25 June 2012

Real Estate Direct Investment - Hold / Flip / Rental?

My 1st property purchase in Iskandar Malaysia made in year 2009 was completed when I got the keys just a couple of week ago. While there are a lot of thoughts on my mind, I would like to list down all the posibilities and pros & cons of each options to my first real estate purchase in Iskandar Malaysia.

While everybody is talking about "Location, Location, Location" in real estate investment, I can see more property developers are going to suburbans to develop the properties there, especially when the infrastructures are in place. The current "hottest" spot in IM are located at Bukit Indah, Kempas, and Nusajaya.

When the time I made my real estate investment in IM, my 1st thought was to purchase a house near to my family, and I was single at that point of time. 3 years after, a lot of things had changed, and I have one lovely girlfriend who prefers to stay at Singapore due to more convenient and efficient time planning to work at Singapore.

With this in mind, I realize that the demographic of people staying in Iskandar Malaysia is mainly divided into three parts, one who prefers better "lifestyle" to avoid crowdiness in Singapore and they have their own private transport which allow them to be flexible in working in Singapore while staying in Malaysia. The second majority would be those who cannot afford to pay an expensive rental in Singapore. I roughtly know that the current rental for a common room can be easily stand at 600SGD to 800SGD, not to mention the master bedroom, which can be as expensive as 1,200SGD. The last part would be those who work in Iskandar Malaysia for shorter period/not afford to buy a house here.

Of course, if I would like rental income, I should go for servived apartment. The reason is due to the higher rental income / mortgage loan payment ratio. While we can still see a success story in investing in real estate for long term, there is no deny that JB second hand property market has been stagnant for long time, partly because of the reasons that the residents here prefer 1st hand purchase and there are still plenty of medium cost houses here.

If I would flip the house, I would sell it immediately after I get the keys. I saw from some websites that the neighbour of mine would like to sell it at price of RM550K to RM610K, which I think is quite amazing/unbelivable. Anyway, I try to let my emotion off from me, as I do not really know the best/maximum profit I can achieve from this option.

I appreciate your kind opinions if there is any. Thank you.

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