A very capable young lady who has yet to buy a home had lunch with me on Monday. She asked if there were any area which I think is worth buying currently. Else, she intends to buy in Bangsar, where she was staying with her parents currently. She also asked what’s the price range which she should look at. She has no intention to stay in the unit she will be buying because she is comfortable staying with her parents at the moment.
I told her that if she loves the area where she was staying, then it’s worth buying as soon as she could find a property which could be easily rented out. She asked how does she know, I told her to look at rental advertisements as well as to ask the question when viewing the unit with a good real estate negotiator. Then, I remembered a chart from Knight Frank’s Real Estate Highlights for 2019. (click here to read the copy). Image for average asking rentals for the following area as follows:
The above image does not mean every single property will be priced within the range. In order to use it as a very rough guide, then example as below: Assuming the property is a 1,000 sq ft condo in Bangsar. Based on the above, the rental for such a unit will be around RM2,400 – RM4,000 per month. It has remained unchanged. If the property was in Damansara Heights, then the lower end rental has actually gone up. Taking the same 1,000 sq ft, we learnt that the rental has increased by between RM200 – RM300.
Secondly, it is also based on ASKING RENTALs. Thus, it has to be assumed that these rental rates are the rates which are generally accepted in the market. Assuming rental if RM2,400 – RM4,000 per month, then the maximum price which one should consider buying should be between RM480,000 to RM800,000. In other words, RENTAL FIRST, before buying price. When the rental could cover the property price, that would be an ideal situation.
Again, this depends on our current age (how long could we stretch the loan to) and our salary (how much we could actually qualify). Remember, regardless of how awesome that area is, look at the rental numbers first before the selling prices. However, if it’s for own stay and one must stay very close to the mother-in-law because she cooks every night and her food is tasty, then please do not look at rental. Just look at what you could afford. Period. Happy deciding.
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