Less favor over New Constructed Property

photo credit: yearofthebird

Over the years I have been looking around and accumulating existing property at matured residential area. The question arise when one of my client ask me who would prefer to buy secondhand property? My answer is, not many people will love it!! Secondhand property is always treated as old design, less quality, ugly outlook, not practical design and many more reasons. But below are few reasons I would like to highlight to you for your consideration when purchasing sub sales property.

Location

Normally location of existing property is located at matured area and established neighborhood. Compare to new developed property which is quite far away from the town. Just like in Kota Kinabalu area, most of the prime location property is located at Damai, Luyang, Lido, Likas, Kelombong and Kepayan which is only about 8 KM radar from central district centre. While new development residential areas like Sulaman Kingfisher, Indah Permai, Bandar Sieara and Putatan is about 15KM from town. Last year when petrol price hits RM2.70 per liter I believe a lot of people who purchase property far way from town started to worry as this will shot up their transportation cost. That why normally I prefer to buy secondhand property as it’s nearer to town and easing the possibility of rising transportation cost. But the most important its does save my TIME. Imaging if you travel to work from Indah Permai to city centre everyday? How you feel? For me it’s awful.   

Price

Price of the property is very crucial as this will determine your rental yield. Higher purchase price will drag your rental yield down further. But how to get property at discounted price? The only way you can purchase property below market value is through sub sales market. Bear in mind, developer will not sales their new developed property below current market value to you.

Land Tenure

Refer to my previous article “Information of Land title” land tenure of the title does add value to your property. There are only 2 types of title for residential property in KK that is 99 years and 999 years. In KK, 999 year title mostly available around Luyang, Lido, Damai, and some area at Penampang. If you notice recent development in our property industry, Sabah Housing Association is appeal to land office to remain 999 titles status even after development. This is very important and will benefit house buyer in the future. While waiting for the new land ordinance to be approve, all new development is to be remain at 99 years tenure. Of course there is some prime housing area with land tenure less than 30 years like Likas will continue to enjoy stable and increasing price due to location. Furthermore Likas is surrounded by 70% of government and private kinder garden, primary and secondary school.

Condition Of the property

Newly purchase property need a lot more refurnishing expenses compare to old property. Major basic thing that you need to fix up when you purchase new property is electrical wiring for the whole property, some build in cabinet, fixing air condition point, car park, extension of the kitchen, grill and etc. This easily cost you RM20-RM50K. The more area you touch and move, the more cost incurred which will drag down your rental yield and the worst your potential buyer might not like your renovation. By purchasing secondhand property, all this cost can be minimize while helping you getting higher rental yield if you buy for rental collection.

Land area and size

Secondhand property normally having bigger land size compare to new development. If you observe Damai area in KK, the landed terrace house easily have more than 2000 square feet while new development might only reach 1500 square feet or less. Not only that the road within the housing area is easily accessible, bigger compound for car park and some even have common area for the whole housing population to jogging and relax. For your information, up coming all new development done by developer will continue to maximize and squeeze the land usage simply because their land cost is too high.  

Maturity

Maturity here refers to the occupancy of the whole project and rental expectation. Stability of the rental and capital appreciation can be influence mainly by numbers of unit within the whole area, accessibility to town or commercial area, surrounding government activity and condition of the property. Look at Beverly Hills apartment, this property took 10 years to have capital appreciation of 30% while Jesselton Condominium took 2 years to achieve the same result. Of course, Beverly Hills has been enjoying stable rental for the 5 years while Jesselton condominium rental might take a bit time to stable. For those who have less capital you might consider purchase property like Beverly Hills to expand your rental portfolio. Whilst those who have huge capital, you can consider to purchase high end condominium at good location like Likas and Signal Hill which will continue enjoy capital appreciation and commanding good rental.   

Immediate Occupancy

By purchasing existing constructed property, virtually you can start moving in after the completion of your Sales and Purchase Agreement. This benefit a lot to investors who purchase the property for rental collection as your cash flow is immediate. While under construction property might take another 30 months to complete and the worst you need bear all the interest incurred during the construction period. What happen if the developer runway? Just like what happen to one of the project at Likas.

With all the above ideas and sharing, I hope all of you will make use of it when you decide to invest in favor of maximum capital appreciation and good rental yield property.  

Happy Investing.

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