How i bought my First Property

It was the year 2009, when i was looking for my first property. The country was barely recovering from the 2008/2009 global financial crisis.

If you ran a check on the property prices before 2008, you would have noticed that the property market was pretty much stagnant. Prices haven’t increased or fluctuated in the last 10 years.



We saw a new breed of property investors, the so called “Flippers” fueled the rapid rise in property prices between 2011 and 2013 to the extent that Bank Negara Malaysia had to intervene.
Georgetown City in Penang, was awarded the Prestigious UNESCO World Heritage Site in 2008.


I purchased the house for RM 180,000 back then for a 80m2, beach side condominium. 5 years later, it was sold for RM 500,000. A 177% increase in price. Would i have known that the house prices would increase this much? Why was the prices stagnant for almost 10 years and it rose to an incredible value  almost 2.7 times the price?

Questions i asked my self back then was

  1. Considering the locality which was by the beach, the size and condition of the property, was the asking price justifiable for me? (I was buying a home back then)
  2. How long was i going to stay in this house?
  3. Did i have the cash flow to purchase the house?
  4. Would i be taking a loan?
  5. How confident was i on my job status back then?

My father used to work as a property valuer, and a basic of how they value a property, they xx

The truth is, neither your real estate agent nor anyone else can tell you whether now is the best time to buy a house so you can make a hefty profit in short order. If they could and were so confident in their predictions, they certainly wouldn’t be giving you advice. Instead, they’d be acting on their own knowledge to become incredibly wealthy.

Kathy Braddock, a managing director at real estate brokerage William Raveis New York City, says, “The reality is, no one has a crystal ball. We only know what the right time was to buy or sell by looking at history, hindsight being 20/20.”

Plenty of challenges accompany the current real estate market and those who invest in real estate without proper preparation might suffer the negative consequences. If you’re interested in beginning a rental property business, here are a few of the most basic aspects to remember.

1. Get Finances in Order

This one seems obvious, but it can be more complicated than you think. Investing in an income property isn’t like purchasing a house; it can be much more risky. With an income property, you never know exactly how your tenants will treat the property and how much work will need to be completed throughout the year. For that reason, it’s extremely important to have financial stability and a low-interest loan.

To begin with, ensure that you have enough money to handle the ups and downs of a rental property. The first rule of financial stability in the rental business is ensuring you can afford the payments on a house without the rental income. You may not always have renters, and when you don’t, the bank still expects you to make payments on the house.

You will also need a healthy sum set aside for emergencies. When the pipes burst and cause thousands in property damage the insurance won’t cover, you need to be prepared to take care of the cost.

Finally, remember that when you run a rental property business, you are not running a home; you’re running a business. Therefore, it’s wise to have an account separate from your business dealings for your spending related to the care of your income property.

2. Understand the Market

The real estate market is one of the most malleable markets in the country. It can change at the drop of the hat, and it’s difficult to predict when it will go up again, unless you’re thoroughly immersed in the market.

If you truly understand the real estate market, you know when it’s smart to purchase a property and when it’s best to wait for a better price. You can also gauge the proper times to raise rent prices. Overall, you’ll receive better returns if you can predict the market.

3. Begin with the Right Property

Almost every prospect requires that you start out low and work your way up, and real estate investments are no different. It’s important to begin with a solid property before finding a challenge.

A feature article published on Fox News gives several suggestions for the type of rental properties beginners should consider purchasing. Some of their tips include:

  • “Buy a property that you love.”
  • “Skip the prize properties.”
  • “Buy as a personal residence and change to rental.”
  • “Buy properties in good shape.”

Each of these options are excellent suggestions for those joining the business. Once you’ve mastered the simpler income properties, you can move on to another challenge, such as flipping a dilapidated property.

4. Plan for the Care of the Property

Managing a property isn’t easy. If you choose to be the landlord, it’s your responsibility to collect rent, keep the books, file taxes, screen tenants, handle maintenance, work out the insurance plans, write the contracts, and more. Many feel that they’re up to the challenge and try to handle the work themselves.

For others, the task is daunting to say the least. If that sounds like you, you’ll probably want to look into hiring a property management company. A property management company can cost anywhere from 5-10 percent of a month’s rent, which decreases your return, but can be well worth the investment.

This article from Green Residential of Houston points out there are many benefits of hiring a property manager including local knowledge, low turnover, legal knowledge, marketing expertise, and expertly handled maintenance. It’s not the right option for everyone, but many have found the time and money saving benefits to be worth the monthly fee.

