land Sdn Bhd to luanch Iskandar Residences 
3rd project: 18@Medini

How to protect yourself from the property bubble?

Some simple steps to protect yourself from the property bubble:

1.Switch from Base Lending Rate (BLR) to a fixed interest rate to protect yourself from fluctuating interest rates. So, your monthly mortgage payments will never ever change. 

 

2.Don’t buy a house simply because it is a good investment or you afraid that you will miss out the opportunity to buy before prices rise again if you cannot afford it. You can seek help from bank or any financial advisor to work out your budget and find out how large a mortgage payment you can afford to pay every month. You should not forget the associated housing expenses that might occur as well.

3.Buy your second, third or fourth property only if you have a positive cash flow. 

4.Don’t assume your house will keep on appreciate at the fast pace as it has in past years in the near future nor assume the house price is unlikely to decrease.

5.Try to avoid yourself from taking advantage of the home equity that you have built up over the years by getting a cash-out refinance to pay for your cars, credit cards or any other debts. You can get yourself into trouble if the property prices decline in the future.

6.Take a more conservative approach if you are involving in stock market investment or any other investments.

7.Rent instead of buy a house if you are uncertain whether how long you will be staying in the house.

DNR: Boustead unit buys land from LTAT

Boustead Holdings Bhd (BHB) unit Mutiara Rini Sdn Bhd (MRSB) has proposed to acquire three parcels of land totalling 5.2 ha in Kuala Lumpur from Lembaga Tabung Angkatan Tentera (LTAT) worth RM106.69mil.

In a filing with Bursa Malaysia yesterday, BHB said the acqusition would allow MRSB to expand its existing land bank and provides oportunities for property development activities for the company in the Kuala Lumpur city centre location. “BHB is optimistic on the prospects of the properties considering their strategic location in the city centre with good accessibility to major highways and close proximity to public amenities.

“The properties are also expected to benefit from the Mass Rapid Transit station at Cochrane which will create demand for both commercial and residential properties in this location,” it added. 

BHB said the purchase price will be funded through a combination of bank borowings and internally generated funds. 

“Barring any unforeseen circumstances, the proposed acquisition is expected to be completed before the end of this year,” it said.

Property bubble

We often hear about the property bubble or property bubble burst in the real estate industry but do you know what exactly property bubble and property bubble burst are?

Property bubble or real estate bubble is a type of economic bubble that occurs occasionally in local or global property markets. It is characterized by a rapid expansion followed immediately by a contraction. In other words, there is a rapid increase in valuations of property and this situation will keep continue until it reaches unsustainable levels and then decline, resulting in the overall property market to collapse. We named this situation as property bubble burst. This would be followed by an economic recession in the market.    

Property bubble usually starts with an increase in demand but with limited supply in the market. When there is an increase in demand, the speculators who attempt to profit from short term fluctuations through buying and selling will enter the market, further driving demand for properties. Prices go up when demands outpace current supplies. The demand will then decreases or stagnates when the properties are priced too high but at the same time supply increases, eventually resulting in a sharp drop in prices. Therefore, the bubble bursts.      

Bear in mind that there are many other factors contribute to high property prices besides than increasing demand and buying for speculation rather than shelter including inflation, increase in average income, increase in population entering the housing market, low interest rates, etc.

DNR: Saving the young from bankruptcy

Have you ever heard about the story of a man who was only in his 20s when he committed suicide after coming under pressure to settle a RM13,000 debt with a bank? At his funeral, someone was overheard saying: "If only he had sought the help of AKPK, he would be alive today."

AKPK is the abbreviation of Agensi Kaunseling dan Pengurusan Kredit or Credit Counselling and Debt Management Agency, a unit under Bank Negara Malaysia set up six years ago to provide free counseling to consumers on proper management of debts with financial institutions. It also helps those in financial distress negotiate with banks on restructuring their debts. As an added service, AKPK also offers its personal financial module to institutions of higher learning which could be made an elective study course or embedded in the curriculum. This is to train lecturers who can then educate students on how to properly manage their finances once they join the workforce.

AKPK chief executive officer Koid Swee Lian related the young man's tragic story to me a few days ago in the wake of a front-page exclusive report in Berita Harian that said some 50,000 people below the age of 34 were declared bankrupt in the country over the last five years. Most became insolvent so early in life due to credit card debts and car loans.

Koid said she believed the situation would have been scarier with many more falling into traps that could lead to bankruptcy, if not for AKPK's intervention. So far, the agency has counselled almost 200,000 people at its branches, out of which about 82,000 have been taken under its Debt Management Programme (DMP). The DMP enables AKPK to talk to banks on the customers' behalf on matters ranging from holding back legal action to restructuring their debts in accordance with their ability to pay.

