property investment in my

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Property Investment In Malaysia www.newpropertylaunch.my Page 1


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2. Where to Invest? (Appetizers)

Always stick around in KL City or within Selangor. Why? Do you know what are the factors that

contribute to a property increases in value.

Always remember the 3 BASIC Elements:-

1. PEOPLE

When there are people, which is KL-SEL (currently at 7million over population), people like it or not

will come to KL for all kinds of reasons because it is the capital city of Malaysia, a financial hub, CBD,

Government HQ, Education Hub, Commercial Hub, MNC Hub, International Airport, and etc. Young

people will come for:-

Kuala Lumpur is the capital of Malaysia and along with its neighbour state, Selangor, both location

consist an estimated population of over 7 million, and people go there for various reason as it is the

centre of everything from businesses, industries, facilities, education, entertainments and job

opportunity as well. All these are the factors that young people are moving into to these places.

Education

Job Opportunity

Business

Spending

2. JOB/BUSINESS

When there are people, there are activities in the market. People will look for employment, or

business. When there is job or business, people will make money.

When it is the city centre, big corporate and firms are being set up in these area, hence there would

be a bundle of job and business opportunities available.

3. MONEY

When people make money, they will need a shelter. Demand increases, thus property value

increases. For people who can afford, they will BUY a house, but for those who cant, they have to

RENT. For smart people, they will INVEST first.

When people have a job in the city centre, they work and they earn, that is where most of the cash is

flowing. In the mean time, obviously those that work in the city would need a shelter nearby for

convenient purposes. Thus there is demand in the market and property value increases.


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These 3 simple basic elements will always be the reasons why property price appreciated because of

a simple economic terms SUPPLY & DEMAND equation. When there aredemand, there must be

supply, thus price goes up. For the year of 2012 and 2013, there are more than 500,000 incoming

migrants from other states moving into KL-SEL.

Not to forget the Economic Transformation Programme (ETP) and Vision 2020 which is to achieve 10

million population in KL, with all infrastructures upgrading and construction in progress. It will

increase the efficiency in transportation of population from further places into the central of Kuala

Lumpur which makes it Centre of Gravity. Thus,always stick around the CITY!


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3. What to Invest? (Main Course)

If you are to invest in KL-SEL, there are many choices available. There are mainly two kinds of

property which are Projects by developers as well as Subsale. So which is better?

Project OR Subsales ?

Buying a Primary Propertymeans you are buying a brand new property directly from the developer;

Secondary / sub-salesmeans you are buying a previously owned property from a private owner.

Here is the comparison table for both:-

Primary Secondary

Upfront Cash - If 90% margin of finance, -May have higher down payment due to10% downpayment property value.

(Developer's rebate ranging from

3-10%, may occur Zero-down package)

that offset the 10% down payment)

- Approximately 10% for legal fees, - Acquisition cost for SPA, Legal

stamp duty and others fees, stamp duty and etc have to be

(sometimes borne by developer) Self-borned.

Monthly - During construction period, only - Immediate full repayment.

Repayment need to service interest in instalments.

Full repayment begins upon completion.

Discounts -Depending on developer's packages. -Discount not available, but buyer

May have early bird discount, may negotiate with seller or real

bumiputera discount, staff discounts estate agent.

or member's privilege.

Furnishing / -Some newly developed properties -For older properties, renovation may

Renovation come partially or fully furnished. be needed. Extra cash may be needed

for this.

Risks -Delay in delivery -Major issues with house may not be

-Abandoned projects detected during viewing such as

-Stiff competition for rent and sale in termite problem, electrical wiring,

delivery period. piping decay and etc which may requires

-Intangible and surrounding substantial amount of cash to repair.

infrastructure may differ from what

was told


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So Which Type of Property Stretches Your Ringgit The Most?

Project

Pros

Brand new and shiny. There are advantages and disadvantages in these properties. Developers

package often comes with rebate, which can reduce the upfront cash needed when buying the

property. Some units even come with basic furnishings such as kitchen cabinets and built-in

wardrobes.

For developer projects, it comes with Defect liability period (DLP), meaning there is a period where

the developer will address defects on your behalf at their own cost. Normally for property more than

RM100,000, at least 12 months of DLP from the certified date of completion is required.

You also get to choose the unit that you desire (if available), in other words you can choose your

house number, street number, facing view, etc.

Cons

There are some incidences where the projects were abandoned by developers. This is the greatest

risk as you will lose your deposit and all that you have expended. Besides, there can be delay which

prolong your interest payment and affect your financial plans. Thus, you have to do due diligence on

the developers company profile, past records and feedback from their existing buyers. Some

developers may charge at lower price so that the buyers can earn more from capital gain, and buyer

will come back for future launches.