5. Screen Tenants Properly

Finally, once you’ve take care of the basics, it’s time to rent out the property. However, it’s not wise to use a first come first serve basis with tenants. You need to be sure that they’ll pay the rent every month and treat your property respectfully. This requires a certain screening process, which will allow you to find great tenants.

Furthermore, be prepared for the tenant to screen you, in a sense. The best tenants will be prepared with the right questions. An article previously published on outlines some of the most popular questions tenants ask before signing a lease. Make sure you have the answers ready, and take these questions as a sign of their dedication to the property.

Getting a handle on the income property business will likely be more challenging than you think, but once you’ve mastered these basics, you’ll be ready for the next important business step: making a profit.

1.  Know your budget

If you’re thinking of investing in property, it’s important to first set out a clear budget. Make sure you take into account the purchase price, stamp duty, legal costs, mortgage insurance (if needed) plus any extra funds you may need for renovations.

Once you’ve done the numbers, and have a better idea of what the real cost of buying might be, ask your bank for a pre-approval on your loan so that you know approximately how much money you may be able to borrow before you start hunting for properties.

2.  Seek advice

When borrowing to purchase your investment property, there are different loan options for you to consider. Whether you choose interest only repayments for a period of time or pay principal and interest, or whether you choose a fixed interest rate or a variable rate loan, will all depend on your personal circumstances – consider your options carefully before you decide.

Structuring your loan correctly is vital for long-term financial health, so seek advice from a reputable financial adviser, accountant and conveyancer.

3.  Research locations

It’s important to buy in an area where there is strong demand for rental accommodation – so research the local demographic.

Apart from rental return, you are also looking for capital gain. Each individual property market has its own growth cycle – this can be due to local supply and demand, economic climate and consumer confidence.

The idea, if possible, is to invest in a suburb (town or region) that has just been through its cyclic downturn and is poised for a growth phase. Choosing an ‘upcoming’ area can pay dividends.

Look for suburbs undergoing gentrification – signs include; the arrival of young people with good incomes, new homes and renovations springing up, plus new infrastructure like schools and business centres.

4.  Know the market

Once you decide on a location, do your research. Talk to locals, real estate agents and council to get a feel for the area, then check out recent sales to get a good idea for what property in the area is worth.

5.  Be objective

When purchasing a property for investment purposes, it’s important to buy with your head and not with your heart.

As an investor, you’re making a business decision and should be looking for property that is well presented and functional with potential for good rental return and capital growth in the future.

6.  Get an inspection

If purchasing an older property, making major repairs in the first few months of ownership could make a significant dent in your cash flow which is why obtaining a professional Building Inspection before purchasing might be a very smart move.

Prior to signing the purchase contract, take time to understand the building inspection report to avoid expensive repairs down the track.

7.  Freshen it up

You’ll attract better tenants if you have a well-presented property, so it pays to spend a bit of time and money polishing it up.

Paying tradespeople to renovate your investment property is costly. If you’re prepared to get your hands dirty you can save money and increase your profit margin by doing some of the work yourself. However you should stick with professional tradespeople for things such as electrical and plumbing work.

Keep colours neutral to appeal to a wide market and make sure your kitchen and bathrooms are in good condition. A lick of paint and some new carpet can do wonders for freshening up a property.

8.  Beware of costs

Once you have bought a property you need to be aware of the ongoing costs involved in maintaining it. Apart from interest charged on your mortgage, there will be other outgoings including council rates, land tax, property management fees, strata fees (if applicable) and insurance.

As a landlord, you will also be up for any maintenance repairs needed on the property. You will of course receive rent and you may be eligible for tax deductions to offset these costs but it’s a good idea to have all your incomings and outgoings set out in a budget so you know exactly where you stand.

9.  Employ a property manager

An investment property manager (PM) is usually a licenced real estate agent who will keep things in order for you and the tenant. They can:

  • Help locate and place a tenant
  • Undertake reference checks to ensure you find the right person
  • Advise on market rental for your property
  • Negotiate with a prospective tenant to get the best possible return on your investment.

A good PM can also advise on the rights and responsibilities of landlords and tenants.   (You can also visit the Office of Fair Trading for information and consumer advice on home ownership, tenancy and property management)

They’ll also take care of any maintenance issues, manage rent collection, run regular property inspections and act as the point of contact between you and your tenant.

The fee you pay your PM is usually a percentage of the rent.

10.  Think long-term

Remember that property investment is a long-term strategy and you should not rely on property prices rising in the short term.

The longer you can afford to commit, the better – and as you build up equity, you can consider purchasing further property.

Note: While these top 10 tips for property investing are intended as a guide only, your individual circumstances should naturally be taken into consideration. This is why we also recommend you obtain independent professional advice relevant to your financial circumstances.

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