A close friend asked me about a Studio Unit below 600sf for a below RM450,000 price. ‘Should she buy?’ I answered her that I do not like to buy SOHO, SOFO, SOVO or whatever acronym they may call the units because it is just not my type. At least one friend who bought these small units have earned a lot and thus I told my friend, she should just follow this common friend of ours and buy in this case. She wanted encouragement and thus she reminded me that the unit she is referring to is a STUDIO unit. In other words, it’s not the commercial type like SOHO, SOVO, SOFO or whatever. Let me answer briefly here. She is buying for investment, not for own stay. She is happily married.
First of all, these are all SMALL units, irregardless of whether they are residential or commercial. It would be suitable for a single, sure but not even a couple. Reason? They almost always come with one car park or none which meant that the couple better leave the home together and come home together. The cure? Nearby MRT stations. Yeah, convenience helps tremendously but these are still SMALL units. Personal preference, even if I stay alone, I would like a 700sf or larger unit. Sometimes, I just want my family members to come visit me and stay back and these are just not suitable. Yes, they may visit me just 2 times per year but I repeat, these are SMALL units.
When it is small unit, how much do you think the prices would shoot up? RM600,000? Search in any of the famous real estate sites and see what are some of the properties you can still buy for RM600,000. I am not sure if the buyer is prepared to pay RM600,000 for your unit. Maybe yes, then lucky you. Of course, as long as the economy is good, I think RM500,000 is very possible but sometimes when you really think objectively, half a million for a small unit? Demand is definitely possible but the market is likely to be smaller.
What about rental then? Surely it is easy to rent these units out. This, I agree totally. If I am single and I hate to do lots of housekeeping, a small unit is best. However, if I am a young single, how many of these young singles can afford to pay the type of rent that you need them to pay so that you can cover the mortgage for your small unit? RM1,200? RM1,600? Well, both these meant that you will suffer deficits every month. RM2,500? Now, this is a more realistic number but think realistically, how many can earn enough so that they can rent your unit for RM2,500? I have no answers and I have no intention to answer too.
Everyone must have their own preference. You may get very rich from investing in small units. I salute you. However, as a personal preference, I will still buy bigger units even if it has its own problems and limitations. Just a choice ok. If everyone buys just the same type, it would be so boring too right?
written on 22 Jan 2015
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