This is what happen in United States, i.e. if you cannot qualify for loans or are having difficulty obtaining credit through the normal channel, then a subprime loan may be your next port of call. A subprime loan is a loan that is given to people with a bad credit record. The interest rate on a subprime loan is likely to be a lot higher than an interest rate you would expect on a loan from a bank.
In Malaysia, the closest to its kind is probably credit company. However, this kind of credit loan is usually smaller in amount and is not widely used when purchasing real estate in Malaysia unlike its peers in United States. Once defaulted, as with the case with "loan-sharks", it creates more social issue rather than economic issue.
What I'm more concerned with is the so-called "Full-Loan" package the developers are offering in the market for the past few years. Yes, you can now own a house by paying a nominal sum of probably RM500. The developer can achieve this by marking up the true selling price of the property by 10%, enabling the buyer to obtain 100% loan, or full-loan so to speak. Unlike the conventional way of buying houses, where the buyer used to fork-up minimum 10% downpayment for the house price, this new marketing strategy has given more people (even the less affordable ones) to own a house at an earlier stage.
As a result, the banks now loses their comfort zone of this 10% of the house price. Once defaulted, the borrower may still owe the bank's a considerable sum of money even after the property is being auctioned. In other words, house buyers today are much more heavily-indebted as compared to the conventional ones. They are also exposed to higher risk on variation in the interest rates, i.e. Base Lending Rates.
Spending future money seems to be the trend now. Even when we buy a few thousand mobile phone, some still opt to pay by installment, thanks to the bank's "zero-interest" repayment scheme.
We are in the midst of building another economic bubbles, which we don't know when it will burst. But if it does burst, are we then prepared for it?
Over 30 years of experience in Iskandar Malaysia's property market, Johor Bahru -based registered estate agency, Tiram Realty, offers FREE tips and info on the selling, buying, renting and auction of properties in Iskandar Malaysia through the blog.
Friday, August 17, 2007
Tuesday, August 7, 2007
Real Estate Tips #19: Sell your property through a registered estate agent
By way of referral or advertisement, you may call up a registered estate agent to sell your property for you. On your first meeting, the following should be discussed:
(1) Joint inspection of the property
- Before the joint inspection, you might want to give the address of the property to the agent for him to gather some information on the market price. During the inspection, the owner should produce documents such as photocopy of the title or quit rent receipts as proof of ownership.
- The owner should clearly point out to the agent any renovation involved and any known defaults on the property.
(2) Formal written instruction to procure a purchaser
Any registered estate agent should have with themselves a an instruction form, normally known as " Appointment to act as an estate agent (to secure a purchaser) " . This form may vary from one agent to another, but the general information should be as following as prescribed under the Malaysian Estate Agent Standard:
(a) Vendor's (seller) details and contact.
(b) Type of property
(c) Property address.
(d) The permission for the agents to display signboards/advertise in the media/send out flyers and promote generally the sale of property.
(e) The general terms and condition of sales, which includes:
- Asking price
- Earnest deposit on acceptance of offer, which is normally 1%
- On signing of Sale & Purchase Agreement, which is the balance 9%
- After signing the balance to be paid within, which is normally 120 days
- With or Without vacant possession, it simply means the buyer can or cannot take over the occupying of the property after purchase
- Other terms and conditions include, such as 8% p.a. charged on any extension give to the completion period of the agreement.
(f) Types of agency, such as exclusive/sole/sole joint/joint/ad hoc agency. Further explanation can be found in my previous article named Types of Agency you may come across with an estate agent.
(g) Appointment period.
- It can vary from 2 months to 6 months or so.
(h) Agreed fee
- Commission payable as prescribed by the Valuers, Appraisers and Estate Agents Act
- Payable upon the creation of a binding contract for the sale and purchase of the property, i.e. the signing of a unconditional Sale & Purchase Agreement.
- Other reimbursement may include :
I. costs of printing, plans, copies of documents, lithography, traveling (only when the distance between the agent's office and the property is more than 40km) and other expenses actually incurred;
II. costs of media advertisements, signboards, brochures or other promotional materials;
III. costs of private auction, conductin a tender, open house , exhibitions and tele and electronics marketing services.
IV. the total cost of reimbursement is payable on receipt of a statement of accounts even in the event of the transaction not being successfully concluded.
(i) In the case of this appointment being aborted, the estate agent is entitled to claim 50% of the full fee or 50% of the forfeited deposit/ compensation received, whichever is the lower.
(j) The capacity of the instruction given, such as registered proprietor, attorney of the registered proprietor pursuant to a Power of Attorney or a trustee for the legal owner.
(k) Signatory and witness.
(l) Viewing arrangement need to be decided as some property may be tenanted , then special arrangement needs to be made with the cooperation of the tenant before viewing.
Again , the above may vary from one agents to another, but this is pretty much the terms needed to be agreed upon between the agent and the vendor at the stage of appointment.
(1) Joint inspection of the property
- Before the joint inspection, you might want to give the address of the property to the agent for him to gather some information on the market price. During the inspection, the owner should produce documents such as photocopy of the title or quit rent receipts as proof of ownership.
- The owner should clearly point out to the agent any renovation involved and any known defaults on the property.
(2) Formal written instruction to procure a purchaser
Any registered estate agent should have with themselves a an instruction form, normally known as " Appointment to act as an estate agent (to secure a purchaser) " . This form may vary from one agent to another, but the general information should be as following as prescribed under the Malaysian Estate Agent Standard:
(a) Vendor's (seller) details and contact.
(b) Type of property
(c) Property address.
(d) The permission for the agents to display signboards/advertise in the media/send out flyers and promote generally the sale of property.
(e) The general terms and condition of sales, which includes:
- Asking price
- Earnest deposit on acceptance of offer, which is normally 1%
- On signing of Sale & Purchase Agreement, which is the balance 9%
- After signing the balance to be paid within, which is normally 120 days
- With or Without vacant possession, it simply means the buyer can or cannot take over the occupying of the property after purchase
- Other terms and conditions include, such as 8% p.a. charged on any extension give to the completion period of the agreement.
(f) Types of agency, such as exclusive/sole/sole joint/joint/ad hoc agency. Further explanation can be found in my previous article named Types of Agency you may come across with an estate agent.
(g) Appointment period.
- It can vary from 2 months to 6 months or so.
(h) Agreed fee
- Commission payable as prescribed by the Valuers, Appraisers and Estate Agents Act
- Payable upon the creation of a binding contract for the sale and purchase of the property, i.e. the signing of a unconditional Sale & Purchase Agreement.
- Other reimbursement may include :
I. costs of printing, plans, copies of documents, lithography, traveling (only when the distance between the agent's office and the property is more than 40km) and other expenses actually incurred;
II. costs of media advertisements, signboards, brochures or other promotional materials;
III. costs of private auction, conductin a tender, open house , exhibitions and tele and electronics marketing services.
IV. the total cost of reimbursement is payable on receipt of a statement of accounts even in the event of the transaction not being successfully concluded.
(i) In the case of this appointment being aborted, the estate agent is entitled to claim 50% of the full fee or 50% of the forfeited deposit/ compensation received, whichever is the lower.
(j) The capacity of the instruction given, such as registered proprietor, attorney of the registered proprietor pursuant to a Power of Attorney or a trustee for the legal owner.
(k) Signatory and witness.
(l) Viewing arrangement need to be decided as some property may be tenanted , then special arrangement needs to be made with the cooperation of the tenant before viewing.
Again , the above may vary from one agents to another, but this is pretty much the terms needed to be agreed upon between the agent and the vendor at the stage of appointment.
Thursday, August 2, 2007
Real Estate Tips #18: Getting a registered estate agent to source a house for you
Over the years in the real estate industry, I've noticed one phenomenon, i.e. many people tend to seek service from a registered estate agent (REA) without knowing exactly what they want! Here's a simple guide or questions rather, that can help you to determine what you want before looking for a REA, hence making things easier for a REA to work on your instruction more precisely.
Qualifying process:
(1) What is the purpose of this instruction?
- Investment
Then you are looking at tenanted properties, giving you consistent rental income with possible growth in capital value.
- Owner-occupier
Then you are looking for properties that can deliver vacant possession, i.e. that even if it's tenanted at the time of buying, but the tenancy can be terminated, giving back to you the right to use the property at a timely manner.
(2) Budget
What's the initial outlay and installment that you can afford? For a residential property, you should be prepare minimum 15% for the house price as initial outlay, i.e. 10% for the downpayment, balance 5% for the incidental costs such as legal fees and stamping. The monthly installment figure should not be more than 30% of your monthly net disposable income. Net disposable income is the balance sum of your monthly gross income less monthly commitment with financial institution, such as car loan or other mortgages.
For example,
Gross Monthly salary = RM5000
Car Installment = RM1000
First house Installment = RM1000
Then your net disposable income is equals to :
RM5000 - (RM1000 + RM1000) = RM3000
Monthly installment that you can afford now = 30% @ RM3000 = RM1000
Based on the above calculation, your loan approval should be hassle free, provided you are not blacklisted under CTOS or CCRIS. This is how the banks look at your financial standing as to how much you can afford to pay monthly.
(3) Buying a house for owner-occupier purpose
After decided your budget, few things you need to determine here:
- Location
- Landed or highrise
- Number of rooms
- Prefer house with renovation or without
- Value added features such as gated and guarded
- Orientation , if that's of importance to you
By now, you should be able to know clearly what sort of house that you are looking for. The REA can now work effectively as per your instruction.
Qualifying process:
(1) What is the purpose of this instruction?
- Investment
Then you are looking at tenanted properties, giving you consistent rental income with possible growth in capital value.
- Owner-occupier
Then you are looking for properties that can deliver vacant possession, i.e. that even if it's tenanted at the time of buying, but the tenancy can be terminated, giving back to you the right to use the property at a timely manner.
(2) Budget
What's the initial outlay and installment that you can afford? For a residential property, you should be prepare minimum 15% for the house price as initial outlay, i.e. 10% for the downpayment, balance 5% for the incidental costs such as legal fees and stamping. The monthly installment figure should not be more than 30% of your monthly net disposable income. Net disposable income is the balance sum of your monthly gross income less monthly commitment with financial institution, such as car loan or other mortgages.
For example,
Gross Monthly salary = RM5000
Car Installment = RM1000
First house Installment = RM1000
Then your net disposable income is equals to :
RM5000 - (RM1000 + RM1000) = RM3000
Monthly installment that you can afford now = 30% @ RM3000 = RM1000
Based on the above calculation, your loan approval should be hassle free, provided you are not blacklisted under CTOS or CCRIS. This is how the banks look at your financial standing as to how much you can afford to pay monthly.
