There are lots of things you will need to think about before buying any property. Even more so if you are planning to buy a new property as your first real estate purchase. Besides saving up for the initial costs up-front – which include the down payment, agent fees, legal fees, closing costs, etc – you also have to consider various aspects of the property itself, be it a landed house or high-rise unit. We’ve picked out the 6 most important things you’ll need to consider before buying a new property.
Once you have your sights set on a particular development, it’s best to do some research into the developer’s background. Many big property development companies are familiar names in Malaysia, but that doesn’t necessarily mean that their projects are perfect, neither does it mean that smaller, less well-known developers are unable to come up with quality buildings. Does the developer tend to focus on location, design, facilities, or functionality? Is this their first foray into a particular category of property? What are the comments from people who have purchased their properties? Online forums are a good source of information. Be smart and do a bit of background research beforehand to avoid disappointment.
Handover Track Record
Does the developer of this project have a good track record of handing over completed projects? Some developers are consistently punctual with completing projects, while others have a reputation for abandoning or delaying work. Delays in construction time-lines, issues with authorities and problems in a development’s construction phase can be easily found via a simple search online, as they are often reported in newspapers and highlighted in property websites.
Product Delivery Quality
This may be a little bit more tricky to find out, but not impossible. Some projects look really attractive and appealing on paper, and the end result looks like something right out of a designer’s portfolio. However, looks can be deceiving, as a chic modern facade can hide flaws such as low quality materials (to reduce cost), shoddy workmanship, poor management, and even misrepresentation of property. Make sure the property you are buying does not compromise on quality, even if it is on the cheap side, and especially if it comes with a hefty price tag.
Ah, the ever-important location. While in recent times location has occasionally taken a backseat to other factors (find out why), it is undeniable that a good and strategic location will be more easily sold or rented out. Therefore, it would be wise to choose an established location, an upcoming area near to already established markets, or a new area that is not too isolated with good connectivity and accessibility – it all depends on what your reasoning and personal judgment.
If all else fails, buy a map and highlight surrounding areas according to affordability, accessibility, and any other factors you deem important and perhaps it will show you a clearer picture of possible future developments and investment choices.
Current Rental Returns in the Area
If you are buying new property for investment and collecting rental, make sure to find out the current rental yields and expected rental returns in the area. Statistics in an established area are easier to source, but that doesn’t mean it is impossible to find out the rental returns for new properties. The best way to find out is to search or ask around for the current rental rates in the immediate area or in the vicinity, or spend some time on property listing/rental websites to get an approximate value.
Past Management Ability
This applies to strata properties – including but not limited to townhouses, apartments, condominiums, and serviced residences – which have a company to manage the building’s operations and facilities. Residents in such properties are required to pay a management fee, but does the management deliver the services people are paying for? Is the management company a reliable one? Is the rubbish disposal properly handled? Are the facilities maintained regularly? Are repairs fixed in a timely manner? These are all important questions to ask so you can have an idea of their past management ability.
Tip: Online forums are the best places to source for firsthand information, as these are places where residents and owners will be able to freely air their grievances, complaints, comparisons, ideas, opinions, and even praises of a particular property or developer. Do a comparison of past years’ property award winners, and skim through past articles to gauge whether a developer or development is reliable. It’s all about being a smart consumer and investor!
*This is a series of short articles from our Maspex 2015 Penang experience. Although the exhibition focuses on secondary property and its corresponding market, most (if not all) of the information here is applicable to the Malaysian property market within the proper context. We hope you find these articles helpful and interesting, regardless of whether you are a real estate agent, property investor, or just a member of the public trying to learn more about property and real estate in Malaysia.