How to identify investment properties in Malaysia
Published on: Thursday, March 17, 2022
By:
Vigneswar Rajasurian, FMT
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A 4-5% yield on property investment is considered decent in the current housing market.
Here are five ways to hunt for investment properties in Malaysia.
1. Follow the infrastructure
A general rule of thumb is to follow the infrastructure. Current and upcoming LRT and MRT routes are easily found online, and property rental rates and values generally increase as public infrastructure nears completion.
New properties attached to rail networks or transit-oriented developments are likely to have high demand, boosted by amenities such as educational institutions, commercial zones and highways.
In the subsale market, visiting the physical sites of upcoming infrastructure helps uncover nearby properties that might not appear in online searches.
2. Property portals
Real estate portals are the best avenue to start researching investment properties. The “filter” option narrows down your search criteria, while the “sort” function arranges listings from low to high prices.
Some sites also show how the property’s value has appreciated or depreciated over time. Monthly mortgage repayments can be determined using a loan calculator and compared against current rental rates to identify properties with positive cash flow.
Public infrastructure and upcoming amenities can boost property values in a new development. (Envato Elements pic)
For high-rise properties, find the average price of a particular layout and compare it with the cheapest-priced listings for a similar layout.
Also be sure to compare the rental rates and selling prices of similar properties within a vicinity.
3. Below-market-value deals
Real-estate investors make money at their entry point, where a lower purchase price leads to better rental yield and reduces losses if the market value deteriorates.
With pandemic-related pay cuts and job losses, some distressed sellers may be forced to dispose of their properties urgently, resulting in an opportunity for lower entry prices.
Savvy investors can then undercut competing rental rates, assuring their property is rented out quickly.
Even if a property is listed below market value, always check the actual transacted price as the value of the current listing could be inflated. This includes auction property listings that claim to be below market value but have far different purchase requirements.
4. Befriend property agents
An inexperienced investor might uncover fully furnished units in a high-end building for rent, but not realise they lack demand and have remained listed for an extended period. It could be that the empty or partially furnished units are the ones in high demand in a particular building.
It is good to connect with property agents who have their ears to the ground, but bear in mind they have their own agendas. (Envato Elements pic)
Real estate negotiators and agents who specialise in a particular development or area can provide insight into what might not be immediately apparent. They are the best people to contact for “insider information”.
Seasoned property agents could also share current rates, recently transacted prices, and even below-market-value private deals.
Nevertheless, even with access to all this information, always do your own research as property agents have vested interests and biases when it comes to the properties on offer.
5. Join investor clubs
Property investment clubs notify members of good deals that often are not publicly advertised, such as overhang units selling below their initial launch price.
Thanks to the power of collective bargaining, some companies also offer members bulk-purchase discounts, where prices are reduced as investors purchase property collectively.
Others offer access to their own panel lawyers, resulting in even more savings for their members.
This article was written by Vigneswar Rajasurian of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.