(3) Buying a house for owner-occupier purpose
After decided your budget, few things you need to determine here:
- Location
- Landed or highrise
- Number of rooms
- Prefer house with renovation or without
- Value added features such as gated and guarded
- Orientation , if that's of importance to you
By now, you should be able to know clearly what sort of house that you are looking for. The REA can now work effectively as per your instruction.
Wednesday, August 1, 2007
Real Estate Tips #17: What are the types of agency you may come across with Registered Estate Agent?
There are few types of agency as noted under the Malaysian Estate Agent Standard :
(1) EXCLUSIVE AGENCY - This refers to the instruction from a client to a single registered estate agent to act on his behalf. The client may make introduction but will leave the closing of the transaction to the registered estate agent. The principal must pay the appointed estate agent the agreed fee even if the estate agent was not the effective cause of the transaction.
(2) SOLE AGENCY - Just as in exclusive agency, a single registered estate agent is engaged. The client may, however, wish to reserve the right to close deals in addition to making introduction and the client may plays an active role. The principal must pay the appointed estate agent the agreed fee.
(3) SOLE JOINT AGENCY - This is a variation of the Sole Agency. The registered estate agent works together with the client as a team and the fee is divided on a pre-agreed formula. The client has the flexibility to compensate additional registered estate agents and at the same time maintain the advantage of having one registered estate agent in control.
(4) JOINT AGENCY - This is where more than one registered estate agent is appointed and only the registered estate agent who closes the deals gets paid. The number of agents appointed is limited and each is aware of the appointment of the others.
(5) AD HOC BASIS OR COMMONLY REFERRED TO AS OPEN LISTING - In this case, the principal can engage an unlimited number of estate agents on an ad-hoc basis and fees are paid only on successful conclusion of the estate agency transaction.
If you ask me from the perspective of a registered estate agent, they will definitely opt for Exclusive Listings. Very often, how much effort an agent will put in one particular listing for sale, is very much dependable on the types of agency he's getting. The higher the hierarchy, the harder he will try to dispose the property for you in the shortest time possible.
(1) EXCLUSIVE AGENCY - This refers to the instruction from a client to a single registered estate agent to act on his behalf. The client may make introduction but will leave the closing of the transaction to the registered estate agent. The principal must pay the appointed estate agent the agreed fee even if the estate agent was not the effective cause of the transaction.
(2) SOLE AGENCY - Just as in exclusive agency, a single registered estate agent is engaged. The client may, however, wish to reserve the right to close deals in addition to making introduction and the client may plays an active role. The principal must pay the appointed estate agent the agreed fee.
(3) SOLE JOINT AGENCY - This is a variation of the Sole Agency. The registered estate agent works together with the client as a team and the fee is divided on a pre-agreed formula. The client has the flexibility to compensate additional registered estate agents and at the same time maintain the advantage of having one registered estate agent in control.
(4) JOINT AGENCY - This is where more than one registered estate agent is appointed and only the registered estate agent who closes the deals gets paid. The number of agents appointed is limited and each is aware of the appointment of the others.
(5) AD HOC BASIS OR COMMONLY REFERRED TO AS OPEN LISTING - In this case, the principal can engage an unlimited number of estate agents on an ad-hoc basis and fees are paid only on successful conclusion of the estate agency transaction.
If you ask me from the perspective of a registered estate agent, they will definitely opt for Exclusive Listings. Very often, how much effort an agent will put in one particular listing for sale, is very much dependable on the types of agency he's getting. The higher the hierarchy, the harder he will try to dispose the property for you in the shortest time possible.
Tuesday, July 31, 2007
Property Auction #6: Are you bidding on Standard & Chartered Bank's properties?
If you are planning to bid for Standard & Chartered Bank's property (Laca case), always remember to register yourself with their panel agent few days in advanced. The purpose is for the agent to apply for you to waive the maintenance fees, quit rent and assessment owed by the previous owner.
If you do not perform the above, I'm sorry to inform you that you yourself have to bear those costs. In many instances, these figures can amount to more than RM10,000!
This only applies to Laca cases, i.e. properties without individual titles being issued. As for non-laca cases, this is not really an issue as the bank will automatically absorb the sum.
The beauty of auction properties with most overseas banks is they will pay up the owing sum directly to the management corporation. As compared with the local banks, they will normally ask the buyer to fork out the money first, then claim back the money from the local banks at later stage, which sometime takes up to one year! Therefore, if you are buying properties through auction with local banks, please get ready the owing sum first as part of your initial outlay.
If you do not perform the above, I'm sorry to inform you that you yourself have to bear those costs. In many instances, these figures can amount to more than RM10,000!
This only applies to Laca cases, i.e. properties without individual titles being issued. As for non-laca cases, this is not really an issue as the bank will automatically absorb the sum.
The beauty of auction properties with most overseas banks is they will pay up the owing sum directly to the management corporation. As compared with the local banks, they will normally ask the buyer to fork out the money first, then claim back the money from the local banks at later stage, which sometime takes up to one year! Therefore, if you are buying properties through auction with local banks, please get ready the owing sum first as part of your initial outlay.
Monday, July 30, 2007
New features added to www.tiramrealty.com.my
I'm pleased to inform you some of the exciting updates on Tiram Realty website:
(1) Property Listing - where you can search for the properties you are interested online. If you are interested on listing your property with us, please drop us a email. Do try out our advanced search function under the property listing section as well.
(2) Property Channel - A video channel showing property-related videos online, where you will find FREE tips on home improvement, home decoration, fengshui/geomancy, property news and general information on living in Malaysia.
(3) Newsletter - The first issue of our newsletter, i.e. The Real Estate Insider has been issued and sent out on 24th July, 2007. For those who's interested, please wait no further and register to our newsletter right now!
(4) Property Events - Any upcoming property events will be shown, such as seminar or exhibition.
(5) Podcast - Tired of reading? Have you tested our Tiram Podcast? Let our broadcaster to read out our articles for you. You can even choose to download our article in mp3 format!
Enjoy!
(1) Property Listing - where you can search for the properties you are interested online. If you are interested on listing your property with us, please drop us a email. Do try out our advanced search function under the property listing section as well.
(2) Property Channel - A video channel showing property-related videos online, where you will find FREE tips on home improvement, home decoration, fengshui/geomancy, property news and general information on living in Malaysia.
(3) Newsletter - The first issue of our newsletter, i.e. The Real Estate Insider has been issued and sent out on 24th July, 2007. For those who's interested, please wait no further and register to our newsletter right now!
(4) Property Events - Any upcoming property events will be shown, such as seminar or exhibition.
(5) Podcast - Tired of reading? Have you tested our Tiram Podcast? Let our broadcaster to read out our articles for you. You can even choose to download our article in mp3 format!
Enjoy!
Wednesday, July 18, 2007
Landlord and Tenant #4: What if my tenant run away without settling his utility bills?
Can you imagine a tenant of a single storey terrace house owed the water authority for over RM3000 and get away with it? Howabout a tenant of a half an acre factory owed the TNB for over RM100,000 in few months time? Yes, they do happen to my clients.
Question arises here as to who is responsible for the owing? Many of you will tell me, the tenant, of course. Legally, you all got it right, but practically, it "may" be the owner's onus to settle the owing at the end of the day.
Say, Albert is the tenant of property owned by Tony. Albert left the building without informing Tony, and Albert owed the Tenaga Nasional Berhad for RM6000 electricity bills. The account is under Tony's name. The electricity supply was then been disconnected by TNB.
Two months later, Tony found himself a new tenant, and wanted to reconnect the electricity supply for the new user. TNB's officer will normally tell you this, "we can't reconnect the supply for you unless you have cleared the previous owning."
Two things you should take note here,
(1) TNB do understand that owning is made by the tenant, not the landlord,
(2) TNB has this policy saying that they cannot reconnect the supply to the same property until such time the owning are fully cleared. And they don't really care who's responsible for that owning.
So, in the end of the day, the landlord still has to pay up the owning made by the tenant in order to reconnect back the supply. Hey, wait! There is a court case few years ago telling otherwise! I hear people shouting now, yes, there is a court case which the landlord won, the TNB has to reconnect the supply because the owning are not made by the landlord, but the tenant. However, you need to take TNB to the court for this purpose, because TNB treats that particular case as an isolated case, which they will go on a case by case basis.
Henceforth, if you are facing this problem now, you either pay up the owing, and rent the property out right now, , or you can bring TNB to court for that matter. However, do yo know how long does it take for your matter to bring up to court? Can you afford to wait for the court's final decision and leave your property empty for months or even years? This is what i meant just now by saying, legally yes, but practically no.
My reminder to you all is, whenever you collect your rental from your tenant, please remember to obtain a paid copy of receipt for the utility bills at least on a bi-monthly basis.
Question arises here as to who is responsible for the owing? Many of you will tell me, the tenant, of course. Legally, you all got it right, but practically, it "may" be the owner's onus to settle the owing at the end of the day.
Say, Albert is the tenant of property owned by Tony. Albert left the building without informing Tony, and Albert owed the Tenaga Nasional Berhad for RM6000 electricity bills. The account is under Tony's name. The electricity supply was then been disconnected by TNB.
Two months later, Tony found himself a new tenant, and wanted to reconnect the electricity supply for the new user. TNB's officer will normally tell you this, "we can't reconnect the supply for you unless you have cleared the previous owning."
Two things you should take note here,
(1) TNB do understand that owning is made by the tenant, not the landlord,
(2) TNB has this policy saying that they cannot reconnect the supply to the same property until such time the owning are fully cleared. And they don't really care who's responsible for that owning.
So, in the end of the day, the landlord still has to pay up the owning made by the tenant in order to reconnect back the supply. Hey, wait! There is a court case few years ago telling otherwise! I hear people shouting now, yes, there is a court case which the landlord won, the TNB has to reconnect the supply because the owning are not made by the landlord, but the tenant. However, you need to take TNB to the court for this purpose, because TNB treats that particular case as an isolated case, which they will go on a case by case basis.
Henceforth, if you are facing this problem now, you either pay up the owing, and rent the property out right now, , or you can bring TNB to court for that matter. However, do yo know how long does it take for your matter to bring up to court? Can you afford to wait for the court's final decision and leave your property empty for months or even years? This is what i meant just now by saying, legally yes, but practically no.
My reminder to you all is, whenever you collect your rental from your tenant, please remember to obtain a paid copy of receipt for the utility bills at least on a bi-monthly basis.
Wednesday, July 4, 2007
Property Auction Tips #5: Should i bid for a caveated property?
This is a question posted to me by one of our Tiram blog reader. Apparently, she came across a Proclamation of Sale (P.O.S) of a property in Kuala Lumpur which she's interested in buying. It so happened that the property has been caveated. She then sought advice from few registered estate agents on the issues on caveat, nevertheless she couldn't seem to obtain a satisfactory answer.
