Dear all, I plan to invest in condos that give good rental income and at the same time give good value if I decide sell 10-20 years later.
I have a few questions for all shifus regarding the factors to consider when buying a condo for rental investment. I'm sure some of us have the same questions.
1) is it true that condos on higher floors with better view will appreciate faster in value (in terms of % appreciation, not absolute value) (say for every level higher, the initial purchase price increases by RM6000 per floor)
not necessary appreciate faster, but will have a higher demand provided there are 2 identical units with identical price, typically people will prefer higher floor, unless the person fear of height. RM6000 per floor is a bold figure, usually is from RM500 - RM2000, typically is RM1000 increase per floor 2) is it easier to rent out a unit and at a higher rental price which is on a higher floor with a better view (do the tenants normally factor in the view and high floor when they rent an apartment).
again, higher floor will have an advantage if the 2 units have identical features, identical price and the person not fear of height. for own stay or people who have the intention of staying in a place for a longer period (such as family), good view might be one of the factors that they consider. typically students and working singles just need a place to sleep and use their computer3) leasehold vs freehold if you intend to keep for at least 10-20 years and hope to make some captial gain. (because you may need cashflow any time for another investment)
since you didnt specify, i assume you are talking about high rise here. if possible, of course, freehold is better. common sense. but not necessary to over rate the leasehold or freehold factor. people still buy and sell leasehold property from time to time. traditionally high rise do not command too much capital appreciation, but in the past few years, appreciation for some high rise is not too bad, some could even match with landed property. cashflow + capital gain, what a deal! 4) is it true that smaller units appreciate faster per sq feet. Is there an optimum size for rental investments (meaning not too small, and not too big because some people prefer a decent size unit) If there is an optimum size that give better rental return and is easier to rent out, can I know what's the size range. I know for places closer to city, people would normally go for smaller sizes, and places further in suburb, people would go for slightly bigger units, what are the size ranges?
investors like to buy smaller unit because it is cheaper (entry cost & installment). your optimum size would have to depend on your target tenants. considering yourself as a tenant, will you feel comfortable if the size is too small? will you feel it is such a waste if you are paying for a large room that you do not need?
people who stay closer to city stay in smaller unit because they cant / not willing to afford a bigger unit. the property nearer to city is generally more expensive (psf), therefore the rental will also be more expensive. since the tenants just need 4 walls to complement their hectic life style, smaller and more affordable unit is all they need. (this does not apply to the minority of high income expat though)
people who stay in suburb stays in larger unit because suburb units are more affordable.
some of the simplest way to push your high rise cashflow is to make a partition in your living hall for an extra room and then rent out the rooms separately.
5) is it advisable to invest (for rental and capital gain) in condo away from the city centre in a corner of a developing township that is quiet near hills and golf course and away from the crowd. (but not necessarily low end)
if it is away from city center, return of rental might not be too lucrative. consider yourself very lucky if you can get positive cashflow. it is more like a bet that hoping the township will boom. make sure you have done enough homework for that township. you should have good holding power if you want to go for such a deal6) do you have any comment on those condos with guaranteed rental return as agreed by the developer.
one of the property gurus discussed about this. the guaranteed return is there only as long as the developer is around. who will give the guaranteed return if the developer has close shop?
another point to note, even with guaranteed return, the owner might still need to bleed cash every month. so whats the point?
i saw a deal in cyberjaya offered by developer, the guaranteed rental is simply cannot cover loan installment + maintenance + wear & tear, it just simply dont make "sense"!
7) Iskandar Johor got potential for better growth? compared to KL or penang as I consider these places to be developed and have matured.
In other words, will the development and price PSF gap between Iskandar Malaysia (Johor) and KL/Penang narrow, maintain or widen (in % terms) in the long term (10 years).
For example the same condo in JB would cost 50% psf of that in KL. In 10 years time, would the same condo in JB cost 20 % or 90 % of that in KL. Say they are exactly identical condo, only one is in KL city centre, another in JB city centre.