2011 Dec: Getting rich through property investment

By Melisa Ng | Dec 14, 2011

Getting rich through property investment

---

Tiew believes that property investment is one of the ways to amass wealth.

Buying a new house is an exciting experience but saving for the down-payment usually takes a while.

For most of us, buying a house is probably one of the largest single investments we will ever make in our lifetime.

Andaman Property Management Sdn Bhd sales and marketing director Datuk Vincent Tiew offers some tips on investing in property.

As an avid investor himself and with more than 10 years in the property industry, Tiew believes that property investment is one of the ways to amass wealth.

Do’s and don’ts 
“You have to understand the objective before purchasing the property. is this property intended for your own use or is it used as an investment?” explains Tiew.

“Be certain of your wants and needs before you purchase the property, so that you will be able to get the right property.”

Another important consideration when buying property is to have an appropriate budget. This refers to the targeted price range of a property that you are planning to purchase.

Think carefully before making a final decision. There is no need to rush into buying a property because you do not want to regret the decision and end up spending a huge amount of money on something not worthwhile.

Research on the prospective yield of your investment and always calculate the level of risks involved. It is important to conduct sufficient research and survey the types of property you intend to buy.

Tiew advises prospective buyers to get detailed information via the project’s website. They should also visit the developer’s office or the actual development site. An investor has to understand the “product” that they are buying.

“Don’t buy a property due to peer pressure. This factor has caused many first-time home buyers to enter the property market when they are not quite financially ready,” says Tiew.

Developer Interest Bearing Scheme 
Should one buy or rent a home?

Tiew is quick to reply, “Buy! When you buy properties, you hedge against inflation and you can benefit from capital appreciation.

“Moreover, it’s quite easy to purchase property nowadays as property developers are offering the Developer interest Bearing Scheme (DiBS) which is beneficial to home buyers as they will have more time to save money while the property is still under construction.

“Also, with the advent of government programmes such as My First Home Scheme (MFHS) and 1Malaysia Housing Programme (PR1MA), it is so much easier to own a home now.”

Buyers looking for significant capital appreciation should opt for residential properties – both landed or high-rise within the RM1mil price range.

Guaranteed Rental Return 
“Besides the basic requirements such as good location, product quality and developer’s reputation, one should also consider nearby facilities, infrastructure and accessibility. These are the factors that will increase the value of a property,” Tiew points out.

“If you want a property that will achieve good capital gains, look at its environment and (development) potential. At this point, i believe that the MRT (Mass Rapid Transit) plan is one of the key factors that most investors will look into before purchasing a property. This is because properties close to the MRT stations can expect better appreciation once the station is built.

“Also, check if the developer provides a Guaranteed Rental Return (GRR) scheme as the GRR will not be affected no matter how the economy performs. GRR is an alternative to a secured recurring rental for homeowners and its popularity will increase next year.”

Market outlook in 2012 
Tiew predicts that this year, landed properties in prime locations in the Klang Valley, particularly Kuala Lumpur, will experience a significant increase in value.

“Industrial properties and office space will be ‘left behind’ due to an oversupply and a lack of demand. This is particularly apparent in the Klang Valley.

“However, my view of 2012 is that the market will remain bullish. I’ve a good feeling about the property sector in terms of sales, price appreciation, take-up rates and sales achievement by developers. Therefore, we can continue to purchase, but pick the right sectors and buy selectively.”

Buyers looking for significant capital appreciation, says Tiew, should opt for residential properties – both landed or high-rise – within the RM1mil price range.

A friend who sought Tiew’s advice on buying a property that cost RM1,000 per square foot, was persuaded to reconsider his decision.

With the same quantum of money, the buyer could have a choice of buying two separate properties. This would give the purchaser the same amount of capital gain.

“In the Klang Valley – if you don’t buy or invest in properties this generation, your next generation will not be able to afford it.

“Labour, construction materials and consultancy costs are rising and will continue to rise. More importantly, the land cost has gone up. Therefore, don’t wait, buy now,” urges Tiew.