Buying Properties for Investment or for Your Own Stay

In the book “The Richest Man in Babylon”, George Samuel Clason wrote the importance of owning the roof over your head. After that is achieved, a wise move would be to acquire rental properties to provide passive income. This wisdom holds true for the Babylonians on the banks of Mesopotamia as for us today in our modern homes.

My paternal grandparents were poor, illiterate immigrants who saw the potential or owning their business and investing in real estate. No longer poor and academically qualified, I humbly follow in their footsteps.
However, there is a difference in buying a house for your own occupancy and buying a house for  investment or rental purposes.
 
If you are buying a property for your own occupancy, the things to consider would be:
1) Affordability
Do consider your income and expenditures and liabilities and decide how much mortgage you can afford. Remember that in addition to the   asking price of the property, you would need to set aside another 5% of the price to cover costs of legal fees and stamp-duties. Then there is the cost of renovations, repairs and any extras such as landscaping that you might want to have. Buy the best house you can afford to meet your needs.
 
2) Location
Is the location convenient to you and your family in terms of access to your place of work or school, hospital, shops etc. I have seen enough people suffer because they chose to stay far away from the place of work or school that needs to be reached daily. Why do they do this? For some it is because houses in faraway places such as Rawang, Semenyih and Seremban are cheaper and therefore cheaper even though they may be working in the Klang Valley. Others choose to stay near their parents homes. Yet others prefer to stay near malls or entertainment outlets. Do consider travel time,petrol and toll costs when choosing the best location for you.
3)  Apartment or house
Again it depends on   your needs. Apartments/Condominium are typically preferred when security is a concern. When you need more space for a growing family, then a house is obviously better.
 
When buying a property for   investment, there are two types to look out for:
Category 1 : Properties that are likely to appreciate in value but with little or no rental income Category 2 :Properties that provide both rental income and capital appreciation.
 
A smart investor would choose   Category 2 and would not settle for less. Despite what  people may tell you, it is possible to find this type of investment. However, you must be prepared to do your own research   and negotiation or pay someone to do it for you.
Properties that fall into Category 2 more often than not are commercial properties. Not any commercial property but carefully selected commercial properties.
The commercial properties that generate good returns are often:
1)1/2/3 storey shops that do not need a lift
2) ground floor of a building
3) land that can be used as parking bay
4 )located in a densely populated area with limited commercial buildings
5) occupied by a business that is doing well.
 
Many property investor buy apartments/condominiums as they are cheaper. As I have mentioned before, buy value not price .It is better to save up and buy a property with good value that generates good returns than to buy just because it is cheaper. Furthermore, there is currently a glut in  apartments/condominiums that result in low rental or no occupancy.
This can be avoided by doing sufficient research before investing ,Property is an illiquid investment and the purpose, location, holding capacity  and returns have to be given due consideration.
Better to be prudent than sorry . . .
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