This is what i would do should i come across any caveated properties in auction:
(1) Talk to the P.O.S lawyer on the nature of the caveat in questioned, and the possibility of removing the caveat,
(2) Obtain second opinion from my panel lawyer on the possibility of removing the caveat,
(3) Should i get both negative answers from both lawyers, i won't even market the property to any of my client at the first place
(4) Should i get conflicting answers from both lawyers (and yes, lawyers do differ in their opinions sometime), i will also advise my client not to bid for the property.
I've always told my client that buying properties is a happy thing to do, but it may turn out to be some not so delightful event should you get yourself caught up with some legal predicament.
Always make sure that you know what you are buying.
This is what i would do should i come across any caveated properties in auction:
(1) Talk to the P.O.S lawyer on the nature of the caveat in questioned, and the possibility of removing the caveat,
(2) Obtain second opinion from my panel lawyer on the possibility of removing the caveat,
(3) Should i get both negative answers from both lawyers, i won't even market the property to any of my client at the first place
(4) Should i get conflicting answers from both lawyers (and yes, lawyers do differ in their opinions sometime), i will also advise my client not to bid for the property.
I've always told my client that buying properties is a happy thing to do, but it may turn out to be some not so delightful event should you get yourself caught up with some legal predicament.
Always make sure that you know what you are buying.
Monday, June 25, 2007
Iskandar Development Region #6: New updates on Nusajaya
These are some of the happenings in Nusajaya City:
(1)Columbia-Asia Hospital commencing work by September 2007, a 70 beds hospital at Medi-Park
(2)University managed by I-Carnegie commencing work by September 2007
(3)Estimated first yacht will be sailing into Puteri Harbour at Nusajaya by December 2007.
(4)Detailed incentive package for IDR will be published by September 2007.
Looks like September this year will be an exciting month for all of us who's interested in the progress of Iskandar Development Region.
(1)Columbia-Asia Hospital commencing work by September 2007, a 70 beds hospital at Medi-Park
(2)University managed by I-Carnegie commencing work by September 2007
(3)Estimated first yacht will be sailing into Puteri Harbour at Nusajaya by December 2007.
(4)Detailed incentive package for IDR will be published by September 2007.
Looks like September this year will be an exciting month for all of us who's interested in the progress of Iskandar Development Region.
Friday, June 22, 2007
Real Estate Tips #16: Are you planning to visit a mapex/property exhibition? Here's what you should do.
Before you go, you should :
(1) Determine your purpose.
Are you looking for a house at a particular locality? Are you searching for a shophouse for investment purchase? Are you looking at a single or double storey terrace house? How many rooms i needed? Too many questions? Well, to make things simpler, just answer the following questions:
- What's the locality you wanted?
- What's the type of house you wanted, single/double house, or apartment?
- What's the value added facility you wanted? Security features, larger carporch or etc?
(2) Determine your budget.
What sort of initial outlay can you fork up? If you are looking for a residential property, you should be looking at minimum 10% outlay, as for commercial property, you need to have minimum 20% of the value of the property. You may notice many developers now are coming out with an easy entry package which may need as low as RM1000 as initial outlay to buy their product/houses. Don't feel skeptical about it, because these are genuine package. Besides the first payment of the property, there are also some incidental costs such as legal costs, stamping and etc, this will amount to another 5% roughly.
Besides initial outlay, the bank's installment comes into the picture. As a rule of thumb, the monthly installment should not be more than 1/3 of your monthly income, or not more than 40$ of your monthly net disposable income.
Now that you have determined a purpose and budget, you will then be more focus as you step into the exhibition hall. Here's what you should do as you arrive:
(1) Stay Calm
You will be surrounded and flooded by flyers, brochures and sales person. Just stay calm and accepting flyers and put it aside, as you can read it later when you are back home.
(2) Plan your trip
Look for an exhibition hall map, if any, and decide a logical track where you won't repeat the same booths again and again and get lost. Go for a quick one round to have a feel of what's available there generally and take note on those comes within your purpose and budget as targeted booths.
(3) Visit the targeted booths
Now is time to go to the targeted booths , and here's what you can do there:
- Look through the master plan of the project, and its adjacent development
- See the model house
- Obtained detailed brochure, which entails design of the house, price, package, built-up area, land size, actually location and etc.
- Ask the sales person should you have any question, don't be shy, they are more than happy to answer to your questions.
- Register with the developer if you want more information to be sent to you in future
- Check the developer's background with the sales personnels
- Find out who are the bank panels, some banks may offered special rate for particular product for this developer
- NEVER BUY ON IMPULSE, i've met plenty of first-time house buyers who regretted purchasing their first house, don't go and become one of them.
(4) Visit the bank's booths
- After knowing what you might want to buy, now it's time to chat with the bank officer to see your financial standing, whether or not you are eligible and affordable to purchase the property you wanted.
- The more financial information you give to the bank's officer the better, i.e. monthly income, commitments such as car loans and etc.
- The bank's officers can normally calculate your monthly installment on the spot.
- Don't get confused over the different package offered by different banks, just obtain the brochures/flyers and study them when you are back home later.
- Here's some questions you might want to ask the bank's officers:
(a) What's the rates offered?
(b) What's the installment payment i need to make?
(c) How long can i borrow?
(d) What's the margin i can borrow?
(e) What's the incidental cost involved?
(f) How much do i have to pay the MRTA? How do I make myself covered in the "correct" way? Please refer to my previous articles on the MRTA insurance.
(g) Can i make prepayment? What's the cost involved?
(h) What's the penalty if i switch the loan? How long are you going to bind me?
Always remember, getting information from the property exhibition is only a first stage of purchasing a property, you should then pay a site visit to gather more information, such as actual showhouse, construction stage, orientation, road's level and etc.
(1) Determine your purpose.
Are you looking for a house at a particular locality? Are you searching for a shophouse for investment purchase? Are you looking at a single or double storey terrace house? How many rooms i needed? Too many questions? Well, to make things simpler, just answer the following questions:
- What's the locality you wanted?
- What's the type of house you wanted, single/double house, or apartment?
- What's the value added facility you wanted? Security features, larger carporch or etc?
(2) Determine your budget.
What sort of initial outlay can you fork up? If you are looking for a residential property, you should be looking at minimum 10% outlay, as for commercial property, you need to have minimum 20% of the value of the property. You may notice many developers now are coming out with an easy entry package which may need as low as RM1000 as initial outlay to buy their product/houses. Don't feel skeptical about it, because these are genuine package. Besides the first payment of the property, there are also some incidental costs such as legal costs, stamping and etc, this will amount to another 5% roughly.
Besides initial outlay, the bank's installment comes into the picture. As a rule of thumb, the monthly installment should not be more than 1/3 of your monthly income, or not more than 40$ of your monthly net disposable income.
Now that you have determined a purpose and budget, you will then be more focus as you step into the exhibition hall. Here's what you should do as you arrive:
(1) Stay Calm
You will be surrounded and flooded by flyers, brochures and sales person. Just stay calm and accepting flyers and put it aside, as you can read it later when you are back home.
(2) Plan your trip
Look for an exhibition hall map, if any, and decide a logical track where you won't repeat the same booths again and again and get lost. Go for a quick one round to have a feel of what's available there generally and take note on those comes within your purpose and budget as targeted booths.
(3) Visit the targeted booths
Now is time to go to the targeted booths , and here's what you can do there:
- Look through the master plan of the project, and its adjacent development
- See the model house
- Obtained detailed brochure, which entails design of the house, price, package, built-up area, land size, actually location and etc.
- Ask the sales person should you have any question, don't be shy, they are more than happy to answer to your questions.
- Register with the developer if you want more information to be sent to you in future
- Check the developer's background with the sales personnels
- Find out who are the bank panels, some banks may offered special rate for particular product for this developer
- NEVER BUY ON IMPULSE, i've met plenty of first-time house buyers who regretted purchasing their first house, don't go and become one of them.
(4) Visit the bank's booths
- After knowing what you might want to buy, now it's time to chat with the bank officer to see your financial standing, whether or not you are eligible and affordable to purchase the property you wanted.
- The more financial information you give to the bank's officer the better, i.e. monthly income, commitments such as car loans and etc.
- The bank's officers can normally calculate your monthly installment on the spot.
- Don't get confused over the different package offered by different banks, just obtain the brochures/flyers and study them when you are back home later.
- Here's some questions you might want to ask the bank's officers:
(a) What's the rates offered?
(b) What's the installment payment i need to make?
(c) How long can i borrow?
(d) What's the margin i can borrow?
(e) What's the incidental cost involved?
(f) How much do i have to pay the MRTA? How do I make myself covered in the "correct" way? Please refer to my previous articles on the MRTA insurance.
(g) Can i make prepayment? What's the cost involved?
(h) What's the penalty if i switch the loan? How long are you going to bind me?
Always remember, getting information from the property exhibition is only a first stage of purchasing a property, you should then pay a site visit to gather more information, such as actual showhouse, construction stage, orientation, road's level and etc.
Tuesday, June 5, 2007
Real Estate Tips #15: Seminar on Southern Johor Development
Malaysian Institute of Estate Agents , Johor Branch together with the cooperation of University of Technology of Malaysia and Land & Mines Johor are conducting a seminar on SOUTHERN JOHOR DEVELOPMENT: PROSPECTS & CHALLENGES IN THE 21ST CENTURY at The M-Suites Johor Bahru, 27th & 28th June 2007.
The seminar topics are as follows:
1. Iskandar Development Region - Embarking into a New Horizon;prospects and challenges
2. Iskandar Development Region - The need for a balanced development
3. Challenges of the Malaysian Torrens System in to the 21st Century
4. Environmental Management Issues
5. Latest Amendment of the Strata Title Act 1985 and the Incorporation of Gated Community Schemes
6. Introducing new paradigm in housing industry: developer's perspective
7. Introducing new paradigm in housing industry (certificate of completion & compliance, build then sell, one stop centre, gated and guarded community, latest amendment of strata title act): Government's perspective
8. Making build then sell 10:90 concept work
9. Business and Investment Opportunities in Southern Johor Development
10. Southern Development: The way forward
11. Certificate of completion and compliance: new role for the architect
12. The concept of waqf as an instrument for real estate development in IDR
All topics are given by prominent speakers. The fees are RM600 per person, including notes, refreshments and lunch. For enquiries, please send me a email to boonping@tiramrealty.com.my.