Due to the number of new units released after completion, there may be a period of oversupply.

This makes it tough for owners to sell or rent due to stiff competition. To counter this problem,

majority of the owners will sell or rent the property at its present condition, however, buyers or

tenant will prefer over units with more complete furnishing. Thus, owners have to decorate their

units and put extra furnishings to attract new buyers.


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Sub-Sales / Secondary

Pros

When you buy from existing owners, you can physically touch, feel and see exactly what you will bebuying, the infrastructure, the neighborhood, and the amenities. These can be immediately

evaluated especially those in matured area, with everything more or less established.

Cons

The pitfalls are rather obvious; renovation and repairs. Sometimes you may have to redo the whole

propertys electrical and plumbing works. Other extensive renovations may be needed if the unit is

more than 10 years old or was badly maintained. These extra costs will not be financed by bank as

compared to developers fully furnished package. It may easily cost you between RM10,000 and

RM 100,000, or more, depending on the renovation and repairs required.

There is also higher acquisition costs; such as

Sales and Purchase Agreement (SPA)

Loan documentations

Stamp duty

It can also be very challenging to find a seller who agrees to sell at the agreed price, and you will

need three parties to agree mutually, namely the buyer, the seller and the bank. Valuation is neededby professional valuers to estimate the market value of the property. If the value is lower than the

asking price, buyer may have to come up with higher down payment to make up the shortfall. The

home loans margin of finance is based on the market value, not the asking price.

In a nutshell, these two types of property have their pros and cons. Choose based on your needs and

risk appetite, financial readiness, and opportunities. Explore more new launch properties here at

www.newpropertylaunch.my
http://www.newpropertylaunch.my/http://www.newpropertylaunch.my/http://www.newpropertylaunch.my/


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Which First Property Should You Get?

If you happen to ask anyone new to the world of property why they have not buy their first home,

most will say that the prices of property have exceeded their affordability. However, there are some

who might tell you that they are holding out and saving to buy their dream home.

Now the question is, whether to hold on the money until you can afford your dream home. As the

property market in Malaysia booms and prices continue to soar, many property buyers find

themselves having to downsize their dream home from a landed two-storey linked house to a two-

bedroom condominium.

So do you:-

Buy a starter home now? OR

Save up until you can afford your dream home?

Everyone will have different ideas on what constitutes a starter home. But in general, a starter home

is something you will be happy living in for at least five years or perhaps something that is perfect for

a single individual. On the other hand, one could potentially see themselves living in the same house

for the rest of their life, when they start a family.

The primary compelling reason will be of course, the money.

Get a Starter Home First

There are benefits to buying a starter home now rather than waiting for years to buy a dream

home. Malaysia home loan interest rate is still low compared to other countries:-

Pakistan : 20%

Bangladesh : 14.75%

Philippines : 11.50%

India : 11.1%

Iraq : 9%

(source fromhttp://asia.deposits.org/as for the month of Aug 2014)

We should feel lucky to be in Malaysia, and seize the opportunity of having lower interest rate

before it rises in future.

Another consideration to be taken into account is appreciation of property. Buy what you can afford

today, may help expedite your goal towards getting a more expensive dreamhome in near future.

Ideally, you want to buy a property that will appreciate (or at least hold its value) so when you sell it

a few years later, you have equity to put into your dreamhome.

A property thats not affordable now will most likely be even lessaffordable in the future, if the

salary hikes remain at the same rate.
http://asia.deposits.org/http://asia.deposits.org/http://asia.deposits.org/http://asia.deposits.org/


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Aiming for the Middle Ground

As a guideline to decide on your first home, consider the price difference between a potential starter

home and your dream home. If the difference can be saved up within a year, you may want to

consider waiting. However if the difference takes more than 5 years for you to save up, you may

want to aim for property price that falls in between what you can afford and your dream house.

Even if that means you are not able to afford a huge landed property in the best neighbourhood

right now, you may want to consider a medium-sized condominium or even look for property further

away from the city center that is within your price range.

By relaxing your criteria, you may be able to find something that suits your needs for the foreseeable

future until you can afford that dream home. Sometimes, it may take more than two houses to

finally own your dream home.


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6 Factors That May Result in Your Home Loan Being Rejected

Obtaining a home loan can be easy if you know what to do, and how to prepare for it. There are

various factors that can result in a home loan being rejected:-

1. Financial Score

How much bank can lend you depends on 4 key factors:-

1. Individuals risk profile

2.

Property Valuation

3. Debt Servicing Ratio (DSR)

4. The max Loan-to-value (LTV) ratio / Margin of Finance

Each bank credit policies can differ greatly. The max borrowing amounts can even differ up to 3

times between different banks.

