3 stages of Property Investment to consider before investing
1) Buying Stage
2) Holding Stage
3) Exit Plan
1. Buying Stage
1) How much money to be invested? Because the more money comes out from your pocket the lower the return of investment. For example, you take out RM50,000 to get a return of RM100,000 in 5 years will average 40% (100,000/50,000*100%/5years) return every year. If your initial investment is 0 then your return rate is infinity.
Things to consider - Downpayment, Legal Fee & Stamp Duty, Extra money to refurbish or furnish.
2. Holding Stage
Who is your future tenant and what is the rental they willing to pay? Will it be positive or negative cash flow every month?
Maintenance is not just about management fee (if any) but also the replacement of furniture, piping, roof, tile, painting, tax, quit rent/assessment, insurance along the whole holding period.
3. Exit Plan
Who is your future purchaser and what is their price range? The safest way is to buy median range property (residential) in the area.
Always buy market demand property that your future purchaser will buy. For example: 1,500sf condo with 800k would be nice to stay today but it would be difficult to sell in the future due to the price and also the family size.
This article was contributed by:
TJ WONG (REN 09589)
IQI Realty Sdn Bhd E(1)1584