PROJECT or SUBSALES..? One of the most FREQUENT ASK QUESTIONS. There is no BEST ANSWER for this question, like i always said when people ask me when to invest, or where to invest, or what to invest? When to invest? I say NOW Where to invest? I say EVERYWHERE What to invest? I say EVERYTHING When we breakdown the questions into more detail, it will be; 1. WHEN IS THE BEST TIMING? (Soup) I say as long as you are READY, as in income profiles prepared, liquid cashflow ready, check with the bankers your DSR and borrowing capacity, MOST IMPORTANT INCOME TAX ADDON to this; the market in KL now is actually bubbling with a massive over supplies of CONDO, Which i will call it AIR-SPACE. Many units ready which are not able to resell or rented out. So how? And so what? Even it bubbles, no bubbles, or bubbles popped.? There are massive opportunities out there! U just need to go search for it. Something that matches your borrowing preferences, NOT something LIKE for investment sake. As for me, i have daily deals... Every day every week, i recieve tonnes of great deals from all my Agents friends on good projects, good ready vp properties, matured undervalued subsales. I cant proceed that much, i would rather wait for something that i alredy know that is gonna come out the market discreetly and i am the first few priority to get access to the choosing VIP units first hand. 2. WHERE TO INVEST? (Appetisers) My answer is; always stick around in KL city or Within Selangor or fringe of Selangor state. NEVER NEVER EVER invest anything OUT of town. WHY? Do u you know what are the factors that contributed to a property increases in value? Always remember this 3 BASIC ELEMENTS, 1. PEOPLE - when there are PEOPLE, which is KL-SEL (currently 7million+ population), people like it or not they have to come to KL for all kinds of reasons because here we live in the Capital city of a country, its a Financial hub, CBD, Govt HQ, Education Hub, Comercial Hub, MNC hub, International Airport, Sea Port, this hub that hub........ Young people come for Education > Job > Business > Spending 2. JOB/BUSINESS - when there are people, there are activities in the market, people look for employment, or businesses. When there are job or business, people make money. 3. MONEY - when people make money? They need a SHELTER, for people who can afford they will BUY a house, but for people who cant, they RENT. For smart people, they will INVEST first. *this 3 simple basic elements will always be the reason why a property has to go up in prices because of a simple economic terms SUPPLY & DEMAND equation. When there are demand, there must be supply? Price goes up... For the past 2 years 2012 and 2013, there are more than 500,000 incoming migrants from other states moving into KL-SEL. And also, with our ETP on progress, our vision 2020 to achieve 10,000,000 population in KL. With all infrastrutures upgrading and construction progress, it will increase ecfficiency in transportation of population from further places into the central of Kuala Lumpur, i call it Centre of Gravity. So always stick around CITY! 3. WHAT TO INVEST? Project or Subsale? (Main course is served) If we are to invest in KL-Sel, but there are so many projects available in the market, as well as so many subsales. HUNDREDS & THOUSANDS of units. Which is better? There are PROS & CONS for both project or subsale. PROJECT (Pros) 1. Low entry (lesser capital required, developer spec in all the spa fees, legal fees, stamp duty, etc) 2. Massive discount from developers (most developer struggling to sell today) 3. Dont have to worry about repayment (completion 3-4years later) 4. You can do multiple submission (buy 3x unit at the same time with different bank) 5. No risk of rental issue, (3-4years later only worry) LOL.....!! 6. New concept, new design, new this! New that! (People always prefer NEW) PROJECT (Cons) 1. Risk of developer NOT completing the building (Project abandoned) 2. Risk of developer NOT compromising. (Shitty quality) 3. Purchase price today is Inflated value. (Buying future price) 4. Purchase price is more expensive than Subsale. (Due to inflation, all costs incurr in development are all transferred to end user) 5. Risk of being able to RESELL or not upon completion (quite a number of project on going now) 6. Risk of being able to RENT or not (mostly purchasers today are also investor, every unit also wana rent, when is your turn? 7. Most probably Rental LOWER than Repayment. (deficit rental, because nation income doesnt increase, but property prices keeps increasing) 8. U are buying AIR today. (U just own a contract to temporarily own the Air Space up there, nothing for u to touch n see) 9. Your loan is LOCKED for 3-4years. (DSR burst, no more quota to reinvest for the next 3-4years even u found the BEST property in life) SUBSALE PROPERTY (Pros) 1. As solid as bricks. Something READY. (U can feel it, kiss it, see it) 2. No risk of abandon project issue. 3. Banks prefer to finance ready property. (Especially with tenant) 4. With rental income, u can leverage and gear up for the next property, and next, and next, and next.............. 5. Price is cheaper than projects. 6. U can see the quality of a property and do your due diligence. 7. A little enhancement in renovating the property might possibly gives u an instant increase in value of the property, as well as asking rental. 8. Sometimes old properties bought and refurbished can be flipped for a better price within a short period. SUBSALE PROPERTY (Cons) 1. Requires alot of capital (no way to avoid 10% downpayment) 2. Miscellaneous fees u gotta pay (Legal, spa, loan legal, stamp duty, MOT, bla bla bla...) 3. Ends up capital injection is very high. (COC ROI, cash on cash return on investment margin is always lower) 4. Most subsale rental cannot cover repayment (if can cover repayment Why owner wana sell to u? Unless u found a dumb owner) 5. Asking price always higher than Bank Valuations (coz NAPIC transaction record is always 6months outdated, and banks only sees old transacted prices, so gotta comes up with extra always) 6. Gotta spend money to fix and repair unseen damages which agent or owner wont tell you. 7. OLD properties (has lesser room to grow for capital gain) 8. OLD properties rental cannot increase because of market incoming New supplies (old product always goes out of preference, people who rent will look for new property) Well, here are the simple basics definitions of Projects vs Subsales pros and cons. Which is the best? LOL... U cant find the best. Because there are no BEST property, i suggest u invest in NETWORK first, that is to make more friends with agents, spend some time getting to know whats happening in certain areas u are familiar of. Check out the internet what are the new projects that is launching soon or that alredy launched, compare prices, visit show gallery, speak to the project marketing person, look for subsale, ask agent to bring u to view 30units in 1 month within a same area... Bla bla bla...... Sounds like Tonnes of due diligence to do yea... U better be. Best solution? Invest when, where, what JL invest Muaahahahaha...... JL™
Posted on: Sun, 03 Aug 2014 18:40:47 +0000
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