Category: Investment Tips (5)

Real estate agents and brokers who have been around awhile understand the skill, time, effort and measure of luck it takes to beat out the competition and get awarded a signed property listing agreement.

They also understand the marketing process; those things that must be accomplished in order to present the property to the real estate community, and then subsequently how to properly handle offers to purchase.

Okay, but on the other hand, real estate agents who have never listed and sold rental income property might not know the full scope of physical inspections that must be coordinated once the rental property is sold and enters escrow.

So for those of you who are just starting to service commercial real estate let me give you an idea of what you should expect to address in the way of property inspections. Of course we’re assuming that these inspections are requested by the buyer in the sale agreement as “subject to the buyer’s approval” and accepted by the seller.

 

1. The Walk-thru Inspection

A “walk-thru” inspection is where the buyer gets to physically enter and examine all the units in the rental property with an eye on the over-all condition and quality of the carpets, appliances, fixtures, and tenants. This inspection regularly takes place during escrow because sellers are reluctant to disturb or alert tenants about a sale until they are satisfied with the buyer’s financial ability to make the purchase and have an accepted signed-around purchase agreement.

 

2. The Infrastructure Inspection

This is where the buyer typically hires licensed contractors to make inspections for such things as pest and dry rot, plumbing, electrical, roofing, and maybe even mold. Obviously these inspections will be a cost to the buyer so they shouldn’t be ordered until the walk-thru inspection is approved.

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checklist-300x300– Does it have strata titles or individual titles, The former will be bound under the Strata Title Act. Although new regulations state that guarded and gated development have to have strata titles, there are projects still offering individual titles.

 

– Confirm if the guarded and gated has obtained the necessary approvals from the authorities.

 

– Check the developer’s track record. The developer’s involvement in guarded and gated projects is inevitable, especially during the initial completion period, e.g. engaging the residents, setting up a resident’s committee, appointing security guards and landscaping companies, etc.

 

– How much are the maintenance fees. All residents need to contribute toward the management and maintenance of the common areas within the guarded and gated area. Per house contributions can be exorbitant if there are only a small number of residential units within the guarded and gated area.

 

– How is the road circulation within the guarded and gated area as well as ease of access to the main road and highways.

 

– Features such as open areas, car-parks, CCTV etc.

Top property investment tips

– Two golden rules

Look for the potential upside, and always calculate the amount of risk involved in the investment

 

– Don’t believe the hype
Always refer to facts and figures and not the hype surrounding the property or your own hopes and emotions.

 

– Enter at the right price
When choosing the right property, nothing is as critical as the right entry price. Cross-check the property price against surrounding properties; if it is lower than its neighbours, you’re taking less of a risk and have the potential to make more profit.

 

– Popularity counts
Popularity needs consideration. The property has to be sizeable enough. Reasonably well-known areas and architect’s brand name give a strong publicity push. These are the properties which prices will escalate.

 

– Look for uncertain times
If the market isn’t good, there will be buying opportunities, and interest rates will have to stay low. Do your calculations don’t speculate and take advantage of the opportunities.

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repayment-plan

Bi-weekly and extra payments can help to save on bank interests

When it comes to purchasing a property, it is vital to look into the possible steps to save on interests. Most Malaysian only pays a minimum loan installment every month and this cause the loan amount to double up due to the interests. There are 2 simple ways where the buyers can save money on bank interests.

 

1) Bi-weekly Payment Package
Instead of choosing a monthly installment, buyers can choose Bi-weekly installment instead. This payment method is popular in foreign countries, but not so popular among Malaysians. Instead of making a monthly payment, the buyers can pay half the amount, twice a month. Please refer to the example below. By using this method, the buyers can save at least RM42,495.71 in interest and 4.5 years on loan tenure. But everyone should be wondering what’s the catch behind this. The catch is, the buyers need to pay 1 month of extra installment per year, since the payment is calculated every 14 days. So instead of making 24 installments a year, the buyers need to pay 26 installments. Yet it does make a big differences in the savings.

 

2) Extra Payments Towards The Loan Principle
The second step would be, calculate 10% of your monthly installment and pay the additional amount towards the principle of the loan. By this the buyers can save RM78,000 interest and 8.5 years of tenure.

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InsideSlides_Property_Insurance

Property is one of the most expensive item that you may bought in your life, so you spend your hard earning money to buy it, you need to make sure it cover with insurance to protect it, the following are some of the tips that you may go through when you buying an insurance for your property

 

  • Insured value/sum insured – Get a professional property valuer to estimate the value of your property based on rebuilding costs. For property insured by the bank, the coverage is usually based on the amount of loan taken. It’s advisable to top up coverage for better protection. Householder policy holders should declare items they want insured to get full compensation. Maintaining documents, receipts and photographs of these items prove helpful in the event of a claim.
  • Average condition – If the insured value in your insurance policy is less than the rebuilding cost, the ‘average condition’ will apply in the event of a claim. It is advisable to re-evaluate your property and its contents annually for a more accurate insured sum that covers renovations, enhancements and additional movable household items.
  • Insurance purchase responsibility – Insurance only needs to be purchased upon vacant possession from the developer. It is mandatory for the ‘management’ to purchase fire insurance for the entire building for strata title properties. Still, respective unit owners or tenants are advised to purchase or top up on the coverage. Do check if your bank already required you to purchase property insurance beforehand.
  • Premium and policy – Ensure you pay your premiums on time, within 60 days from the inception date or the cover will be null and void. Insist on a receipt for premiums paid and contact the insurance company if you have not received your policy within one month of purchase.
  • Making a claim – Notify your insurance company in writing with full details as soon as possible and take necessary measures to mitigate further loss. Advisable to contact your insurance agent immediately to find out relevant procedures and action required.
  • Complaint – If you are dissatisfied at any time regarding your insurance claim or policy, submit a written complaint to the complaints unit of your insurance company. For further action, you may take the matter up in writing to Bank Negara or the insurance mediator at the Financial Mediation Bureau.

GOOD TO KNOW
When purchasing residential landed property, one is paying for the land and the building structure. When purchasing insurance for it, concentrate on the costs of re-building the structure and the contents of the home.

Employ a valuer to estimate these costs before taking up a comprehensive insurance package to ensure coverage of the costs of re-building and loss of contents. Strata-titled owners are advised to purchase both houseowner and householder policies as the insurance these owners are required to take up under the high-rise management only covers the cost to re-build the structure.