How Does Real Estate Investment Compare To Other Forms Of Investment?

You have the power in real estate to control the operational performance of your asset more than any other investment. Some predicted that by the year 2050 a loaf of bread at the supermarket will cost RM30. We may still be around then, but the figure illustrates an unwanted yet inevitable living environment where continued inflation may well be heading. Each year, inflation is eating into the spending power of our money at the rate of four to ten percent a year, and it has been doing so since the end of World War II. Project leasing Develop a compelling marketing strategy for your building using technology to bring the space to life to attract and secure tenants. Leasing Attract and retain the best tenants for your space and negotiate the most advantageous lease terms to secure maximum occupancy.

As such, this type of investment are generally considered to be more risky. Note that, not all residential investments will give you the same ROI due to various factors, the main one being the property location. Thus, proper research is important so you acquire a property that is in a ‘preferred’ location, in order to maximise your investment return, whether in terms of rental collected or re-sale value. You can adapt the risk management framework to identify, assess, and mitigate real estate investment risks.

Her love of reading and outdoor sports has informed her desire to travel, explore, and connect with new people. Investment into this category include properties with commercial land titles, such as shop houses, retail lots, SOVOs , SOFOs , SOLOs and SOSOs . Investment in commercial titled properties are typically leased out for business usage only.

Of all possible investments that are within the reach of the average investor, none offer the combination of outstanding benefits that are available to real estate investors. Banks and life insurance companies recognise this fact, and they invest your money in real estate! While they pay you between 1 and 4 percent for the use of your money, they are making 10 to 20 percent on it. Sale & leaseback Evaluate the possibility of selling an owner-occupied asset and leasing it from the buyer to free up investment capital and ensure flexibility in your long-term real estate strategy. Design & deliver projects Breathe life into old space, or create something brand new to help your people thrive.

Location – Location of the property will affect the capital gain. In the Malaysian context, properties in KL have higher capital gain than those in Johor. This article is contributed by KCLau and Dr. Ong Kian Leong, both the co-founders of the first ever online property investment course for Malaysians, called Property Method (). Never think that you are already a real estate investor even if you have bought a home for yourself.

While it is true that you can do this to an extent with stocks through buying on margin, the fact is that there is no investment where the application of this tool is more powerful than in real estate. We keep on having babies but God quit making land a long time ago. It means that existing land is becoming more and more valuable each year.

Commercial properties are usually involved in multi-year leasing, thus you can attain a greater and more stable cash flow from it. A key positive to commercial investment is that the utility costs and management fees are typically borne by the tenant. And unlike residential properties, commercial properties can be rented or re-sold unfurnished. Ften seen as an alternative investment for many retail investors. Those who are considering purchasing an investment property in Malaysian should view it as another financial risk, similar to how one might assess a stock or gold investment. Unlike traditional private real estate ownership, unlisted REITs are liquid assets that can be sold fairly quickly to raise cash or take advantage of other investment opportunities.

Being in the “wrong” location affects the rent as well as the potential selling price of the property. For unlisted REITs, like any other unit trust products, you can buy from or sell to the management company or through other authorised agents. Some CREs that should be looked at are shop lots, especially in housing areas, which offer relatively stable rental gains from SMEs. Office spaces are also considerable investable assets as they tend to be in operation for at least a few years, translating to relatively stable rental yields. Like most properties, location plays a big role in how this real estate will perform. Upcoming developments or townships could pay dividends as do locales, which are currently being developed.

I will show how each of them can be carried out in the following sections. While I have used some examples to illustrate them, the article is not about whether a particular property is less risky or whether the risk mitigation plan as shown is comprehensive. Rather it is to illustrate the approach so that you can adapt it for your own analysis.

Depending on who you ask, investing in real estate today can be a debatable subject. The property boom the local market experienced several years ago has finally simmered down, no doubt further acerbated by the pandemic. Well, the same holds true with real estate, considered a non-liquid investment. If the investor wants out quickly and is willing to sell at a loss, as he probably will his stock, he should be able to locate an immediate buyer. Sure, you can call your stockbroker or use your online trading account to offer your shares for sale… at whatever price they will bring on the market at that time. And, the way the market has been, there will be times that you have to sell at a substantial loss in desperate situations.

The biggest factor that affects our retirement funds is still inflation. At the tenancy stage – focus on occupancy rather than rent as you will lose more waiting for another month or so to get an extra 10% rent. The other property is located in one of the newer townships in the outskirt of Klang where the rent has been paid late occasionally. Assessing the risk in the context of the impact and the likelihood of the occurrence.

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Finding a place is just the first step, the next requires you to pull out your trusty calculator. Factor how much it would be to fix up the place before putting it back on the market for a higher price. By sprucing up the place, you can force appreciation, by adding value and appeal to the home. Bear in mind though, the key to a successful flip is holding on to it for the shortest time possible because you are ultimately paying a mortgage for it. Before, it was common to see people snapping up a brand new property at launch, hold on until its completed and then sell it off for a quick buck. We don’t see this happen as often as before but that doesn’t mean you can’t flip a home in the current climate.

Check out the latest list of blacklisted Malaysian property developers. Or, if you are buying from an existing owner, you need to check the building compliance. Capital gain results from the difference between the selling and purchase price. This is of course after accounting for transaction costs and taxes. Compare risks between different locations and/or types of properties in Malaysia.

Commercial properties offer a way for many real estate investors to gain passive income. But take heed because Commercial Real Estate is more beneficial over the long term. In a real estate investment, this equity income can be a sizeable amount. Although you cannot spend it each month, when the time comes to sell or refinance your property, you owe less on the mortgage, so you will receive more money at closing. It’s like putting money in the bank each month, while this money is helping you to reduce the mortgage loan interest by lowering the outstanding loan amount every month.

Since it is a dynamic process, that might mean lowering rent or offering an incentive. While there are still external market conditions that affect your investment, the difference is that you have the ability to manipulate the operations of your investment to respond to those conditions. Similarly, you have no control over financial markets when you purchase bonds or futures. You make a calculated guess, and then you sit back and watch.

There is no question that a real estate investment is just not that liquid. This is why you were advised not to invest all of your funds in real estate. For example, if you are a landlord, you have the ability to manipulate rents based on changing market conditions in order to maximise income.

One of the reasons for the liquid nature of REITs is that its units are primarily listed and traded on a stock exchange. We’ve covered the viability of rental properties before as a form of passive income. But the realm of rentals goes beyond just long term and short term leases on real estate. You can maximise your investment returns through various forms of rental.