Landed for RM900K in Penang, buy?

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A close friend asked if a landed property in Penang is worth buying. He gave me the project name. My advice to him was simple. I have not been to the project but if it meets three requirements, buying a landed property inside Penang island can never be wrong

Dimension. If you log in to propertyguru.com.my, search for landed and choose RM400,000 in KL, you would notice that there are still such properties! Landed for RM400K in KL?! Yes, but the size is 18 x 65. The width is just 18 feet which is very narrow. My personal opinion, make sure the minimum size is 22ft x 70ft. The reason for this is logical. Every household has a minimum of two cars these days. Thus if you park your cars side by side, you need a total space of about 18ft at minimum if you want to still have space to move comfortably. 22ft meant that everything is super comfortable. There is nothing wrong with 20ft width as well but your two cars should not be Segment D cars. 🙂

Location. Sorry yeah. Even in Penang island, location is very important. Location here refers to both area and surrounding. If you are paying RM1 million for your landed property today and in the future you intend to sell it for RM1.5 million, do you think the buyer would want to buy your landed property if it is surrounded by low cost flats? Alternatively, do you think they want to turn into a small lane from the main road and drive through village houses before they reach their property? Area is less important in future but should you think about selling in just a few years, then the areas loved by Penangites are definitely better. I have a friend who bought in Batu Maung for RM700K. His property is currently 50% up, selling for Rm1 million. I have another friend who bought a landed at an area where the flats surround the house and it has only appreciated slightly.

Objective. Please do not tell me your objective is to rent out while you wait for capital appreciation. If you intend to rent at a loss, then yes, your objective is clear. However, if you are thinking to rent for positive cash flow while waiting for capital appreciation it will not happen. Are you also ready to hold? If you are not ready to hold and have no extra funds to hold, then it may not be wise to overstretch yourself to buy such a property. Buying for rental vs buying for capital appreciation are two very different thing. It requires you to buy a different type of property too.

My friend will most probably be buying the property because it is JUST RM900,000. Until today, I do not own any landed property except that I offered to buy the house I stayed for the first 10 years of my life in Teluk Intan. Yes, I offered to my mum. Haha. My objective is also clear. Buy the right size, minimum 1000sf, buy at undervalued locations and objective is to rent out for positive cash flow while waiting for the appreciation which I assumed to be just same % as the inflation. Thus, I only buy condos.

written on 10 jan 2014

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