1. Check your income
When we are talking about buying a property for your own
stay or investment purposes, it is utmost important that you should get to know
your income and financial power. You will be making yourself a clown if you are
buying a property worth RM 800k with a meager income of RM 3000 a month.
Knowing your income and understand how bank will borrow
according to your income will be good for you to know where you should start
hunting for the property that is within your range. The benefit is you save
your time, and you also save the agent time as well.
Of course, if your income is small, you do not immediately
assume that you can’t afford to invest. As long as you have a stable and
reasonably good paying job with solid employment history, you shouldn’t have a
problem getting a loan, provided that the property mortgage is within your
range.
A quick check to know how far your income can be committed
to bank repayment is to take your net income x 70% = Amount that can be
committed to bank installment. If your current bank commitments (personal loan,
hire purchase, credit card cash out, PTPTN, mortgage loan) + your new purchase
property monthly mortgage is within the 70% of your net income, then you will
have a good chance to getting your mortgage financing of your new property.
2. Get a pre-approval loan
Now this is a little bit tricky. Getting a pre-approval loan
is akin to testing whether you are a bankable person to the bank or not.
Usually, seasoned investor will use this method to see if they are still
eligible for how much loan, or margin of finance. This is an important process
if you are planning to get lelong / auction property from the auction house,
because the auction house will have a strict deadline for you to adhere to
after winning the final bid. Getting a pre-approved loan will help in meeting
the deadline and avoid any unnecessary penalty from delay.
3. Set a concrete goal
Buying a property is not buying your daily vegetables or
clothes. For most, the property is a once in a lifetime purchase. While for
investor, it is important to choose a good and strategic property in order to enhance
their portfolio return.
You must know what are you looking to achieve. Ask yourself
that what does success look like to you? For example, property investors
generally invest in property to secure their financial future or to be free to
do what they want, when they want it.
In order for you to achieve your goals, you must first
articulate what your goals are. More importantly, you need to set a deadline as
to when you want to achieve these. Then you can work backwards.
I had friends that wanted to invest in properties 10 years
back, but 10 years later, they are still in the same place, because they do not
have any concrete plan. If you’re looking to replace your income and retire on
your investments within 10 years, you can start by creating a 10-year plan,
broken down further to 5-yearly, yearly, bi-annual all the way down to weekly
timeline. This way you don’t get overwhelmed by the enormity of the task.
4. Understand your attitude towards risk
It is important to know what you can take on your shoulder
so that you do not break your own back. Understanding your risk profile will
dictate your strategy. In properties, what sort of risk can you tolerate? If
you are investing a property for rental yield, can you tolerate if the rental
yield does not meet the monthly bank repayment? If you are investing for
capital appreciation, do you have a strong cash flow to “tahan” when the
property market is not performing so good?
Getting an understanding of your own attitude to risk will
help you create a strategy that reflects this.
It’s not sexy, but budgeting is the only way to ensure
you’re able to balance your income & expenses.
5. Now is the time to start your budgeting
This is one of the important part in every big purchase.
Budget plays a big important role. A lot of people do not know what are the
real cost that is going to crash their wallet when purchasing a property.
Purchasing subsales property is more than just being able to pay the 10% down
payment to sign the SPA. We are talking about paying the lawyer fee, stamp
duty, loan agreement fee, stamp duty for loan, mortgage insurance, and
renovation and repairs if needed. That is another additional 10% to 20% from
your SPA price.
Alternatively, if you are not looking to pay so much to
acquire a property, you can always do so with new property launches directly
from the developer. Developer always offer good packages that will ease the
purchase upfront with minimal cash layout. If you are looking to purchase aproperty at old klang road, I can tell you of a developer that is willing to offer you a fully furnished house with bed, mattress, dining table and chairs,air conditional as well as legal fees all paid for with just RM 2000 of booking. Incredible right?
But if you
are going for subsales in Old Klang Road, be prepared to fork out RM 100,000 to
RM 150,000 easily. No joke. A RM 700k condominium will land you with RM 70k to
sign SPA. What about the rest like MOT, lawyer fee ?
6. Research for more information and be informed
Free food doesn’t always come good. If we are talking about
property that is of half a million in value (unless half a million is peanut
for you) then, it is important for you to do your own research. Use the tools
available to you to make an informed decision. Don’t know what tools to use?
The best ever tool to be known online will be Google.com.
Of course, you can check about surrounding prices from
iProperty.com, PropertyGuru. You can get to understand the location by using Google
Map. You can check on surrounding property transaction prices from brickz.my.
Good enough?
7. Keep focused
In anything you do, make sure you stay focused. Investing in
property is a business decision, not an emotional reaction. Get clear about
what you want to achieve. You can set a date as to when you want to achieve
this goal. No deadline, then you will get nothing accomplished, because human
like to procrastinate.
In conclusion, it’s easy to get overwhelmed when you’re
starting something new and as massive as property investing.
But don’t give up. Just imagine in 10 years, if you buy
the right properties this year, you could be sitting back, feeling happy,
secure and even proud that you bought properties that more than doubled their
values while your peers and everyone else wishes they’d bought back in the day.
How good would that feel?