Buying property, whether as a home or an investment, is most people’s biggest financial decisions. Proper research and planning are crucial to ensure that it is a sound investment that can yield good returns. Property experts, country head of JLL Malaysia Y.Y. Lau, and Propedia Consultancy principal Vicky How, share some advice for women who are looking to invest in property.
Is investing in property a good idea?
Lau: There are a number of options for investments such as fixed deposits, government securities and bonds, shares and properties. Each of these have different risks attached to them. The current inflation rate is from 3% to 4%. Fixed deposit rates are also around the same level, which wipes out any gains from placing money in fixed deposit.
Investing in property is a good idea as it is a fairly good hedge against inflation as land is a scarce resource, especially near city centres.
How can property investment improve women’s financial standing?
Lau: Most people cannot reach financial independence by being full time property investors as you need cash for the deposit when buying any type of property.
You would need a steady income to service the property loan. Active income is also necessary for the banks to assess how much credit or loans they are willing to extend to you.
But income from real estate can be a form of passive income that will help you build your retirement income quicker or enable you to live as well as you did during your peak earning years.
Property investment can be an investment to make your surplus money work for you.
What must a woman consider before investing in a property?
Lau: Affordability is key. As a general rule of thumb, a third of your monthly income can be apportioned for mortgage payments.
It is also important to have the necessary savings for the deposit and check whether you can obtain financing for your intended investment
Is it really all about location, location, location?
How: Location is not everything. Women should also look into the price, population, amenities and potential of the property.
Lau: Location is important but if you cannot invest in a prime location, there are other options to consider. Good connectivity is important for easier commute to work. Investing in locations near to existing and future infrastructure such as new roads, MRT or LRT is the next best option. Women who are starting a family should also consider a place near schools.
What should you look for in a good property developer?
How: You have to do due diligence, especially if you are buying a property that’s still under construction.
Research the developer’s background and track record. Look at their workmanship as you don’t want to struggle with leaks and cracks once the liability period is over.
Buying a property that’s still under construction requires some vision of how the property would be like in the future. Do not draw conclusions based merely on what the sales person tells you.
Go to the actual site a few times to have a feel of the location. Check on things like density and accessibility. Once you are happy with everything, go ahead and make your decision.
Is it wise to invest in a property that’s still in development?
How: I advise first-time property buyers to buy new development property. The reason is simple – first they do not have to spend too much money on the initial deposit. Also, purchase costs such as legal fees and even stamp duty of the loan agreement are borne by the developer. Second, buying under construction property is straightforward and protected by the Housing Development Act. Third, as the construction may take three to four years to complete, you will not have to pay full instalments every month during this period. You will have ample time to prepare to pay full instalments and save for renovation costs.
What are the common investment problems women face?
Lau: Knowledge is most important when investing in property. Many people don’t have all the information they need about future rental, occupancy or even property prices before making that investment decision.