Aug 2 2013, 01:38 PM, updated 13y ago
Written by our fellow member of PTLM https://www.facebook.com/groups/115179435202482/
Rent first before you buy
02 August 2013| last updated at 09:38PM
http://www.nst.com.my/red/rent-first-before-you-buy-1.331006
BUY LATER: Khairul gives a compelling argument why it’s better for first-time home buyers to rent first before buying
You have just graduated and you have just snagged your dream job. You bought your first car and you found a life partner whom you want to settle down with. All these happened within a space of five years after you graduated. With all these milestones lined up in your life, you think you are ready for that next big step. After all, all those books said you should do it. You have saved enough and you know the pitfalls and of course, you have heard about the success stories. This is it.
You are going to buy a house!
Stop.
Why don‘t you consider some of these facts first before you buy a house? Houses are expensive. Even authors who say you should buy a house as an investment said a house is one of the most expensive purchases you will ever spend on in your lifetime. If that is true, you should really think hard before immediately buying one. Here is an idea every young person thinking of buying a house should contemplate when you are starting a family - rent first before you buy a house.
Similar returns
There is evidence that investing in a house will bring you the same return if you invest in various other instruments such as Amanah Saham Bumiputra or in the share market. These investments have cheaper costs than the purchase of property. Property investments are more sophisticated than other investments but people still line up at property sales to buy houses even if they cannot afford to buy or understand the complexity of buying a house. They do it because they were told by family and friends that you need to buy a house when you have reached a certain stage in life. You will be losing the next big wave if you don’t buy now, they warn.
When you decide to buy a house just because you want a starter home, you buy it for the wrong reason. A starter home should be purchased if you can afford it. If not, why don‘t you just rent? You can postpone the purchase of your starter home until you find the right house. Have you considered the neighbourhood? Have you gotten to know the neighbours? Have you seen the infrastructure within your would-be house (for those buying under-construction properties)? The community halls, prayer places, and the need for pest control. As a former property owner of a new neighbourhood in Shah Alam, half of my former neighbours have moved elsewhere (including me) as we found out the neighbourhood was too far from our workplace and the promised infrastructure was never built.
People are always buying houses near where they work. Why don‘t you live for a few years first at a location which you think is the most likely place that you will be settling down? Rent a house and experience the neighbourhood there.
The argument that the price of property will never come down is not a good argument. The argument that you will need a house during your old age is also not the best argument around. These should not be the only reasons why you buy a house. Understand the cost, the need and the requirements of maintaining a house as you are just starting out in life. As a property lawyer, I found house buyers nowadays tend not to know enough about buying a house or the liabilities that come with it.
Discipline of monthly payments
By renting first, especially in an area where you have decided you want to settle later in life, you can gauge whether the neighbourhood is good for you. You can also learn to discipline yourself to reserve some money every month for rent. If you are able to pay rent, you can then manage to pay your installments when you buy a house later. You will also learn how to manage the maintenance of a house.
Maintaining a house is not as easy as it sounds as any house owner can attest. In the interim, you can save money to buy that house in some interest-bearing investment schemes.
With rental, you can also manage your utilities payment and if you choose to live in a strata development, you will need to budget for payment of service charges and understand why your water bill is never zero even when you are not at home. When you live in a landed property, you need to maintain your garden and ensure the garbage collection is regular, your assessment rate bill and quit rent are up to date (although this is usually paid by the landlord, understand their functions) and the repair of fittings and fixtures are kept in check. When you can appreciate the rental home you are living in as much as if it’s your own, you will then be ready to buy a house.
One final note why renting first before you buy is better, you can always move somewhere else if you have bad neighbours, if your school-going children do not like their friends, or if you have barking dogs terrorising your cats. You will even get your deposit back when you move out from your rented house. On the other hand, if you have already purchased the property, it will be costly for you to sell it. Heck, in certain cases, you can even lose money.
So, the next time you are thinking about buying a house to live in, think hard about the responsibility of owning a home and plan well.
Khairul Anuar bin Shaharudin is a lawyer and author of ‘40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia’.You can contact him at: khairulsuhailahazlina@yahoo.com.
Investment YOUNGSTERS, PLEASE RENT FIRST BEFORE BUYING..., Dont rush accumulating unaffordable debt
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