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Spotting The Ideal Investment

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Should you be looking to a property as your investment, then the priorities differ from owning a self-occupied home. However, as with the ideal home, you should still consider these three aspects: PROPERTY TYPE, BUDGET, and PURPOSE.

Again, deciding on the suitable type of property for yourself plays a big role in determining whether your investment will work or not. Determining whether it is a residential or commercial property is important, as they both bring very different values to the table and may behave differently in the real estate market. For rookie investors, you may find more confidence in buying a residential property since this is usually the first type of property you would buy anyway. Then again there are those who are equipped with more knowledge in purchasing commercial properties such as shop offices, retail lots and office space.

Now comes the question of money. How much are you willing to part with for that property investment? Are you ready to put all your eggs in one basket in hopes of a higher return, or do you find comfort in saving some cash for a rainy day? It is of utmost importance to evaluate your financial standing before charging into a deal that you only “think” is worth it. Also, if you are buying a new property, it is good to take into account the rebates, discounts and incentives given by the developer.

Your purpose for investing is also crucial in your quest for the ideal investment. Some people invest with the hope of making a quick buck (or quick million in some cases), while others may choose to buy a nice home as a retirement plan for the future. In any case, one should also look at the TYPE OF INCOME they prefer from the investment, which is either rental income or capital appreciation.

Typically, condominiums and apartments are more suitable for rental income as the demand for such properties are higher and more frequent than landed properties. On the contrary, landed homes are more suitable for capital appreciation.

In any case, when a property is bought as an investment, chances are it must be tenanted if it is a fully completed property. The rental collected will, at the very least, lighten the load of the mortgage, if one is taken that is.

To entice someone to rent your unit, it is essential to put yourself in the shoes of possible tenants and think about their needs. One good place to start is the LOCATION. Yes, it does seem quite obvious to quote this age-old mantra, after all, the more strategic your property is, the higher the demand.

In the case of residential properties, ideal residential considerations such as ACCESIBILITY and AMENITIES are again the prime factors. This will determine what types of tenants you will get. Families might pay attention to nearby amenities such as schools and kindergartens.

On the flip side, the consideration required for a commercial property is far greater than residential property. It is trickier to spot an ideal commercial property as other factors such as population demographics will have higher priority.

This brings us to our next factor. One must also look at the profile of the SURROUNDING RESIDENTS. It is important to ascertain if the surrounding folks are willing to spend their time in that particular area because commercial assets thrive on business viability. If the area is not commercially viable, it defeats the purpose of the investment.

However, should the analysis conclude the area to be feasible, then the research goes to the next level. You will need to find out the age groups of the population, the race composition and the general profession of that specific community. It will determine which business is suitable and which is not; and thus bringing us back to the type of property that is suitable for that business.

FUTURE DEVELOPMENT in the surrounding area is also crucial to the demand for the property. A classic example that can reflect how vital this can be is the hype of where the Kuala Lumpur International Airport (KLIA) was going to be built. Many investors thought that the airport would be built in the northern part of the Klang Valley, making Lembah Beringin and even Bukit Beruntung a great place to invest. But when it was built in Sepang, it completely crippled the hopes of many investors who had invested elsewhere.

With these few questions addressed, you should be able to determine your “ideal investment”. Now that you’ve got the know-how to spot your ideal property, it’s time to put it into action. In the next issue, we will look at how to kick-start your property hunt expedition and what you should look out for when inspecting that ideal property.