Major causes of bankruptcy & financial problems:

#1.   credit card debt

#2.   multiple charges besides the interest rates, that credit card users have to bear and are mostly unaware of, hidden in fine print that they have to consider before swiping their cards

#3.   for the ladies, overspend on handbags and smartphone

#4.    expensive wedding expenses

#5.   overspend to celebrate festivities like Hari Raya, Chinese New Year and Deepavali

#6.    all sorts of scams

#7.    unreliable get-rich-quick schemes

#8.    rising cost of living

#9.    no savings

#10.  rampant practice of not paying their balance in full

#11. car loans – high dependency of car due to largely unreliable public transport system

#12.  cars are very expensive in Malaysia 

Why lease option?

Lease option is generally known as a lease with the option to purchase. In other words, the buyers pay for an option that grants them the right to purchase the property at an established price within a certain time frame, usually three to five years. The option money is not refundable. Lease option is different with lease purchase. Lease purchase binds both seller and buyer to the sale while the buyer has the right but no obligation to buy the property in a lease option.     

The buyer is engaged in a lease option transaction for several reasons. First, they may not have enough capital in paying house down payment probably due to some credit issues or financial problems. Second, they might have been transferred immediately to another company located overseas or other states and they need to sell their current home before they can buy a new one in the city to which they are relocating. They can only afford to rent a house before they sell their existing home. Third, they want to carry out a neighborhood check before they decide to buy the house. For most people, buying a home can be a single largest investment decision they will ever make in their whole life time. Hence, they will not want to make any mistake in purchasing the house. For safety purpose, they will first evaluate the crime rates, noise, transportation facilities, traffic, schools and public services that will be found in that area before deciding to buy the house. Next, the buyer may be uncertain about the overall property market. Lease option will then offers them the best insurance when they doubt whether the house prices will fall or rise in the future. If the property worth much more than the option price during the option period, the buyer can exercise the option to buy. However, they will choose not to exercise the option even after the option expires if the house has fallen in price.

DNR: M’sian firm to play major role in RM15bil Laos transport project

Malaysian company Giant Consolidated Ltd (GCL) is set to play a major role in transforming the face of Laos’ transportation system with the construction of a 220km electrified double track railway.

The project, which is estimated to cost US$5bil (RM15bil), is also expected to result in the advancement of economic activities in Laos as it will see the land-locked state be turned into a land-linked one in 2017.

Coincidentally, this will be the largest investment made so far by a Malaysian company here, with the US$5bil to be spent over a period of 10 years.

Tock said he and GCL president and chief executive officer Mohd Fadzwi Hamidun together with their local partners Dr Aixinjueluo Yuhao and Bounmy Thepphavong of Asia Economic and Trade Cooperation Council (AETCC) had worked hard to see this project be realised because of the tremendous potential it has in boosting economic activities in Laos.

Why refinance?

Refinancing refers to the replacement of existing loan with a new loan under different terms. People may choose to refinance due to the following benefits.

#1. Better interest rate

People often choose to refinance when there are lower interest rates available in the market due to market conditions itself or the lenders are now more willing to offer them a better deal when their income or credibility has been improved over time. With this lower interest rate, people can save on their interest expenses.

#2. Lower monthly payment

The monthly mortgage payment tends to be lower when the interest rate is reduced. Another way to lower the monthly payment would be to extend your loan for a further period.

#3. Better cash flow

Lower monthly payment simply means extra cash on hand. This extra cash can be used for other investment purpose, pay off other debts or bills, home renovation, new car purchasing and so on.   

DNR: Iskandar Malaysia enters the fast lane

The chief of Iskandar Investment Bhd (IIB) is bullish on the outlook for Iskandar Malaysia in Johor, attributing his optimism to various projects like the high-speed rail (HSR) plan and the transformation of Desaru.

"Hopefully, it (HSR) can come earlier. Iskandar Malaysia will benefit from the MRT link between JB Sentral and Woodlands in Singapore," said IIB president and chief executive officer Datuk Syed Mohamed Syed Ibrahim. "The outlook from 2013 onwards will be strong within the context of Nusajaya and Iskandar Malaysia. We see some of the current developments coming up and investors will be submitting their plans for new projects," he told Business Times in an interview recently. 

Khazanah Nasional Bhd recently said plans are underway to transform Desaru, starting with Phase 1 that carries a gross development value of RM5 billion. The transformation will be carried out in three phases over 15 to 20 years.

