2017-07-26
[Interview] Dory’s Experience in Renting Property in Japan and Property Investment in Malaysia: Part 2/2
- Interview
Why made you invest in real estate?
At first, I was thinking to have at least one property in my whole lifetime because it’s better to have assets. I was only thinking of owning my own dream house but after that for some reasons, my husband was influenced. In the starting, he didn’t believe in investing in property but my father-in-law and my husband’s friend have been actively investing in property. Under these influences and at the same time, I urged him to have some properties on hand so we got our first one. After that, he started to study the trends and found out a few properties which are undervalued, and he thought they were good bargains. Moreover, we will also look at the catalysts such as the latest news regarding the development of the area where the property is located. This will help to increase the property price of the area. Also, it depends on the timing.
When did you purchase your first property?
I purchased my first investment property 8 years ago together with my brother. It’s located in Damansara Perdana, which is very near to IKEA and One Utama. After we bought the property, they started to build Empire Damansara and MRT. Although, it was still affordable in terms of buying or renting because it is not a very high-end property. The location is the most important thing for the rental market property.
During that time, we couldn’t tell for sure how much we would be able to earn for that property. To note, when my husband & I consider property investment, we would categorize them into 2 categories, property which is better for rental market and property which is better for flipping.
Dory’s first property in Damansara Perdana
Do you have any target tenant?
I have thought about it. If possible, I prefer working adults or family.
Other than location, are there any important factors that you consider?
The location is not the only thing, pricing is important as well. Pricing is very technical and complicated. Actually, the main person who did a lot of analysis was my husband. So, what I am sharing now is what I learned from him. At first, you have to do price research by comparing the prices among the surrounding areas. You have to check the pricing, the costs, and rental market, the selling price and the price per square feet in these surrounding areas. Furthermore, you have to check the background of the property area to see if there is any future development, which can influence the area.
Where did you find all this information?
You only need to go through the internet and look into the real estate portal site to do the price research. For research on the future development of the area, is more tricky. You have to read a lot and remember what you have read. Or else, you need to go out to meet people and talk to them. My husband has a couple of contacts of the property developers and he talked to them. You will definitely need some relevant insights from these kinds of experts. They are also like us looking for cheap places and lands. We have to think like them when we buy property regarding the location and price. This is macro research where we look at a bigger picture. Then we will proceed to the smaller details like the exact location, accessibility and surrounding facilities which can help you to rent the property out fast. This involves a lot of time and thinking. Sometimes you cannot wait for so long because you are also afraid that the price of the property will increase. It also depends on your own luck.
How did you find your first property?
I got to know about that property in Damansara Perdana through my husband. One of my ex-colleagues was also staying there but he stayed in a bigger unit, so I went there before and was kind of like it. Someone put it on an advertisement and my husband came across it. That time my husband had been actively searching for property. Before I bought the unit at Damansara Perdana, he bought one apartment located in Surian Damansara, which is just walking distance to The Curve & IKEA. But he had sold off this unit after holding it for 3-4 years.
Dory’s husband’s property in Mont Kiara
A couple of years later, my husband saw one posting for another apartment which is located at Mont Kiara. It was fully furnished, fully renovated, free hold apartment located in a quiet neighborhood at Mont Kiara. The facilities are top notch where it also comes with a few sky lounges built with different themes. During that time, my husband thought it was a good deal. He saw the potential of decent capital gain as new blocks are being built to this same apartment but with a selling price of a few times higher than our targeting unit during that time, in terms of per square feet. Hence, we bought it.
How long did you take from finding a property to settlement?
I can’t really say how long it took to find the property because it really depends. I asked some of my friends as well but nobody had an answer. What I can share is starting from the day that I approached the property agent. Usually, we will do some negotiation on the pricing and it takes about 1 or 2 weeks to get the response. Then we will apply for the mortgage loan, which takes about 1 week. At the same time, the agent will draft up a confirmation agreement where both parties will have to look at the agreement first before we sign, which will take another 1 or 2 weeks. It only involves one or 2 pieces of papers. At this stage, we have to pay 3% of the total 10% deposit. We can include a clause stating that if the buyer is not able to secure a loan, then the owner will have to pay back the deposit.
After we get a confirmation on the mortgage loan, we will negotiate with a lawyer. Normally the buyers will engage their own lawyer instead of using the owner’s lawyer. This is for the buyers to protect themselves. The lawyer is responsible for preparing the sales and purchase agreement (S&P agreement). He has to do a lot of paper work and research. Before the owner hands over the property, the lawyer will check if there are any outstanding utility bills or maintenance needed. He will also need to do the title transfer, etc. There will be a clause saying that from the day we send the S&P agreement, the owner has to pass us the key within 90 days. Once we receive the key, we have to pay him in full. This is the estimation for freehold property, leasehold property will take even longer.
Did you face any difficulties in buying the property in Malaysia?
Everything was quite smooth and steady for my first purchase, but my owner was very busy that time. She delayed the key handover and she had to pay penalty. For my property purchase experience, it is so far so good. It’s even less hassle if you buy the property from developers.
However, my first apartment bought is with strata title and the strata title is still under my previous owner’s name. This should be the developer’s fault. I might have difficulties if I want to use the property for refinancing. These couple of years, our property management team tried to fight for the strata title on behalf of us by giving pressure to the developer, but we haven’t received the title yet. Finding a property with a good developer is also very important. When you are finding a property, you need to consider the background of the property developer as well.
Did you have to pay commission and were there any other costs involved?
For sub sale, yes. The 3% of deposit that I paid is for the agent but is paid by the owner to the agent as a selling cost (commission to the agent). There were many costs involved such as stamp duty, lawyer fees, etc. They had to be in cash. I needed to prepare about 20% to 30% of the property price in cash. 10% of the property price was for deposit. On top of that, you need to pay other costs such as the lawyer fees, which you have to pay for both mortgage loan agreement and S&P agreement.
DISCLAIMER: The views and opinions expressed in this article do not necessarily reflect the views of BEYOND BORDERS CO., LTD.
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