11 December 2012

Things to get ready when purchasing a new house

So far I have been through 1 circle of purchasing new property from developer directly. I wish to learn more from purchasing property through resale market (in Singapore and in Malaysia) later next year. From our past experience, it is not so easy to deal with our first purchase. But things will get better after a few months. There are somethings to take note when purchasing a new house:

  1. Accessibility - Location is always a good factor to consider into. However, the more important factor I would think is the accessibility. Why do I say so? Just imagine, if you have a private transport, definitely you wish to have a house near to highways, so that you will avoid a lot of traffic lights on the small road. If you are relying on public transport, then you have to choose property nearer to MRT/LRT stations or bus station, so that you do not need to walk for a long way just to get into a bus / train. I learnt it in a hard way. At first, I thought that it is good to purchase a house near to my hometown so that I can take good care of my parents later. However, this "emotional" decision does not come very well in capital appreciation / rental yield in future. Nonetheless, I do understand that a business park and an interchange is under the plan just within 3-4KM from my property. So it would be a good asset later once the accessibility and facilities are built up in coming years.
  2. Facilities - I just realize that the property price will go up IF AND ONLY IF the people staying there will not moving out to another place. In another word, the people will stay at a place where it provides a lot of convenience / facilities to the people who needs. For example, if you are a businessman, you will like a golf resort near to your house, so that you can discuss or play with your business partners and get more business in. Banks, Schools, Libraries as well as clinics / hospitals are services provided to the public. The more convinience to the residents, the harder the residents will move to another place. And it will create so called "Law of Attraction", to attract richer residents to stay there. You may check with the government on the long term plan, so that you can buy a property with potential capital appreciation, as well as to bring benefits to your next generation. 
  3. Price and Value Ratio - Price is what you paid. Value is what you get. Just imagine if you are doing a property business. The $$ you are paying now is for the value of the property can bring it to you. I admit that the value nearer to my hometown I valued at is greater than the potential capital appreciation that the property can bring to me. But we are just human being. It is really a hard choice if you have to stay far away from your parents and just to buy a property for investment purpose only. I understand that there is a lot of properties in resale market. It brings more opportunities to us to select the properties that suit our needs. Do you really willing to pay high COV (Cash on Valuation)? I am not too sure, it really depends on what value you want to get. 
  4. Understand All the Expenses Involved - After we settle all the outstanding bill such as lawyer fees, taxes, and stamp duties etc, we realize that we have a cash flow problem when we started to search for contractors for renovation and purchase the furniture. Although it may not bring a big problem to us, but it is really a heart pain to me (definitely not my girlfriend, she really likes the renovation and furniture purchased), as I may loss another opportunities to make another down payment for a better properties. Besides renovation cost and furniture & electrical & kitchen stuffs, we also have to take consideration of the ongoing expenses, such as maintenance fees, electrical & water bills and so on, to avoid any cash flow issues. 
  5. Budget - Budge is crucial, when purchasing a properties. Try not to maximize until the max, so that you could save some for opportunities. As property is not a liquid assets, so you may have to take into consideration of the sinking cost (waiting period for rental income / capital gain from disposal). Do also remember to understand more about government policy on property taxes, to reduce any taxes needed to pay (e.g. you may hold a property for 5 years and dispose it off 5 years later to avoid any capital gain taxes in Singapore / Malaysia. 
  6. A proper Property Investment Strategy - Do have a proper property investment strategy whenever you want to start a property purchase later. You could make use of current tax structure to enhance your income (e.g. you may setup a separate entity to hold the properties there etc). 
Welcome to share about your experience in property investment. We could learn from each other and improve our skills later. 

Have a nice day. 


6 comments:

  1. Hey Jack, I agree that when buying a new place, one should take note of the above especially the location like in Singapore, we rely so much on public transportation to get access to everywhere (thats why these properties are always priced so high sigh)

    Just to add on to your list, one should also consider the type/size of property; Singapore has public and private housing with more subsets underneath. The eligibility for the different properties are noteworthy too.

    ReplyDelete
    Replies
    1. Hi Vincent, thank you for your comments. Yup, my gf likes to have property with bigger size that still within our mean. We hope to get 1 property in Singapore next year. Hopefully we could achieve our goals next year so that we can get married soon.

      Delete
  2. oh i see. better start looking soon because property prices here just seem to keep going up up and up.

    ReplyDelete
  3. Really true what you have mentioned as you must be satisfied of plumbing and electrical work before purchasing any house .All of the points above are really admirable because this is right before you can invest in big thing.
    Best Electrical Contractors

    ReplyDelete
  4. Is it true that properties in Kangkar Pulai has poor capital appreciation / rental yield?
    From my survey, the price in Bukit Indah and Nusajaya already shoot up sky high!

    ReplyDelete
    Replies
    1. Hmm, my neigbour sold RM570K last year for the cluster house he bought at RM400K 3 years ago. And I heard that Keck Seng (bandar baru kangkar pulai developer) indicate the selling price for same type for more than 500K. And Mah Sing last phase cluster house with starting price > RM500k was fully booked/sold.

      Delete

Related Posts Plugin for WordPress, Blogger...

View All My Posts Here