The seminar topics are as follows:
1. Iskandar Development Region - Embarking into a New Horizon;prospects and challenges
2. Iskandar Development Region - The need for a balanced development
3. Challenges of the Malaysian Torrens System in to the 21st Century
4. Environmental Management Issues
5. Latest Amendment of the Strata Title Act 1985 and the Incorporation of Gated Community Schemes
6. Introducing new paradigm in housing industry: developer's perspective
7. Introducing new paradigm in housing industry (certificate of completion & compliance, build then sell, one stop centre, gated and guarded community, latest amendment of strata title act): Government's perspective
8. Making build then sell 10:90 concept work
9. Business and Investment Opportunities in Southern Johor Development
10. Southern Development: The way forward
11. Certificate of completion and compliance: new role for the architect
12. The concept of waqf as an instrument for real estate development in IDR
All topics are given by prominent speakers. The fees are RM600 per person, including notes, refreshments and lunch. For enquiries, please send me a email to boonping@tiramrealty.com.my.
Monday, June 4, 2007
Real Estate Tips #14: Mortgage Reducing Term Assurance (MRTA), have you bought it?
MRTA is designed exclusively to protect against the outstanding balance of housing mortgage in the event of the loan holder’s unexpected death or TPD (Total Permanent Disability). In other words, it will pay off the mortgage thereby securing the repayment of the housing loan.
Over my 8 years involvement in the real estate industry, I've come across two typical true cases related to the issue of MRTA.
Case one:
Mr. A lost his eye-sights due to work injury, and he still has to carry a household consist of his wife and a 2 years old daughther. He previously bought a single storey terrace house at Bukit Jaya, and now fully paid off by the banks' MRTA. At least, he still can provide shelter for his family.
Case two:
Mr. B got me to sell off his double storey terrace house at Taman Puteri Wangsa, because he simply couldn't afford to continue serve the bank installment on his own anymore due to a car accident which caused him paralized.He is the only income earner to his family. He didn't subscribe to MRTA, as a result, he's not only losing his livinghood, he also lost his house.
The above are 2 real cases where i've met so far with regards to MRTA, therefore, i strongly urge all house owners subsribe to MRTA.
Get your bank's officer/insurers to explain to you in detail on how MRTA covers you and how you should be covered. That is to say, there are actually many options available when you want to subscribe to it.
Example:
A newly wed couple bought a house at RM150,000. If the husband is the only income earner to the family, then the husband should subcribe fully to the MRTA. If both couple are major income earners to the family, then they can opt to either subcribe to RM75,000 each, or RM150,000 each. In the case of subcription to half of the property value by each of the couple, in the event of death of TPD, the insurer will only pay off half the mortgage. The remaining ones will still have to pay off the balance. The younger the subscriber is, the cheaper the previum is.
The best part of the MRTA is that it can be made to become a portion of the loan margin you are getting from your bank.
Many people out there don't even know how they initially subscribed their MRTA, please refer back to your bank document on that matter, and please ensure you have made the right options (pleaser refer to example above) when buying it.
Over my 8 years involvement in the real estate industry, I've come across two typical true cases related to the issue of MRTA.
Case one:
Mr. A lost his eye-sights due to work injury, and he still has to carry a household consist of his wife and a 2 years old daughther. He previously bought a single storey terrace house at Bukit Jaya, and now fully paid off by the banks' MRTA. At least, he still can provide shelter for his family.
Case two:
Mr. B got me to sell off his double storey terrace house at Taman Puteri Wangsa, because he simply couldn't afford to continue serve the bank installment on his own anymore due to a car accident which caused him paralized.He is the only income earner to his family. He didn't subscribe to MRTA, as a result, he's not only losing his livinghood, he also lost his house.
The above are 2 real cases where i've met so far with regards to MRTA, therefore, i strongly urge all house owners subsribe to MRTA.
Get your bank's officer/insurers to explain to you in detail on how MRTA covers you and how you should be covered. That is to say, there are actually many options available when you want to subscribe to it.
Example:
A newly wed couple bought a house at RM150,000. If the husband is the only income earner to the family, then the husband should subcribe fully to the MRTA. If both couple are major income earners to the family, then they can opt to either subcribe to RM75,000 each, or RM150,000 each. In the case of subcription to half of the property value by each of the couple, in the event of death of TPD, the insurer will only pay off half the mortgage. The remaining ones will still have to pay off the balance. The younger the subscriber is, the cheaper the previum is.
The best part of the MRTA is that it can be made to become a portion of the loan margin you are getting from your bank.
Many people out there don't even know how they initially subscribed their MRTA, please refer back to your bank document on that matter, and please ensure you have made the right options (pleaser refer to example above) when buying it.
Thursday, May 31, 2007
Landlord and Tenant #3: Fire insurance - notification on change of tenants
This has always being neglected by property owners. Under the fire insurance terms and condition, you as a property owners are obliged to submit changes to the tenancies to your insurers promptly.
That is to say that you will be paying different premium for the fire insurance. For example, if you have a carpentry as your tenant, you will be paying tariff at approximately 0.7% whereas a storeroom carries a tariff of approximately 0.2%. Yes, higher risk's tenant will cost you as a owner to pay higher premium. By paying the sufficient premium to your insurers, then only you will be able to avoid any disputes in the case of claims against fire.
From now onwards, do inform your insurers whenever there is a change in your tenants.
That is to say that you will be paying different premium for the fire insurance. For example, if you have a carpentry as your tenant, you will be paying tariff at approximately 0.7% whereas a storeroom carries a tariff of approximately 0.2%. Yes, higher risk's tenant will cost you as a owner to pay higher premium. By paying the sufficient premium to your insurers, then only you will be able to avoid any disputes in the case of claims against fire.
From now onwards, do inform your insurers whenever there is a change in your tenants.
Monday, May 28, 2007
Landlord and Tenant #2: How many of you actually read through your tenancy agreement before signing?
I'm very surprised to hear that many people never actually read through the tenancy agreement before signing it, be it professionals or some people from corporate background.
Both landlord and tenant normally have many issues to be agreed upon, and in many instances, the issues are agreed upon verbally at initial stage. Please make sure these terms and conditions are duely noted and worded properly in the tenancy agreement to avoid any future disputes.
To my knowledge, there are some so-called "standard" tenancy agreement in distribution in the market, which to me are nothing more than a plate of "rojak" full of variety mix of unrelevant contents. You can find standard Sale & Purchase Agreement when buying new property from developer like Schedule G and Schedule H as noted by the Housing Development Control Act. But there are no such thing as "standard" tenancy agreement as per se.
For each and every tenancy agreement you come across, please always read through thoroughly every clauses to see that both of you are in agreement and to safeguard both parties interests equitably.
Both landlord and tenant normally have many issues to be agreed upon, and in many instances, the issues are agreed upon verbally at initial stage. Please make sure these terms and conditions are duely noted and worded properly in the tenancy agreement to avoid any future disputes.
To my knowledge, there are some so-called "standard" tenancy agreement in distribution in the market, which to me are nothing more than a plate of "rojak" full of variety mix of unrelevant contents. You can find standard Sale & Purchase Agreement when buying new property from developer like Schedule G and Schedule H as noted by the Housing Development Control Act. But there are no such thing as "standard" tenancy agreement as per se.
For each and every tenancy agreement you come across, please always read through thoroughly every clauses to see that both of you are in agreement and to safeguard both parties interests equitably.
Tuesday, May 22, 2007
Real Estate Tips #13: Changes in house design over the past 10 years
Some of you might find this interesting, here's some of the changes:
(1) Single carporch to twin or even triple carporch
- Most families now own more than one cars, in order to cater to these needs, all developers now opt to build more spacious carporch.
(2)Traditional kitchen to Wet & Dry kitchen
- Many would use the dry kitchen for display purpose, where the actual cooking is done in wet kitchen.
(3)Cement/parquet flooring to tiled/timber strips flooring
- Many finds cement/parquet floorings to be difficult to maintain. Most developers have now switched to using ceramic tiles or timber strips for the floor to enhance the look and to enable easier maintenance on the floor.
(4)Open drainage to covered drainage system
- The streetscape have become much more neat using the covered drainage system though i am still feeling rather skeptical on the long term maintenance of these system.
(5)Hanging cable to underground cable
- Also to make the streetscape looks more pleasant, many developers have also started to use underground cable rather than to let the cables hanging all around the housing estates posts.
(6)More toilets/washrooms
- To add more privacy and conveniency to the occupants, some innovative developers have added more toilets to the house. For a double storey terrace house, it used to have only 3 toilets, 2 in the first floor, 1 in the groundfloor. We now see some 4 rooms houses came with 4 attached toilets.
(7)Gated and guarded community
- A new concept living style which capitalise on the security and sense of community. Some even provides clubhouse with facilities such as swimming pool, tennis court and etc, which you can only find in condomiums previously.
(8)Streetscape
- Besides the underground cable and covered drainage, the developer now place more emphasis on the "make-up" on the streetscape, e.g. with more greenery , lakes and parks.
(9)More accessories
- Things like ceiling height wall tiles, auto-gates points, tiled carporch and tinted windows, aluminium framed doors and windows have also given to the house buyers by some developers.
(10)Roofing system
- Cool-roof system which are meant to maintain and lower room temperature as compared to the conventional ones, in view of reducing power consumption.
(11) Sheer wall
- A new technique in constructing walls which enables more space created within the house.
(12) Higher floor to ceiling height
- To enable better ventilation
(13) Wider main entrance gate
- To allow easier car access
(14) Columnless carporch
- To allow full utilisation of the carporch
Developers are no longer selling house, they are now selling lifestyles.
(1) Single carporch to twin or even triple carporch
- Most families now own more than one cars, in order to cater to these needs, all developers now opt to build more spacious carporch.
(2)Traditional kitchen to Wet & Dry kitchen
- Many would use the dry kitchen for display purpose, where the actual cooking is done in wet kitchen.
(3)Cement/parquet flooring to tiled/timber strips flooring
- Many finds cement/parquet floorings to be difficult to maintain. Most developers have now switched to using ceramic tiles or timber strips for the floor to enhance the look and to enable easier maintenance on the floor.
(4)Open drainage to covered drainage system
- The streetscape have become much more neat using the covered drainage system though i am still feeling rather skeptical on the long term maintenance of these system.
(5)Hanging cable to underground cable
- Also to make the streetscape looks more pleasant, many developers have also started to use underground cable rather than to let the cables hanging all around the housing estates posts.
(6)More toilets/washrooms
- To add more privacy and conveniency to the occupants, some innovative developers have added more toilets to the house. For a double storey terrace house, it used to have only 3 toilets, 2 in the first floor, 1 in the groundfloor. We now see some 4 rooms houses came with 4 attached toilets.
(7)Gated and guarded community
- A new concept living style which capitalise on the security and sense of community. Some even provides clubhouse with facilities such as swimming pool, tennis court and etc, which you can only find in condomiums previously.