For the HSR, a study to link Kuala Lumpur and Singapore is being carried out by the Land Public Transport Commission (SPAD), which is expected to be completed by year-end. If found feasible, SPAD will call for pre-qualification bids by mid-2013.

IIB, set up in 2006, is a strategic developer of catalytic projects in Iskandar Malaysia, the country's special economic zone. 

It is developing four clusters - 

education, driven by Educity; 

leisure and tourism, led by LegoLand; 

healthcare and wellness, with Gleneagles Medini Hospital being the key driver; and 

creative development, with Pinewood Iskandar Malaysia Studios the catalytic project. 

Syed Mohamed said the catalytic projects will generate substantial multiplier effects, triggering economic activities.

"Without Educity, it would be difficult for any developers to enjoy the current pricing level. For the past 10 years, apartments in Johor were selling at RM300psf but UEM Land (Holdings Bhd) recently launched properties at RM700psqf," he said. 

Syed Mohamed said growth for IIB is on the cards. By end-2012, the company is expected to ink six to seven new deals, including joint venture and land-lease purchase agreements.

IIB currently has such agreements with China's Qingdao Zhouyuan Investment Holdings, Mah Sing Group Bhd and WCT Bhd to undertake projects worth RM2.5 billion, RM1.1 billion, and RM1.5 billion, respectively.

MRT has anything to do with overall property market in KL?

Klang Valley Mass Rapid Transit (MRT) has finally started in Kuala Lumpur. It will be an underground construction project as Klang Valley is the busiest and most densely developed centre where there will be no extra spaces for MRT to be built above ground. The way the MRT stations are designed is that there will be residential and office units found right on top of the MRT stations. The MRT projects are expected to have tremendous positive impact on the overall property market as well as economy in general. The value of properties located just above the stations or along the route is estimated to rise steeply in the near future. Many developers have already make use of this business opportunity to start making money by planning to build property on the surrounding area of MRT stations.  

In other countries like Singapore, Taipei and China, the property or rental prices will go up if the property is in the vicinity of the MRT stations. The same thing will happen here, in Kuala Lumpur. The value of property is estimated to appreciate at least 10% to 25% depending on range of the location to the stations, either near or far.

         

The main reason why the property price increase is there will be a greater demand from the buyers either for their own stay or investment. Most of the people will choose to buy or rent the houses or offices which are located within the walking distance to the MRT stations due to the easy access to transportation. Thus, the property buyers and investors are competing at the same time. Property buyers want to buy a home for their own stay or an office to set up their business as such location will definitely generate more customers to their office. On the other hand, property investors are eager to buy a house or office to make a profit by renting it out to people.

Besides, the MRT station itself is an attraction of all other businesses such as shopping malls, banks, restaurants, coffee shops, mini market and so on making that area a strategic location. We all know the three words in real estate, location, location and location. A strategic location will definitely pull up the property price.

DNR: PPR homes now for sale at RM 35,000

Low-income families will have the chance to own the homes built under the people’s housing programme (PPR) starting next year. Housing and Local Government Minister Datuk Seri Chor Chee Heung said the Cabinet had agreed to allow the sale of PPR low-cost apartments to families whose household income does not exceed RM2,500 a month.

“The traditional method is to let them stay (in PPR units) and pay rental of RM124, but the Cabinet has agreed that any houses built under PPR can be sold to the rak­yat. “There is only one price for PPR, which is RM35,000, even if it costs more than RM100,000 to build a unit,” Chor said after launching his ministry’s Innovation Day 2012 celebration.

Under Budget 2013, the Govern­ment had set aside RM543mil for the National Housing Department to build 20,454 units of low-cost apartments in 45 PPR schemes across the country.

Chor noted that officers from the department are making on-site visits to areas earmarked for PPR schemes. They will not build at an area where there is clearly no demand. “We don’t want to waste money,” he said, while noting that all states would get at least one PPR scheme on which construction will start next year.

Should you buy an abandoned house in Malaysia?

People often overlook the abandoned house which can be a profitable investment in real estate market. It is true reviving an abandoned house is not an easy task. It could be a difficult, complex and time consuming task. But with some effort, capital and patience, you can certainly get a big pay-off from this investment.  

There are Ministry report shows that 177 private housing projects have been abandoned as at May 31, 2012. There are a total of 400,000 abandoned houses discovered in Malaysia. Finding abandoned house is therefore, not difficult in Malaysia.  

These abandoned houses have deteriorated over the years, leading to lower market value. Hence, people can often purchase them at a lower price and resell them for a profit (typical buy low, sell high concept) if they understand how the deal actually works.

For illustration, there is a friend of mine ...