Greetings and salutations, property enthusiast!
We are most pleased to present to you a very near and dear article that is contributed by Hostel Hunting’s very own CEO – Khai – in regards to why properties are his favourite investment.
Talking about investment, did you know that property investment could actually generate many attractive benefits to you? Perhaps you already know or you may not already know OR you may want to widen your perspective on the matter. Whatever the reason may be, we hope that this article could help you to broaden your choice of investments.
Without further ado, kick back with your choice of beverage – whatever it may be – and enjoy this read!
“All these while, I’ve always preferred to invest in property if I were to do some investments. Compared to others, property investment has much more solid reasons for me to carry on with it as the benefits of it are super great. The reasons why property is my favourite investment choice are as below” – Wen Khai, HostelHunting.com CEO
First, it’s a brick and mortar investment
In my opinion, even though property investment may not be so flexible, unlike other investment tools, it is a steady, long-term investment. The asset I’m talking about here is a tangible and solid asset.
Tangible and solid assets will remain there always no matter what. Unless there are any unexpected natural disasters or war hits us out of the blue – which is NOT likely to happen in Malaysia– I can get hold of my property by deciding which location would I prefer to buy my property at.
Next, it has high leverage
It is quite true that for me, property investment is one of the investments that you could leverage on the most. There is no need for me to pay 100% of the purchase price because I’m only required to pay 10%-30% down payment for the property, and for the remaining 70%-90% I would be leveraging on a housing loan from the bank.
I get to “own” the property although literally it is owned by the bank because of the loan, but as long as the monthly installment is settled on time with the bank, it is considered under my control and usage.
Despite other investment tools that could be leveraged, you still got to fork out 50%-100% down payment to get it. Imagine this, 50k cash to purchase 50k-100k of other investment tools, vs 50k cash to buy a property worth 400k-500k!
Third, capital appreciation from property investment could be a good weapon against inflation
It is a good hedge against inflation – just try to compare the inflation rates versus capital preservation & appreciation in cement bricks and mortar.
I think as long as a property is in the good state of demand vs supply, whereby your property is not in a location with oversupply of properties, and with decent demand of rental (this would depend on our research as a property buyer), the property value shall increase over the long-term in 10-50 years (despite the short-term fluctuation in 1-5 years -that may also happen). This is similar to those days when we were kids, we bought tek tarik for maybe $0.20, but today we buy teh tarik for $2.00.
Fourth, property investment is great in developing countries
In Malaysia, the population growth and emerging young markets are still increasing, creating the huge demand for housing (no matter: purchase or rent).
From my perspective, with all the upcoming infrastructure plans in Malaysia, more and more crowds are going to gather at the prime cities for commercial activities. This will greatly boost the property values in those areas.
Then, rental income also makes property investment attractive
With good rental income, you could get some decent positive cash flow, which you will be able to sustain through the holding period via this passive income.
This actually comes to our financial planning as the earlier we start property investment, the longer financial housing loan period we will be able to get. Accordingly, the lower the installment amount will be (although the longer the loan tenure goes the higher the principle + interest), but if rental income shall manage to sustain over the installment amount, it would probably be a good buy.
I would suggest to buy the first property while aiming for rental investment, however this is up to personal preferences. In terms of personal time management, I feel that managing property investment won’t take much time from me since most of the duties, like furnishing and getting tenants are normally a one-off work.
To conclude, property is my favourite investment based on my personal preference
I would strongly advise you to weigh everything out before diving into it. Despite all the various factors mentioned, I think property investment gives you not only tangible assets, but it may give you intangible satisfaction too.
We hope you enjoyed reading it as much as we did. If you came into this article only knowing 5%, we believe that you now know 75% of property investment and why it could possibly be your favourite investment as well.