Property Investment 101: I am a first-time home buyer, how?
I love this question but my answer is not a straightforward answer, sorry.
I spoke in the INVESTFair 2023 in MidValley Mega Mall just last weekend. I cannot say for sure for all speakers but my session was full house and many more were standing just outside the seminar area. I am grateful for everyone who dropped by and listened. I hope I have played my small part in helping more Malaysians own a home.
After the talk, a few people spoke to me and one of them was this young man from Ipoh. He mentioned that he stays near my Ipoh home and asked if I could give him some advise since he intends to buy his first property. Here’s my 3 or 4 simple tips just to get the thoughts on the right direction. If we are really buying, we need to ask more questions than these yeah.
Why are we buying?
It may be a unit nearby my parents house and my brother just have to get that unit no matter what. Thus, the offer has to be really genuine and attractive. It may be a unit which we intend for it to become a home sweet home. If this is the case, then do we like the unit? Are there enough great reasons that we could stay there for many happy years? The reasons could be anything, really. The kitchen is big enough, the living room is spacious, the porch could park 3 cars, anything. Just need all the right reasons for it to become a home sweet home.
If the reason is we want to rent it out for homestay, then it’s time to go online and search similar units nearby, look at the reviews and the prices they were being rented out. If the price is not good, if the reviews are saying things like ‘location’s not good’ etc, then better stay away. All these needs some time to do the research. If you do not and you just trust whatever the sales person says, that’s when it may just be a mistake.
How much could we commit?
Let’s face it. Most of us do not have unlimited funds. I know some friends who seem to have unlimited funds but most people would have funds limitation. Knowing how much we could afford is key. If we over-strectch ourselves financially, it will put us in a dangerous situation. What if we lose the income source for just a few months? What would happen to the repayment? Use our full income, minus all the compulsory expenses and we would have a good number to work with. Please note compulsory expenses should not include fancy meals in a cafe or Americano from Coffee Bean everday yeah.
When should we go ahead?
Is this the best time to buy? Haha. Best time to buy means what? Means no matter what we buy it’s also okay? Worst time means what? Whatever we buy will surely fail? Frankly, it’s the right property which matters. A good property in a great location may only be available at a good price during bad times. A bad property during good times may even be sold at a price higher than what it should be. Stay very focused on WHY question above and the WHAT question below. Stop focusing on the time. If we did not find any property which meets our expectations, do we still buy? 🙂
WHAT should we buy?
This should meet your WHY above. If it’s for a home sweet home, how big should the size be? For a couple? For a family of three? For a family of three? A room for the parents? If it’s a double storey, a room for parents should be a room on the ground floor and it must not be the old design where the room is a small one for the maid. It has to be a current design where the ground floor room could be huge enough for a fully furnished room with a queen size bed.
If it’s for homestay, a high-rise unit with full facilities may appeal better to more people versus a landed property where it’s just too big for a single person, a couple or even a family with young kid(s) because they have no pool / playground to play with and they cannot just be running in the car porch the whole day… Unless of course your target is ONLY for big families and you like to occupy a niche, then go ahead and buy a typical landed home of 1,600 sq ft or more. Usually a double storey terrace may be 1,600 sq ft or higher.
Where should we buy?
This is not the last point. This is save the best for last point. If we have reached some conclusions on all the above, we can now move to all hte potential locations. Sorry, we should never start from location in my own assessment because this will immediately narrow our search too much and we will miss the WHY, what HOW, the WHAT and even WHEN.
The reason to buy is the top, not the location. If we need to stay close to our parents but the location we love is 45 minutes away, then please be realistic yeah. If we like to rent out to working professionals but the location is far away from the central business district then it’s a challenge even before we start yeah. If the budget we have is just RM500,000 and the only thing we can buy in that location for this amount of money is a small sized high-rise unit, should we proceed? This is why we need to do sufficient homework first versus determining the location first. The location will come when we think of why, how, what and when but it must not lead everything else and then we try to match the rest to where.
Conclusion
There is no need to listen to just my perspective yeah. It is just how I buy. Do speak to more people and see what is their strategy. Adapt and adopt one which you find more suitable for you. Just need to remember that property is definitely compulsory one day. Else, it’s never ending rental until the day we bid goodbye to this world. Cheers.
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