(8)Streetscape
- Besides the underground cable and covered drainage, the developer now place more emphasis on the "make-up" on the streetscape, e.g. with more greenery , lakes and parks.
(9)More accessories
- Things like ceiling height wall tiles, auto-gates points, tiled carporch and tinted windows, aluminium framed doors and windows have also given to the house buyers by some developers.
(10)Roofing system
- Cool-roof system which are meant to maintain and lower room temperature as compared to the conventional ones, in view of reducing power consumption.
(11) Sheer wall
- A new technique in constructing walls which enables more space created within the house.
(12) Higher floor to ceiling height
- To enable better ventilation
(13) Wider main entrance gate
- To allow easier car access
(14) Columnless carporch
- To allow full utilisation of the carporch
Developers are no longer selling house, they are now selling lifestyles.
Monday, May 21, 2007
Property Auction #4: I've bought a house at an auction fair by the bank, but they cancel the deal 2 months later! Can they do that?
This was the question posted to us by one of our client who bought a single storey terrace house at Taman Desa Jaya, during a property auction fair conducted by the bank. For those of you who have read my previous articles on property auction before, you all knew this is what we called a Laca case, i.e. properties without individual titles issued.
After two months signing the contract of sale, and he has signed the loan agreement,and he has started doing the renovation (i would not advise this though) he suddenly got a call from the bank saying that the case need to be withdrawn. Apparently, the lawyer who's incharged of this property for the bank has made a blunder, i.e. this should be a non-laca case, simply because the individual titles has already being issued and registered under previous owner. As a result, the "correct" and "legal" way of disposing this property has to be done through Highcourt , and not by the bank themself. Therefore, the bank has to withdraw this case and re-auction the property through highcourt procedure.
So, in the end of the day, not only this purchaser will lose all his legal fees, he's also going to lose his renovation.
Two lessons we've learnt from this case:
(1) Never start renovating the house before the completion of the conveyancing procedure of your property
(2) When you want to bid for a laca property, and you already knew the titles have been issued, please do a land title search on it. If you find the previous owner's name has already being registered , then voice your doubt to the auctioneer, because this should be a non-laca case instead of a laca ones.
After two months signing the contract of sale, and he has signed the loan agreement,and he has started doing the renovation (i would not advise this though) he suddenly got a call from the bank saying that the case need to be withdrawn. Apparently, the lawyer who's incharged of this property for the bank has made a blunder, i.e. this should be a non-laca case, simply because the individual titles has already being issued and registered under previous owner. As a result, the "correct" and "legal" way of disposing this property has to be done through Highcourt , and not by the bank themself. Therefore, the bank has to withdraw this case and re-auction the property through highcourt procedure.
So, in the end of the day, not only this purchaser will lose all his legal fees, he's also going to lose his renovation.
Two lessons we've learnt from this case:
(1) Never start renovating the house before the completion of the conveyancing procedure of your property
(2) When you want to bid for a laca property, and you already knew the titles have been issued, please do a land title search on it. If you find the previous owner's name has already being registered , then voice your doubt to the auctioneer, because this should be a non-laca case instead of a laca ones.
Friday, May 18, 2007
Landlord and Tenant #1: My tenant doesn't pay utility bills!
I've rented a firstfloor office in Taman Molek to a tenant, after a almost a year, the landlord came back to me and inform me that the tenant has owed electricity bills over RM2000, which has way exceeded the utility deposit paid to the owner. Tenaga Nasional Berhad has also sent out warning letter few times indicating that they are going to disconnect the electricity supply.
Later i found out, the tenant didn't really owe anything. What happened here was that, the TNB meter is inside the building, not visible to the TNB people whenever they came to inspect the meter reading, and the tenant is hardly around. As a result, TNB put in an estimated figures every month, which comes to about RM500 usage per month.
I've gone to the tenant's office, and took down the actualy meter reading, then verify the figures with TNB. TNB officers immediately re-adjusted the bills according to the actual readings.
Few tips for those of you having the same scenario, i.e. where your TNB meter is not visible to the TNB people, just write down the current meter reading for say every 2 weeks on a piece of paper plus the date, and paste it on the front door. It's simple, isn't it?
One word of advice for all landlords, please always collect the paid utility bills from your tenant at least every two months, and keep track on your tenant's payment to avoid any unnecessary arguments later.
For your information, one of my client's tenant owed over RM80,000 of water bills over a period of 6 months!
Later i found out, the tenant didn't really owe anything. What happened here was that, the TNB meter is inside the building, not visible to the TNB people whenever they came to inspect the meter reading, and the tenant is hardly around. As a result, TNB put in an estimated figures every month, which comes to about RM500 usage per month.
I've gone to the tenant's office, and took down the actualy meter reading, then verify the figures with TNB. TNB officers immediately re-adjusted the bills according to the actual readings.
Few tips for those of you having the same scenario, i.e. where your TNB meter is not visible to the TNB people, just write down the current meter reading for say every 2 weeks on a piece of paper plus the date, and paste it on the front door. It's simple, isn't it?
One word of advice for all landlords, please always collect the paid utility bills from your tenant at least every two months, and keep track on your tenant's payment to avoid any unnecessary arguments later.
For your information, one of my client's tenant owed over RM80,000 of water bills over a period of 6 months!
Thursday, May 17, 2007
Real Estate Tips #12: Property Investment - Property Management
The long awaited Common Property (Building & Maintenance) Bill has been passed in December 2006. Once this specific law is introduced, developers and owners are expected to form a joint management committee to manage and maintain the common properties. This will give owners a say in how the common properties will be managed. Owners will get to see more transparency in the made up of their contributions towards the management fund & reserve funds for major repairs.
Henceforth, you as a property investor are now in better position to maintain and enhance the value of your property through joint-management with the development even when the individual titles have not yet issued.
I do not want to name any here, but please be aware that many stratified properties are having lousy or poor management nowadays. This will have direct effect on the market rental and the capital value of the property you invested.
Henceforth, you as a property investor are now in better position to maintain and enhance the value of your property through joint-management with the development even when the individual titles have not yet issued.
I do not want to name any here, but please be aware that many stratified properties are having lousy or poor management nowadays. This will have direct effect on the market rental and the capital value of the property you invested.
Monday, May 14, 2007
Real Estate Tips #11: Property Investment - Tenantability
Say you are a property investor, and you are given by your Registered Estate Agent the following properties for consideration:
Option 1:
Alex has got a double storey shopoffice at Jalan Dedap, Taman Johor Jaya selling at RM400,000 with rental income RM2000 per month, i.e. 6%p.a. return. All shops on the same row are fully tenanted. From your survey, you are told that tenants are always on queue for this row of shops.
Option 2:
Brian has got a double storey shopoffice at Jalan Rosmerah, Taman Johor Jaya selling at RM400,000 with rental income RM2000 per month, i.e. 6%p.a. return. There are a total of 3 units of shops located on the same row are still empty. You know that there are always empty units along the same row of shops from your survey.
My advise would be:
The above 2 properties are having the same rate of return, i.e. 6%p.a. However, should Option 1 becomes empty, it will be immediately taken up by another tenant, whilst the same may not happen to Option 2. Under the same scenario, even if Option 2 is fetching a slightly higher rate of return, say 6.5%p.a. , I would still advise the client to consider more on Option 1 due to its better tenantability.
Question arises here, how would you know a property's tenantability is good or not? Firstly, check out if there are empty units around close vicinity. It would be the fastest indication. Then, go to the nearest shops around to talk to the locals on the tenantability history at the vicinity.
Always speak to the locals/neighbours on the surrounding development and history before you buy a property for investment.
Option 1:
Alex has got a double storey shopoffice at Jalan Dedap, Taman Johor Jaya selling at RM400,000 with rental income RM2000 per month, i.e. 6%p.a. return. All shops on the same row are fully tenanted. From your survey, you are told that tenants are always on queue for this row of shops.
Option 2:
Brian has got a double storey shopoffice at Jalan Rosmerah, Taman Johor Jaya selling at RM400,000 with rental income RM2000 per month, i.e. 6%p.a. return. There are a total of 3 units of shops located on the same row are still empty. You know that there are always empty units along the same row of shops from your survey.
My advise would be:
The above 2 properties are having the same rate of return, i.e. 6%p.a. However, should Option 1 becomes empty, it will be immediately taken up by another tenant, whilst the same may not happen to Option 2. Under the same scenario, even if Option 2 is fetching a slightly higher rate of return, say 6.5%p.a. , I would still advise the client to consider more on Option 1 due to its better tenantability.
Question arises here, how would you know a property's tenantability is good or not? Firstly, check out if there are empty units around close vicinity. It would be the fastest indication. Then, go to the nearest shops around to talk to the locals on the tenantability history at the vicinity.
Always speak to the locals/neighbours on the surrounding development and history before you buy a property for investment.
Friday, May 11, 2007
Real Estate Tips #10: Glossary - Overhang property
We all know that from the property report from Valuation Department that Johor has got the most overhang properties. How do we know a property is considered overhang or not?
Definition:
Overhang - Property completed with Certicate of Fitness (now Certificate of Completion and Compliance) remain unsold for more than 9 months.
Are there any real estate terminology that you wish me to further explain? Drop me a mail.
Definition:
Overhang - Property completed with Certicate of Fitness (now Certificate of Completion and Compliance) remain unsold for more than 9 months.
Are there any real estate terminology that you wish me to further explain? Drop me a mail.
Wednesday, May 9, 2007
Real Estate Tips #9: Property Investment - General Buying Guide
What are the top three most important factors in property investment? Many used to say, "location, location, location!". This is no longer true, I'm not saying otherwise, but there are actually more things to look at other than location. There are four (4) main factors which i would normally advise my client in property investment:
(1) Location
Things to look at may include accessibilty, visibility, road level, carparkings, pedestrian flows and etc.
(2) Rate of Return
You should be looking at minimum 6%p.a. as a general guide. Please refer to Real Estate Tips #8 on how to calculate Rate of Return.
(3) Tenantability
If the property become vacant, how long will it take to rent it out again?
(4) Property Management
A poor property manager will result in a decreasing in capital value and the rental of your property in long run.
I shall explore further with the above factors with you all stages by stages. Before i end here, do let me highlight to you the paramount rule on property investment, i.e.
"BUY ONLY THOSE PROPERTIES YOU ARE FAMILIAR WITH!"
(1) Location
Things to look at may include accessibilty, visibility, road level, carparkings, pedestrian flows and etc.
(2) Rate of Return
You should be looking at minimum 6%p.a. as a general guide. Please refer to Real Estate Tips #8 on how to calculate Rate of Return.
(3) Tenantability
If the property become vacant, how long will it take to rent it out again?
(4) Property Management
A poor property manager will result in a decreasing in capital value and the rental of your property in long run.