So what exactly is Debt Servicing Ratio (DSR)?DSR shows how much a persons income is used to

service debt installments and is represented as a % of income. It is derived from 2 main

components:-

a) Commitment

b) Income

Different banks have different requirement in the final DSR amount that is calculated, which may

amount to difference of 20%. Some banks recognize 100% of rental income while some only

recognize 80%. Some banks calculate based on Gross Income while some uses Net Income. Other

factors that impact DSR are income bracket, net worth, qualification and age.

2. Types of Land

The land tenure is divided into

Freehold Land

Leasehold Land

Malay reserved land

Buying freehold property will not be a problem for the banker to finance. However for leasehold

(especially those with less than 60 years left) and Malay Reserved land, it may difficult to secure

financing from certain banks. These lands are considered high risk for banks as they are difficult to

resell in an auction, due to its restrictions. For new leasehold property with 99 years period, it will be

a less significant problem.


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3. Price of Properties

For properties below RM100,000, it will be difficult to secure financing for it. Though the repayments

may be low for properties in this price range, the risk of defaulting is generally higher. Thus, banks

would rather not take the risk for the minimal interest earned.

4. Developer of the Properties

Most banks will do a CTOS (Credit Tip-Off System) check on the developer or seller to make sure that

the company or individual is not under bankruptcy. If the result is unfavourable, you may not be able

to complete the house purchase transaction.

It may be a blessing in disguise for being rejected as this procedure safeguards the bank and also you,

from dealing with incomplete project due to the developers bankruptcy.

5. Location

For certain areas, you may find yourself unable to get a loan for the property due to various reasons.

Some location may have slow movement in appreciation or due to a history of landslidenamely

places like Bukit Antarabangsa. Other less favourable areas are places with

low marketability & occupancy

increasing cases of auctions. Natural disaster arealandslide or flood.

6. Maintenance and Upkeep

If you happen to find an affordable property in hot location, dont celebrate yet. There could be a lot

of reasons why property is priced below market value.

Most banks are not willing to approve home loan for old properties (more than 10years) especially if

it is badly maintained and managed. There have been a number of properties in a good location thatbuyers find difficult to obtain loan. Bad parking access condo may face difficulties in getting

financing too.

By knowing the above factors that determine loan approval, you will be armed with proper

knowledge to find good value property. Even though you may assume that it is difficult to obtain

loan for certain property, it is still worth giving a shot. The result may be different depending on

each banks policies.


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www.NewPropertyLaunch.myis a platform for you to check out on the latest property

launches in Kuala Lumpur and Selangor. With the aim to provide transparent and detail information

in regards to each launch, investors will have better understanding of the overall projects.

The properties are categorized into price range of:-

RM 400,000- RM 600,000

RM 600,000- RM 800,000

RM 800,000 and above

As certain sensitive information such as price per square feet (PSF) and developers rebates may

subject to change, we are not publishing it. For additional information, you may fill up the Enquiry

Form after each project and we will reply within 48 hours.

So Will Property Prices Rise/Drop in the Next Three Years?

(Source from CIMB and UncleZMalaysia)
http://www.newpropertylaunch.my/http://www.newpropertylaunch.my/http://www.newpropertylaunch.my/


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BONUS

Bank Loan Submission

1) To determine your income capabilityto repay the monthly loan commitment, banks will use the

basis of either:-

Debt Service Ratio (DSR)Generally 70% of nett income

Tax declaration (form BE/B)

Choose to submit your tax declaration only IF it shows higher income than your DSR calculation.

(Check with your bank on the basis of DSR Calculation as different banks are different)

2) Certain banks like Hong Leong and OCBC will consider High Nett Worth Individualwith the

allowance of 150% of nett incomefor loan commitment. To be considered as High Nett Worth, one

has to prove more than RM1million equity (asset less liability):-

Assets are:-

Property

Cash in bank (Cash in safe deposit not considered)

Fixed deposit (even in other banks)

Stocks

3) One may require Guarantor to obtain the loan. If your guarantor has 2 properties on hand, the

third property will be based on 70% loan margin. This may affect your margin of financing.

However certain banks will consider based on the basis that you are buying for your First or Second

property with 90% margin of financing, ignoring the Guarantor 70% margin.

Conclusion

Thus choosing the right banks to submit your loan documentation is very important. If the first 3

banks have rejected your loan, the fourth (4th

) bank will have lesser chance to approve even they are

favorable to your financial capability.

The author thereby wishes that these advices and guideline would help you in your future investment

in properties. Thank you and have a good day.

(VISITwww.newpropertylaunch.myfor updated properties launched)
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