I really love invest in properties. I started to study property investment in 2008. That time, my wife and I had high debt. I was asking myself how to make money work for themselves.
So I read lots of books about investment. I found 2 major kinds of investment.
- Property Investment
- Stocks Investment
At first, I started to invest in stocks as the capital requirement was quite small and easier for me to enter into it and easy exit as well.
While doing my stocks investment, I read more than 10 books about properties investment. I did lots of theoretical studies but I didn’t take any action because I was really afraid to venture into it.
I fear property investments because:
1) How do I know the property can be rented out easily?
2) How do I know the tenant is good paymaster & will do good take care of my property?
3) What happens if I can’t rent out fast? Can I cover the loan monthly installment.
4) If anything broken, how much the cost? Can I cover it?
5) Afraid of unforeseen cost to buy a property such as legal cost, valuation cost, stamp duty etc? (Most of books I found are suitable from US, hardly to find Malaysian book which covers these costs)
After awhile doing stocks investment, I feel bored cause it is like watching screen of price movement without much excitement.
I made a leap of faith by going to the ground and did heavy study on properties within my home.
I check occupancy rate of a property, what kind of rental price demand, condition of properties etc by visiting lots of them.
When I bought my first property it was a run down unit with lots of repair to be done.
My hand was shaking when I signed my first property investment S&P. I didn’t have money to cover some of the legal cost. I had to cut my food and other spending to cover my legal cost.
Alhamdulillah, now I have 5 rental properties. If not because of the 30% down payment requirement, I would have more than 10 rental properties by now. :-).
Below are my list of criteria for property investment.
- Driving time: 30mn from my house
- The area offers lots of jobs opportunity or nearby to business district area such as KL.
- Occupancy rate must be above 90%. (Check whether lots of people stay that area at night by looking at the light or parking. If full of cars mean it is good)
- Property type is low rise walk up apartment & non furnished (low rise so less competition, walk up because in Malaysia it is known lift is not well maintain, it must be first or second floor only. Ground floor is not preferred because no privacy. Higher floor more competition from first 2 floors)
- Joint Management Board (JMB) must be well established to ensure strong management in maintaining the apartment.
- Area must be clean. Clean area attracts quality tenant.
- Any competition with similar built up and price