I shall explore further with the above factors with you all stages by stages. Before i end here, do let me highlight to you the paramount rule on property investment, i.e.
"BUY ONLY THOSE PROPERTIES YOU ARE FAMILIAR WITH!"
Tuesday, May 8, 2007
Real Estate Tips #8: How do you calculate rate of return on property?
By international standard, all property investors should be looking at minimum 6% yearly return when it comes to property investment. Here's how you calculate the rate of return:
Rate of return = Net Annual Rental / Price
Scenario 1. Double Storey Shop House at Taman Johor Jaya
Monthly Rental: RM2000
Price: RM400,000
Therefore,
Rate of return = (RM2000 x 12) / RM400,000
= 0.06 or 6%p.a.
Remarks: Attractive investment.
Scenario 2. 8th Floor Office Suite at City Plaza
Monthly Rental: RM4400
Price: RM600,000
Maintenance Fees (monthly): RM1900
Therefore,
Rate of return = (RM4400 - RM1900) x 12 / RM600,000
= 0.05 or 5%p.a.
Remarks: Less attractive investment.
Let me share with you a rule of thumb i often use without having the hassle of going through the above calculation.
Whenever you see the price, take off the last two digits, if the monthly net rental is at least half of this new figure, then rest assured, as you are getting minimum 6%.
Take scenario 1 for example, the price is RM400,000, after taking out the last 2 digits will be RM4,000, and the monthly net rental is RM2000, which is exactly half of RM4,000, there you are, you have a rate of return of 6%p.a. Try it out with other numbers yourself and verify with the formulae given above using calculators to see if it works.
I've provided you the above the simplest model on rate of return calculation, but please also note that rate of return is only ONE OF THE MANY FACTORS that should taken into consideration when it comes to property investment. I shall share with you in near future on other factors affecting property invesment decision making process.
Rate of return = Net Annual Rental / Price
Scenario 1. Double Storey Shop House at Taman Johor Jaya
Monthly Rental: RM2000
Price: RM400,000
Therefore,
Rate of return = (RM2000 x 12) / RM400,000
= 0.06 or 6%p.a.
Remarks: Attractive investment.
Scenario 2. 8th Floor Office Suite at City Plaza
Monthly Rental: RM4400
Price: RM600,000
Maintenance Fees (monthly): RM1900
Therefore,
Rate of return = (RM4400 - RM1900) x 12 / RM600,000
= 0.05 or 5%p.a.
Remarks: Less attractive investment.
Let me share with you a rule of thumb i often use without having the hassle of going through the above calculation.
Whenever you see the price, take off the last two digits, if the monthly net rental is at least half of this new figure, then rest assured, as you are getting minimum 6%.
Take scenario 1 for example, the price is RM400,000, after taking out the last 2 digits will be RM4,000, and the monthly net rental is RM2000, which is exactly half of RM4,000, there you are, you have a rate of return of 6%p.a. Try it out with other numbers yourself and verify with the formulae given above using calculators to see if it works.
I've provided you the above the simplest model on rate of return calculation, but please also note that rate of return is only ONE OF THE MANY FACTORS that should taken into consideration when it comes to property investment. I shall share with you in near future on other factors affecting property invesment decision making process.
Monday, May 7, 2007
Property Auction #3: Is auction property always "cheap"?
Before auction, the bank will always engage a registered valuer to value the property as at Open Market Value (OMV) and also Forced Sale Value. As a rule of thumb and a rough guide, a Forced Sale value is normally 10% to 15% lower than OMV.
The first auction will normally start using the OMV as the reserve price, in other words, the auctioneer will first attempt to sell the property using open market value, if unsold, then only the price will start going down. In the case of Laca cases (i.e. properties without individual titles ), the reserve price is going down almost every month by approximately 5% to 10% from previous auction.
Low pricing is normally the major attract for auction properties, however, other issues such as condition of the property, previous owings and vacant possession should also be taken into consideration whenever you want to bid at the auction. Please also refer to my previous articles on Property Auction.
The first auction will normally start using the OMV as the reserve price, in other words, the auctioneer will first attempt to sell the property using open market value, if unsold, then only the price will start going down. In the case of Laca cases (i.e. properties without individual titles ), the reserve price is going down almost every month by approximately 5% to 10% from previous auction.
Low pricing is normally the major attract for auction properties, however, other issues such as condition of the property, previous owings and vacant possession should also be taken into consideration whenever you want to bid at the auction. Please also refer to my previous articles on Property Auction.
Saturday, May 5, 2007
Real Estate Tips #7: Penalties on the illegal brokers
For those without licence, but who's acting or holding oneself out to the public as an estate agent, has already commited an offence under the Valuers, Appraisers and Estate Agents Act 1981, as provided under Section 22.
22C(1) No person shall unless he is a registered estate agent and has been issued with an authority to practice under section 16-
It is an offence under the Act for any person to act in contravention of Section 22C(1) set out ealier which exposes such a person to a fine not exceeding RM25,000 or imprisonment of three (3) years and a penalty of RM500 perday for so long as the offence continues.
If you are one of the illegal estate agents stated above, think twice before you continue to commit the same offences simply because, you will be caught!
22C(1) No person shall unless he is a registered estate agent and has been issued with an authority to practice under section 16-
It is an offence under the Act for any person to act in contravention of Section 22C(1) set out ealier which exposes such a person to a fine not exceeding RM25,000 or imprisonment of three (3) years and a penalty of RM500 perday for so long as the offence continues.
If you are one of the illegal estate agents stated above, think twice before you continue to commit the same offences simply because, you will be caught!
Monday, April 30, 2007
South Economic Development Region #5: Where is Iskandar Development Region (IDR)?
Many have this mis-perception saying that Iskandar Development Region is Nusajaya. This is wrong, as Nusajaya is having approximately 10,000 hectares of development land, and is only one portion of the whole IDR planning.
The whole IDR covers areas the following areas:
(1) The whole Johor Bahru District
- Majlis Bandaran Johor Bahru
- Majlis Perbandaran JB Tengah
(2) Pihak Berkuasa Tempatan Pasir Gudang
(3) Majlis Perbandaran Kulai
(4) Part of Pontian
- Mukim Jeram Batu
- Mukim Sg. Karang
- Mukim Serkat
The above gives us a total area covered of 2,217km sq.
And all developments will be concentrated at the following existing urban areas:
(1) Johor Bahru city
(2) Pasir Gudang
(3) Nusa Jaya
(4) Senai-Kulai
I hope i've given you all a better picture on where does IDR actually covers.
Friday, April 27, 2007
Real Estate Tips #6: How to identify a Registered Estate Agent from those illegal brokers on a newspaper advertisement?
Whenever you open the page for the classified ads on a newspaper, you tend to see many ads on properties to let or for sale, how do you distinguish the Registered Estate Agent's (REA) or those from an illegal brokers?
The answer is simple, look for four (4) elements:
(1) Company name
e.g. Tiram Realty
(2) Company registration number
e.g. E(3)0077
(3) Company contact number
e.g. 607-3558877
(4) All advertisements by REA must be specific
e.g. Double storey house at Taman Johor Jaya selling at RM150,000, NOT Double storey house at RM150,000 , which is too general.
Look for the abovementioned elements, then you will know whom to call (the REAs), whom you shouldn't call (the illegal brokers). Refer to Real Estate Tips #1 on why you should always engage a REA in malaysia.
The answer is simple, look for four (4) elements:
(1) Company name
e.g. Tiram Realty
(2) Company registration number
e.g. E(3)0077
(3) Company contact number
e.g. 607-3558877
(4) All advertisements by REA must be specific
e.g. Double storey house at Taman Johor Jaya selling at RM150,000, NOT Double storey house at RM150,000 , which is too general.
Look for the abovementioned elements, then you will know whom to call (the REAs), whom you shouldn't call (the illegal brokers). Refer to Real Estate Tips #1 on why you should always engage a REA in malaysia.
Wednesday, April 25, 2007
Real Estate Tips #5: What does 3+1 mean in a property transaction?
3 + 1 simply means that in any property transactions, the vendor (owner) will usually give the purchaser a time frame of 3 months (free of interests) plus 1 month (with interests) in order to complete the whole conveyancing (property transfer) process.
In other words, should the purchaser's took more then 3 months to pay the vendor the full settlement sum, the purchase can be charged interests on the amount owning, based on an agreed rate, normally between 8%pa to 10%pa.
What if the case drag on to longer than 4 months? In most instances, the purchaser can request for extension, bearing similar interests, this is however not automatic, and it is really depends on the decision of the vendor whether or not to accept your request. This is also why sometime, we also see 3 + 2, or even 4+ 1 which came into existence. But this 3+2 or 4+1 is normally pre-agreed upon signing the Sale and Purchase Agreement.
Therefore, always do a regular check on your solicitors (probably once or twice in a month) to find out the progress of the transfer process, so as to avoid your 10% deposit being forfeited by the vendor as a result of non-compliance of time frame given.
In other words, should the purchaser's took more then 3 months to pay the vendor the full settlement sum, the purchase can be charged interests on the amount owning, based on an agreed rate, normally between 8%pa to 10%pa.
What if the case drag on to longer than 4 months? In most instances, the purchaser can request for extension, bearing similar interests, this is however not automatic, and it is really depends on the decision of the vendor whether or not to accept your request. This is also why sometime, we also see 3 + 2, or even 4+ 1 which came into existence. But this 3+2 or 4+1 is normally pre-agreed upon signing the Sale and Purchase Agreement.
Therefore, always do a regular check on your solicitors (probably once or twice in a month) to find out the progress of the transfer process, so as to avoid your 10% deposit being forfeited by the vendor as a result of non-compliance of time frame given.
Tuesday, April 24, 2007
Real Estate Tips #4: Congratulation to all the newly elected councillors of MIEA.
Please allow me to congratulate and introduce to you some newly elected councillors for Malaysian Institute of Estate Agents (MIEA) over last weekend (21st April 2007):
President:
Mr. K. Soma Sundram
Vice President:
Mr Raymond Leong
Ms Shirley Chai
Honorary Treasurer:
Mr. Kelvin Yip
Councillors:
Mr. Terry Wong
Mr. Gavin Tee
Ms. Angeline Chin
Mr. Sivashanker
Together with other existing office bearers and councillors, i wish you all the best in leading MIEA towards to paradigm shift to new professional level in view of the globalization effects which are due to take place in near future.
Friday, April 20, 2007
South Johor Economic Region #4 : How do i qualify myself for Iskandar Regional Development Authority (IRDA) status?
Already many of my singaporean clients asking me this question, as they are all very interested to know the details so as to benefit from the incentives given by the government, especially on tax.
