For many, the act of purchase entails the outflow of cash to procure benefits. However, the reverse is possible when it comes to buying a property. For starters, the value of properties in most cases increases as time goes by, and owners can benefit from capital appreciation.
On the other hand, favourable rental yield ensures a stable and steady rate of return from your tenant. With these factors in mind, a prudent homebuyer can make money when he or she buys a property. Let’s get to the details why this is the case.
1/ Location, location, location
Homebuyers, property investors and upgraders alike must know this rule by heart. The old adage, “Location, location, location,” rings true when it comes to real estate and it bears repeating just to emphasise the point.
Ideally, you will want a house in a place where amenities are within walking distance. If walking distance is not achievable, then the desired amenities should reasonably be within a few minutes driving distance.
With regards to amenities, a combination of holistic lifestyle elements is important, such as the presence of schools, institutions of higher learning, shopping malls, MRT, LRT and hospitals. Depending on the purpose of your property purchase, whether for investment or own stay, your needs or your tenants' should match the neighbouring amenities. Succinctly, the factor of location is reflected in this simple thumb rule - “Live, Work and Play.”
Individuals want a comfortable environment to live in, easy access to their working place, and finally, the ability to exercise their purchasing power, either for entertainment purposes or for their daily upkeep.
Mont Kiara makes a fine example of a case study to reflect this concept. The presence of international schools in the vicinity, coupled with shopping centres such as Publika, and a mature neighbourhood replete with lifestyle elements, has greatly improved the value of properties there.
The paradox of life dictates that having too much of something is harmful. Hence, the balance needs to be observed if one is to buy a property. Many people may enjoy the prospect of staying next to a school or a shopping mall but the noise from the crowd and traffic is abundant enough to disrupt their peace. A thumb rule is to have a home within nature’s embrace, away from the hustle and bustle of city life, but not disconnected from it. The takeaway keyword here is connectivity.
Population booms spell fortune to homeowners everywhere. The increase in headcount reciprocally demands an equal amount of housing to cater to these individuals. The increased housing demand will drive the capital appreciation of your property. Rental yield also enjoys a boost as there is now a surplus of tenants comparative to landlords. The inverse applies to a population decline. On the far end of the spectrum, we may take a leaf from the disaster of Detroit, USA as a lesson.
4/ Job opportunity
If ancient civilisations follow the flow of the river or sea, then modern civilisations follow the job market. Hence, population inexorable flow from villages to towns, and from town into major cities, where there are more job opportunities. Properties in villages then either reduce in value or remain stable while properties in cities enjoy a spurt of capital appreciation. A population with a higher average salary also translates to higher average rental yield for the landlord.
5/ Social stability
Crime rate drives away people. So pay attention to news reports and note the frequency of crime happening in the place where you intend to make that purchase. The presence of police stations in the vicinity is a point to consider as it suggests the presence of security patrol. Other adverse factors to watch out for include the bailiwick of a particularly distasteful political party, perhaps one that imposes adverse and constraining religious practises.