Let’s not kid ourselves. There are a lot of reasons to buy or not to buy a property. In fact depending on which side we are in, we could debate until the fish can fly and we will still be debating. For those who seriously are starting to believe, here’s one article for you. “10 reasons why we should buy a property.” For those who prefers to rent, feel free to google for why renting is better than buying. Thousands of articles I think. Happy reading to both sides yeah. Start reading for those who love properties.
#1 – It’s safe and real. Shelter is the first thing everyone needs based on Maslow’s hierarchy of needs. In brief, this is the foundation before we start thinking of other things. Imagine getting a job within Greater KL but we have no place to stay? Yes, it’s true, we do NOT need to BUY because we can rent too. Well, someone has to buy that property to rent to us, no?
#2 -It’s safer and easier. View a home, like it. View the surrounding amenities, like it. Check google map for the duration of drive to office every morning, like it. With these three likes, we have already done sufficient due diligence if we are buying a home for own-stay. Try doing the same with stocks? Understand the business… well. Get to know the management team…well. Know who their competitors are, know the industry and more… It’s not easy to buy a stock yeah… Let’s not even start about buying commodities or even cryptocurrencies yeah…
#3 – Leverage. Invest RM50,000 into the stock market and it rises by 10 percent, we gained 10 percent. Invest RM50,000 into the property market (10% downpayment) and even if it gains just 5%, that’s RM500,000 x 5% up which is RM25,000. Our total investment was RM50,000. Return on Investment is thus RM25,000 which is 50%. Sounds unreal, just like a scam…
#4 – FORCED to save. In a good way, anyway. We buy an affordable place to stay as a start. A RM200,000 home with just a 2% increase in price every year will be RM500,000 30 years later. It’s true, RM500,000 30 years later may not mean much but how else could we save RM500,000 if not forced, by property? By the way, the property price increase has been 6.7% on average for the periods of 1990 – 2016 for Malaysia. Here’s that earlier article.
#5 – It does not suddenly lose half of its value overnight. Many other types of investments would lose that. Remember a company called Enron? It was overUS$90 and in a few months dropped to less than US$1 and in the end, worth nearly nothing. Gold fluctuations? Oil fluctuations? It’s hard to control them but a property which is NOT a wrong buy will usually be just alright.
#6 – Demand will always be around. (I meant for Malaysia). Looking at the demographics, Malaysia has a median age of 29. This is as safe as we can get. Any lower and Malaysians may not have enough demand since not that many Malaysians have worked and saved enough yet. At 29, that’s pretty okay! Graduated at 23, worked for 6 years, saved RM8,000 per year and that’s already RM50,000 for a first property…
#7 – Everyone’s on your side. Developers would not want prices to fall. Block 1 at RM400,000 and Block B at RM350,000? I think the developer would need security guards… Banks would not want prices to fall. They lent to us based on a value of RM400,000. A year later, the price falls to RM350,000? I think the banks will be sweating because if something happens, they will immediately lose RM50,000 even if they were to auction our property…. The government will not want prices to fall. They prefer prices to stay almost the same so that voters will be happy that they could buy. Thus, the 1 million new affordable homes in 10 years… (here’s that earlier article)
#8 – It’s the least we could give to our kids? Let’s not think about giving them money because in future, that money we give them will only be enough for them to buy a home VERY far from us or VERY SMALL if it’s nearer. However, if we give them a property, they will thank us for thinking well ahead before they even need to think about property. Parents just have to sacrifice a bit…
#9 – Retiring better if not earlier. Without an income when we retire, do we really want to worry about rental if we did not own a property by then? If we bought a property every 10 years, we should have 3 properties when we retire at 65. Selling one is more than enough to last us longer than what the average Malaysians have in their EPF account. EPF says the minimum savings one should have would be RM228,000 in their account when they retire. At the moment, majority of Malaysians are nowhere near this number.
#10 – When we get lucky in property, it’s super huge. Our RM50,000 worth of stocks may increase 3 times and we suddenly have an extra RM150,000 to spend. However, if we used the same RM50,000 for a 10% downpayment and our RM500,000 property tripled, that’s RM1,500,000 of extra money. I am not saying it could happen but the possibility is there… (Think old PJ and current PJ?)
If we google for ‘reasons to invest in properties,’ there will be never ending articles about it. Don’t worry. If we google for ‘why NOT to buy a property,’ there are just as many articles. So, the world is fair and everyone has their own say. From my understanding, no one has actually gone bankrupt simply because they did not buy a property yeah. It’s usually due to some other reasons. Haha. If we dive deeper into the types of properties to buy, then we have even MORE debates; high-rise versus landed, popular hotspots versus emerging new spots and more. Perhaps that’s for another article. Till then, happy deciding.
written on 6th Oct 2018. Edited and republished 9 Dec 2019.
Next suggested article: My children and their future when it comes to property investment