Before i start answering the question, here's a brief elaboration for you on the IRDA status. For the purpose of boasting the initial investment into Iskandar Development Region (IDR) , our government has come up with this thing called Incentive and Support Package (ISP). This package is targeted at the service sector.
ISP consists of the following:
(i) Exemption from the Foreign Investment Committee rules;
(ii) Freedom to source capital globally;
(iii) The ability to employ foreign employees freely within the approved zones, depending on the amount of space occupied in these zones;
(iv) Exemption from corporate income tax for a period of 10 years from commencement of operations for activities within the zone and outside Malaysia, provided these operations commence before the end of 2015; and
(v) Exemption from withholding tax on royalty and technical fee payments to non-residents for a period of 10 years from commencement of operations.
So, in order to qualified for the above incentives, the company must be an IRDA-status company. There's two general criteria to fulfil in order to qualify as an IRDA-status company, namely:
(1) Amongst the six Qualifying Activities
(i) Creative industries
(ii) Educational services
(iii) Financial advisory and consulting services
(iv) Healthcare services
(v) Logistics services
(vi) Tourism related activities
(2)Situated in the designated IRDA-approved zones
To my best knowledge, there are two such zones available, and the first zone is already in the process of finalizing.
Doesn't sound very tedious, does it? Please note that this initial ISP is targeted mainly on service sector at current stage. As for the detailed qualifying process, we were told finalised report will be released latest by the third quarter 2007.
Thursday, April 19, 2007
South Johor Economic Region #3: Developer:" Why do i find it tough to sell my project?"
Many developers in Johor especially, have been struggling to dispose of their launched housing project. Why? Many old timer Johor developers found themselves left with hundreds of unsold units idling, again the same question, why? Isn't the Iskandar Development Region bringing a boast onto Johor Bahru's property market already?
To answer the above questions in the residential housing context, the answer is simple:
(1)there is an imbalance between the supply and demand in the local market.
For your information, the population growth for SJER is only approximately 4.1%p.a.[1] but the approved new housing schemes is 4.3%p.a.[2] for Johor state, and majority of it is in south johor!
At one glance, people might ask me, hey, isn't that a balance you are giving here? Please allow me to further feed you with the following information, do not forget that Johor state has already the most overhang properties in the whole Malaysia, we are already in a suplus for many years, without being able to resolve the overhang issues, but at the sametime building more than our population growth, you tell me, what will be the consequences in the end of the day.
To add things worse, all locals wanted to sell their existing old house and buy/move over to their new houses with all the stylist looks , security and peaceful environment, who's going to take up all the existing old houses? We have seen this trend of decentralisation from Johor Bahru City Central going on for the past few years and it is moving fast.
(2) I hardly hear any developer asking this question, what do Johorean really wants?
There are still many developers in Johor who simply build at their whims, without exploring the local market to survey what exactly is the kind of product/houses we local wants. This is what I called marketing. Marketing is not what most people say, sell, sell, sell. Marketing is about understanding what the market wants, and customize the product for them, then sell the product to the market which already existed.
SP Setia is one of the more successful developer in Johor which has capitalised on the marketing strategy even at the initial stage of choosing a strategic location, house type, infrastructure and style of living for their project. They understand the local, so, they succeeded.
So, for the rest of you, when do you want to start knowing your customer before you sell your product to them?
Footnotes:
[1] Figures obtained from the SJER Comprehensive Development Plan
[2] Figures obtained from Dato' Mani Usilappan's talk during the MIEA 2007 Annual Convention.
Wednesday, April 18, 2007
Property Auction #2: 6 Things to watch out during auction!
(1) Always READ the Proclamation of Sales (POS) carefully, as it will denote few important details such as :
- the earnest money payable to
- terms and condition
- who's paying the maintenance fees, sinking fund,indah water (IWK), assessment and quit rent and utility bills owed?
(2) Watch out for syndicate
- don't worry about them, just ignore them and make your bid, they are NOT genuine bidder
(3) Watch out for timing
- especially for highcourt cases, always make sure your solicitor can complete the transfer within the prescribed time, usually 90 days or 120 days, if not, your 10% earnest money will be forfeited without questions
(4) Watch out for *caveat*
- always do a title search before auction date, should u find any caveat lodged against the property, the BEST way is to buy CASH. If you are thinking of getting partly funding from the banks for the caveated property, think twice.
(5) Watch out for the previous ownings
- always check and verify the prevous owner's owning to the Management Corporation, Indah Water, assessment , quit rent and utility authority.
- In most cases, the bank will be responsible to maintenance fees, quit rent and assessment,however, this is not automatic, please always check with bankers or POS.
(6) Auction property is always sold without vacant possession
- it simply means that it the property is tenanted, you got to let the existing tenant to continue occupy the premises until the end of the tenancy period, however, i would always advise you to sign a brand new tenancy agreement with the tenant.
- the earnest money payable to
- terms and condition
- who's paying the maintenance fees, sinking fund,indah water (IWK), assessment and quit rent and utility bills owed?
(2) Watch out for syndicate
- don't worry about them, just ignore them and make your bid, they are NOT genuine bidder
(3) Watch out for timing
- especially for highcourt cases, always make sure your solicitor can complete the transfer within the prescribed time, usually 90 days or 120 days, if not, your 10% earnest money will be forfeited without questions
(4) Watch out for *caveat*
- always do a title search before auction date, should u find any caveat lodged against the property, the BEST way is to buy CASH. If you are thinking of getting partly funding from the banks for the caveated property, think twice.
(5) Watch out for the previous ownings
- always check and verify the prevous owner's owning to the Management Corporation, Indah Water, assessment , quit rent and utility authority.
- In most cases, the bank will be responsible to maintenance fees, quit rent and assessment,however, this is not automatic, please always check with bankers or POS.
(6) Auction property is always sold without vacant possession
- it simply means that it the property is tenanted, you got to let the existing tenant to continue occupy the premises until the end of the tenancy period, however, i would always advise you to sign a brand new tenancy agreement with the tenant.
Tuesday, April 17, 2007
Real Estate Tips #3: Malaysian Institute of Estate Agents (MIEA)
Unlike Bar Council for lawyers or MIA for the accountants, MIEA doesn't act like a regulatory body for Registered Estate Agent (REA). However, as a proud member of MIEA, i'm happy to say that it does provide a platform for ALL REAs to come together to lobby for our rights and welfare for the same industry.
I salute to all national councillors, whom have been sacrificing their time and efforts for the Institute, even when they are always on the receiving ends of various critics/comments from members. I must congratulate you all for your patience and hardworks, for making the 2007 MIEA National Convention a great success.
Our industry are in need of MORE dedicated and diligent personnels like YOU to join MIEA, to jointly enhance our service quality and to lobby the rights and welfare for the Registered Estate Agents.
Feel free to visit MIEA's website, i.e. www.miea.com.my.
I salute to all national councillors, whom have been sacrificing their time and efforts for the Institute, even when they are always on the receiving ends of various critics/comments from members. I must congratulate you all for your patience and hardworks, for making the 2007 MIEA National Convention a great success.
Our industry are in need of MORE dedicated and diligent personnels like YOU to join MIEA, to jointly enhance our service quality and to lobby the rights and welfare for the Registered Estate Agents.
Feel free to visit MIEA's website, i.e. www.miea.com.my.
Monday, April 16, 2007
Property Auction #1: General info on property auction in malaysia
There's basically 2 types of auction in malaysian property industry, i.e. the more popular public auction due to default payment with banks and also auction arranged by individual owners.
(1) Public Auction due to default payments with banks
Frequently called as highcourt auction as the majority of public auctions are always handled by highcourt. In actual fact, it can be done through highcourt, land office and also by the banks respectively.
Due to the problems in late issuance of subdivided/individual titles in recently years, there is 2 types of public auction emerges, i.e. LACA cases, which refers to property without individual title issued, and Non-LACA cases, i.e. property with individual title issued. The former ones are normally conducted by each individual banks and always in bulk sales, like what you can see these days where the banks are auctioning away 200 properties in one single day. The latter however is the conventional auction through highcourt and landoffice.
(2) Auctions conducted by private owners
This is merely one alternative method of selling your property as compared to private treaty and tender. Normally through the assistance from the lawyer and registered estate agents, the owners can opt to sell their properties through public auction. The procedure is somewhat similar to those from the banks, only that it's not what we would call a *fire-sale* property. In overseas like Australia, New Zealand and United States of America, this has proven been one of the best method of selling in getting the best price of the property in shortest time period.
(1) Public Auction due to default payments with banks
Frequently called as highcourt auction as the majority of public auctions are always handled by highcourt. In actual fact, it can be done through highcourt, land office and also by the banks respectively.
Due to the problems in late issuance of subdivided/individual titles in recently years, there is 2 types of public auction emerges, i.e. LACA cases, which refers to property without individual title issued, and Non-LACA cases, i.e. property with individual title issued. The former ones are normally conducted by each individual banks and always in bulk sales, like what you can see these days where the banks are auctioning away 200 properties in one single day. The latter however is the conventional auction through highcourt and landoffice.
(2) Auctions conducted by private owners
This is merely one alternative method of selling your property as compared to private treaty and tender. Normally through the assistance from the lawyer and registered estate agents, the owners can opt to sell their properties through public auction. The procedure is somewhat similar to those from the banks, only that it's not what we would call a *fire-sale* property. In overseas like Australia, New Zealand and United States of America, this has proven been one of the best method of selling in getting the best price of the property in shortest time period.
Property Law #2: Tenancy Law - fire insurance
One of our client's tenanted factory has recently got burnt down, and he isn't covered by fire insurance! He suspected it was an act of arson by someone he knew, and he asked me for advice.
First thing i told him, go to a lawyer for professional advice. To my best knowledge, this is what he can do:
(1) Report police and let the police the investigate the cause of fire
(2) Cancel the existing tenancy, and full refund the deposits collected as the building has already become unfit for occupancy
(3) Fork up own money to repair/rebuild the factory building
(4) Should the police found any evidence of arson and suspect, you may then sought legal advice on the possibility of lodging a civil suit against the offender asking for compensation. Can you get back the compensation from that suspect? More often not, nobody can give you a definite answer.
All property are made compulsory to renew fire insurance by the financial consitution if your property is still charged to the bank. Problems occurs when the owners has finished pay up the owning and the property become free of any encumbrances, many owners from then on forget to renew their fire insurance on a yearly basis.
Did you find the above tedious especially when it comes to getting compensation? Yes, they are very tedious, so, PLEASE ALWAYS PURCHASE AND RENEW YOUR FIRE INSURANCE AGAINST YOUR BUILDING EVERY YEAR!
