It’s an exciting year of 2011 for my own portfolio. I have been restructuring my own portfolio from conventional to more tasty portfolio which giving me more promising rental yield, rental growth and potential for capital appreciation. Knowing I will not at all time buying low and sell high, middle of 2010 I have change my strategy of investment. How many of you outside constantly enjoying good capital gain over the past 10 years? That means you always, yes always make money from speculation or capital gain over short term. Every time you can get low price and exit at high price!! CAN YOU BE THAT LUCKY??
The answer is MAYBE. But for me, I never believe that I will be that LUCKY. It has been a long way for me to change my all existing residential into commercial. Only now I know how great is commercial over residential. Commercial win majority of the tickets! We talk about tenure of the tenancy; commercial will have longer tenancy period over residential. Looking at all the residential tenancy period is mostly capped at 1-2 years maximum. But for commercial its totally different. Last few month I rented my commercial for the period of 10 years (5+5). Of course we input additional conditions into the agreement so that if the tenant did not pay on time after 2 week we will immediately cancelled the tenancy. This will eventually help in more regular or on time rental payment by the tenant. With 10 years tenure, I’m hassle free for 10 years…so long as the tenants make profit from his business.
Talk about incremental of rental, commercial command higher growth rental yield over the period as much as double of your existing rental so long as the area is coming up. Look at Plaza Kingfisher, the rental for 3 storey’s has been improving a lot. The overall rental has jump from RM3000 per block to above RM4500 per block. This clearly indicating the area is booming. Business owners are enjoying profitable venture thus they don’t mind paying extra or higher rental. It’s different if you compare to booming residential area. You might not enjoy the same rental growth like commercial but you will enjoy more on capital appreciation. Landed residential in Kingfisher are hitting RM450K from RM250K in 2007 (upside of 80%), but the rental yield is still capped at below 3.5% @ RM1300 per month. Do bear in mind, residential portfolio will not continue to enjoy annual grow due to the nature of the asset class. Let me ask you this, Can you residential rent double over time? Not likely my friend. Unless it has more commercial values otherwise there is capping on its growth.
I’m lazy man. I believe you are too J. Whatever thing I do, I need to do it fast. I don’t like to delay in my life. I required more and more hassle free properties in my portfolio. Which property class provides you this character? Commercials property!! In general, commercial properties required less maintenance and most of the time is hassle free. Unlike your residential, cleaning up after your tenant move out is not an easy task. I just clean up my residential house last few weeks for 3 days nonstop and its cost me RM1000. Sometimes you might gain from moving commercial tenant. Some company spends hundreds of thousand for renovation. When they left they might just pack and go leaving all these valuable and tasty renovation for you. You might need minor touch up and cleaning before continue renting it to another tenant at higher rental. But will your residential do this? Not likely or I would rather say…stop dreaming.
It will be more challenging years and more promising years for KK property market. My strategies and focus area would remain the same; Invest in completed properties for steady rental yield and lower maturity risks. And also continuously reshuffle your portfolio and building more solid ground with recession proof asset. Look out my latest and update write up at My Ads starting Jan 2012 issues. With that, I will end 2011 with great wish to all of you. Happy Investing.
Merry Christmas and Happy New Year
Related posts:
TNBC Motor Sdn. Bhd.
Lot 1, Neutron Point,
Jalan Lintas Khidmat,
Kolombong, 88300
Kota Kinabalu
Tel: 088-438000
Fax: 088-439000
{ 9 comments… read them below or add one }
yep,agree with you on this residential vs commercial rental topic. i too have a shoplot that i rented out and i would say managing this type of tenant is far less hassle than managing tenant that rent my residential properties. the good thing is after the tenancy ends say 4 or 5 years, we have the choice of whether to increase the rental and that usually happens in a good location! thanks for sharing.
I wish you all the best too brother! Hope you 2012 will be a booming one for you, me and everybody!
Hi CK,
Thanks for your sharing & i totally agree with your argument. From my experiance, as long as the tenant making money, commercial property practically gives to very much hassle-free cash flow.
Problem that i encountered in commercial properties such as roof leaking & roller shutter faulty can be easily resolved ^_^. Much lesser problem compared to my apartments.
hi CK,
i remember you always mentioned buying land is the best properties of all..what do you think for NT land at Beaufort?someone selling to me rm50k for 1 acres. is it worth to buy?
thanks and happy new year.
HI,
NT title is not easy to dispose in the future unless you sell it back to NT buyer. Anyway RM50K at Beaufort is expensive unless road frontage, utilities access and etc. Happy Investing.
You cannot Grow Land..CK Wong & MY RiCH DAD
Hi Ck,
I have written a blog post on shopoffces investment in a new area called Alam Jaya Commercial Centre (AJCC). Hope to hear your view too…
Dear, CK.
Nowdays price for comercial property is sky rocketing high, almost impossible for most of the middle class group to acquire this kind of properties, and i believe high class group will monopoly such portfolio as they have enough capital.
Im in dilema rt now, i hv bought a double storey terrace house near wisma wanita which almost completed, just matter of time waiting and OC. Market price now around RM 560K-580K.
I would like to ask ur expert opinion whether it is a good move to let go the property and try venturing in comercial properties.
…..TQVM….
Hi,
Sell. I believe you got it for less than 380k. Even if you fully furnish it you might get 2k only..so better sell for capital gain n venture into commercial. Happy investing..
Ckwong & MyRich Dad… You cannot Grow Land
Hi,
Commercial better!!!
Ckwong