Just like diamonds, assets are forever and many fail to see that. Millionaires make sure money works for them and you will have to understand that the only way to build your wealth is to invest in multiple sources of income that you don’t have to work for but build yourself or purchase from someone else. There are many tools to generate income; it could be stocks, bonds and most importantly real estate. Not sure how to get started in real estate investment? You may approach agent and ensure that your agent is registered with Lembaga Penilai, Pentaksir, Ejen Harta Tanah & Pengurus Harta (LPPEH).
Real estate investment has unique traits and no other offering has the abilities like real estate. Real estate value is constantly appreciating and it’s always in demand because people need a place to live. You can borrow as collateral and even able to write off all expenses and costs associated off on taxes.
As a beginner in the real estate investment, there are many ways to invest in the real estate, the major differences is how much capital you will need to put down and invest. It could be as little as RM10,000 to purchase a RM350,000 single family home, or to as much as RM20,000 to RM30,000 to purchase a multifamily home. Commercial property is also popular amongst the savvy investors as it can fetch higher rate of capital gain, many business owners need a physical location to set up and run business.
Condominiums or apartments: Best to buy for cashflow as they give the best cap rates. There’s a problem on the resale as many hard to finance as an investment property.
Commercial office space: Buying small commercial buildings and renting out office space to professionals
Industrial properties: Manufacturing, warehouses, distribution centers and etc
There are many ways to find properties for investment and the most common ways are to find the owner directly and give them cash offer. Find properties that are owned by a lender or bank that they want to get rid of at a discount, auction.
After you have finally the property under your hand, there are many strategy techniques you can use to maximize your return. You can use the technique of buy and hold, fix and flip, vacation rentals and others. Here are some techniques you can use to suit your needs.
Buy and hold – Buy property, rent it, and hold it till there’s a buyer willing to buy at the market value.
Fix and hold – Buy property below the market value, remodel to force value appreciation and hold until market improves for sell.
Fix and flip – Buy real estate below market value, remodel to market price and sell it immediately to get your return.
Vacation rentals – Turn your residential unit property into a vacation property like Airbnb
Many would ask how do I finance my own property investment. There are many loans out there in Malaysia and it is easily available, provided if you have a good credit score.
All cash: Property with no mortgage attached, stable and safe return.
Term loan: The most common loan in Malaysia that gives maximum tenure of 35 years and the installment and interest rates are bundled together in the monthly payment.
Fixed rate loan: Also one of the most common loan in Malaysia. The interest rates for this package is fixed for its entire tenure and those who worry that increasing interest rates and changing of Base Lending Rate (BLR) may affect them, this is the package they should be considering.
Flexi loan: Popular for those who are cash rich in the bank, the borrowers will enjoy the benefits of lowered interest rates when they deposit more money into their account.
Islamic loan: Syariah loan compliant and using Murabahah concept, bank ‘buys’ the property from borrower and rents it back to them. This loan is popular among short term property investors as the nature of the loan where banks are unable to charge borrowers penalty for early redemption.
Refinancing: It is popular among property investors and owners who find the value of their property has appreciated. Refinancing is taking another loan for a property that already has a loan taken out. Loan taker will be able to approach the bank to evaluate their property and if the value of property has increased, borrower will be able to take another loan based on higher value. It will give them ‘cash back’ which they will be able to use monies to invest in other areas.
Government loan: Government housing loan is a loan for government servants, provided under the division of Pinjaman Perumahan. However, there are strict rules for government servants who apply for this loan. Click here for the regulations for government servants.
Millionaires know they do not have all the answers or do intense research on each and every investment. But, they are aware of the market, their investments and current issues happening around. They are involved in the management of their portfolio but know when to seek guidance.