First thing i told him, go to a lawyer for professional advice. To my best knowledge, this is what he can do:
(1) Report police and let the police the investigate the cause of fire
(2) Cancel the existing tenancy, and full refund the deposits collected as the building has already become unfit for occupancy
(3) Fork up own money to repair/rebuild the factory building
(4) Should the police found any evidence of arson and suspect, you may then sought legal advice on the possibility of lodging a civil suit against the offender asking for compensation. Can you get back the compensation from that suspect? More often not, nobody can give you a definite answer.
All property are made compulsory to renew fire insurance by the financial consitution if your property is still charged to the bank. Problems occurs when the owners has finished pay up the owning and the property become free of any encumbrances, many owners from then on forget to renew their fire insurance on a yearly basis.
Did you find the above tedious especially when it comes to getting compensation? Yes, they are very tedious, so, PLEASE ALWAYS PURCHASE AND RENEW YOUR FIRE INSURANCE AGAINST YOUR BUILDING EVERY YEAR!
Saturday, April 14, 2007
South Johor Economic Region #2: Free Access Zone being dropped?
The free access zone plan to allow foreigners from Singapore to freely enter and leave the Iskandar Development Region (IDR) has been dropped, according to Johor Menteri Besar Datuk Abdul Ghani Othman early April 2007.
I have no problem at all with this adjustment, and i fully understand that any systems or policies are bound to be change due to many objective factors.
However, i also believe that in reaching a long term plan as in the one like South Johor Economic Region, our policy maker should strive to achieve a long term CONSISTENCY in their decision making process and the implementation of the plannings.
Consistency will bring the foreign investor's mindset to at ease, and it will be due to consistency again which will retain the foreign investors' to jointly development our country for us in long run.
I have no problem at all with this adjustment, and i fully understand that any systems or policies are bound to be change due to many objective factors.
However, i also believe that in reaching a long term plan as in the one like South Johor Economic Region, our policy maker should strive to achieve a long term CONSISTENCY in their decision making process and the implementation of the plannings.
Consistency will bring the foreign investor's mindset to at ease, and it will be due to consistency again which will retain the foreign investors' to jointly development our country for us in long run.
Real Estate Tips #2: How do you identify a Registered Estate Agent?
To answer the questions i posted yesterday, i'm going to share with you few easy steps to identify a registered estate agent (REA):
(1) Namecard
- identify their position, if it says negotiator, it means he/she is a real estate sales person engaged by a REA, if it says principal, meaning he/she is the license holder themself.
- Check their E Number. Basically in this industry, we are made compulsory to put in our company registration number under Ministry of Finance, which we call E number. There are 2 types of E numbers you may find, i.e. one company E number (e.g. E(3)0077 for Tiram Realty) and also personal E number ( e.g. E1690 for Lim Boon Ping).
(2) Call the office
Do call up the office number on the namecard to verify the personnel is the actual employee from the real estate agency
(3) Search the E number with the Board of Valuers' Website
You can always do a Search for E number for verification at the Board of Valuers's website, i.e. www.lppeh.gov.my, as some registrant's licensed might have lapsed or suspended for many reasons.
Whenever you deal with a registered estate agent or negotiator, ALWAYS write your cheques in favour of the COMPAMY'S NAME only. I repeat, NEVER write your cheques, be it earnest money, commission or other kinds of payments related to the transaction in favour of PERSONNAL NAME, this is to safeguard your interest and to ensure all your money is well indemnified by the insurance company.
(1) Namecard
- identify their position, if it says negotiator, it means he/she is a real estate sales person engaged by a REA, if it says principal, meaning he/she is the license holder themself.
- Check their E Number. Basically in this industry, we are made compulsory to put in our company registration number under Ministry of Finance, which we call E number. There are 2 types of E numbers you may find, i.e. one company E number (e.g. E(3)0077 for Tiram Realty) and also personal E number ( e.g. E1690 for Lim Boon Ping).
(2) Call the office
Do call up the office number on the namecard to verify the personnel is the actual employee from the real estate agency
(3) Search the E number with the Board of Valuers' Website
You can always do a Search for E number for verification at the Board of Valuers's website, i.e. www.lppeh.gov.my, as some registrant's licensed might have lapsed or suspended for many reasons.
Whenever you deal with a registered estate agent or negotiator, ALWAYS write your cheques in favour of the COMPAMY'S NAME only. I repeat, NEVER write your cheques, be it earnest money, commission or other kinds of payments related to the transaction in favour of PERSONNAL NAME, this is to safeguard your interest and to ensure all your money is well indemnified by the insurance company.
Friday, April 13, 2007
Real Estate Tips #1: 8 reasons why you should always engage a Registered Estate Agent
Over the years chairing the Malaysian Institute of Estate Agents Johor Branch, i always get dumbfolded everytime i receive complaints from the public against illegal real estate brokers. Huge question occurs to me, why do people still sourcing for services from the illegal brokers while there are so many registered estate agents around in the market?
After much contemplation, I find *education* is the main cause. Here i am, going to share with you all why you should always choose a registered estate agent (REA):
(1) a REA is a professional personnel recognized and governed by the Board of Valuers, Appraisers and Estate Agents Malaysia (known as the Board for the following column), under the Ministry of Finance.
(2) a REA is a certified professional by the Board, who has undergone 12 papers examination (minimum 2 years), and minimum 2 years of Test of Professional Competence training under a registered person. Therefore, for a REA to get registered, he/she shall need a minimum 4 to 5 years of professional training.
(3) a registered estate agency is made compulsory by the Board to indemnify all clients against negligence through Professional Indemnity Insurance. Hence, your earnest deposit or client's money will always be indemnified and safe with us. Do not attempt however, to write the cheque in favours of the individual negotiator, you shall write all payment ONLY in the COMPANY'S Name.
(4) a REA has to regularly improve themselves through what we call a Continuous Professional Development (CPD) programme on a yearly basis, in order to renew our licence. Therefore, you can be assured that all REA shall always have the most up-to-date property information and knowledge to serve you.
(5) a REA is bound to work under the professionalism framework set by the Board, and to follow the ethical conduct, rules and regulation, for which, any adverse actions or omissions will result in diciplinary actions from the Board against the offender.
(6) a REA is accountable to all their negotiators' (real esate sales personnels) conduct, henceforth, you can always rest assured that all negotiators are well controlled and managed by the REA. Should there be any issues arrise with the negotiators, you can always bring the matters up to their principal, i.e. the REA.
(7) you will NEVER be overcharged by a REA because the professional fees schedule has been clearly spelled out in the Valuers, Appraisers and Estate Agents Act.
(8) All REAs belong in a big family, sometime we do compete, but most often than not we are actually co-operating amongst ourselves (co-agency) in order to sell/rent out your properties in the best price and shortest time possible.
So, why still use an illegal broker where there's no guarantee on the services rendered and security against your money?
Meanwhile, some of you might start wondering, how do you differentiate between a REA and an illegal broker? I'll answer to this question on my next post.
After much contemplation, I find *education* is the main cause. Here i am, going to share with you all why you should always choose a registered estate agent (REA):
(1) a REA is a professional personnel recognized and governed by the Board of Valuers, Appraisers and Estate Agents Malaysia (known as the Board for the following column), under the Ministry of Finance.
(2) a REA is a certified professional by the Board, who has undergone 12 papers examination (minimum 2 years), and minimum 2 years of Test of Professional Competence training under a registered person. Therefore, for a REA to get registered, he/she shall need a minimum 4 to 5 years of professional training.
(3) a registered estate agency is made compulsory by the Board to indemnify all clients against negligence through Professional Indemnity Insurance. Hence, your earnest deposit or client's money will always be indemnified and safe with us. Do not attempt however, to write the cheque in favours of the individual negotiator, you shall write all payment ONLY in the COMPANY'S Name.
(4) a REA has to regularly improve themselves through what we call a Continuous Professional Development (CPD) programme on a yearly basis, in order to renew our licence. Therefore, you can be assured that all REA shall always have the most up-to-date property information and knowledge to serve you.
(5) a REA is bound to work under the professionalism framework set by the Board, and to follow the ethical conduct, rules and regulation, for which, any adverse actions or omissions will result in diciplinary actions from the Board against the offender.
(6) a REA is accountable to all their negotiators' (real esate sales personnels) conduct, henceforth, you can always rest assured that all negotiators are well controlled and managed by the REA. Should there be any issues arrise with the negotiators, you can always bring the matters up to their principal, i.e. the REA.
(7) you will NEVER be overcharged by a REA because the professional fees schedule has been clearly spelled out in the Valuers, Appraisers and Estate Agents Act.
(8) All REAs belong in a big family, sometime we do compete, but most often than not we are actually co-operating amongst ourselves (co-agency) in order to sell/rent out your properties in the best price and shortest time possible.
So, why still use an illegal broker where there's no guarantee on the services rendered and security against your money?
Meanwhile, some of you might start wondering, how do you differentiate between a REA and an illegal broker? I'll answer to this question on my next post.
Tuesday, April 10, 2007
South Johor Economic Region #1: Iskandar Development Region, will it be successful?
Everybody has since middle 2006 talking about South Johor Economic Region a.k.a. Iskandar Development Region (IDR), people has been asking me whether or not it will be a success?
Let me start off by asking you all one simple question, i.e. do you want IDR to be successful? If the answer is positive, then we shall have a good start at the very least.
If you have studied IDR in detail like I did (you can download the whole detailed IDR proposal from http://sjer.com.my/index.php), you will then notice the proposal encompass a comprehensive and thorough development plan in not just economy, but also social economy. Though I find the proposal to be rather seamless, however, implementation is what i really feel the true challenge in the overall planning. Mindset of our government servants involved are required to take a change. It's all about human factor.
The IDR is a gigantic project and vision for all Johorean and our federal government, it will take all the concerted effort we can get in order to make it a success. So, if u ask me the very same old question again, why don't you start asking yourself back, what can you do to help to make IDR a success?
Let me start off by asking you all one simple question, i.e. do you want IDR to be successful? If the answer is positive, then we shall have a good start at the very least.
If you have studied IDR in detail like I did (you can download the whole detailed IDR proposal from http://sjer.com.my/index.php), you will then notice the proposal encompass a comprehensive and thorough development plan in not just economy, but also social economy. Though I find the proposal to be rather seamless, however, implementation is what i really feel the true challenge in the overall planning. Mindset of our government servants involved are required to take a change. It's all about human factor.
The IDR is a gigantic project and vision for all Johorean and our federal government, it will take all the concerted effort we can get in order to make it a success. So, if u ask me the very same old question again, why don't you start asking yourself back, what can you do to help to make IDR a success?
Thursday, April 5, 2007
Property law #1: Landowners, beware!
A Thai woman found herself losing her valuable land in Penang, to a con-woman, who forged that Thai woman’s documents, and sold it to a third party. The Federal Court held that the rights of a bona fide purchaser must be protected. So, she lost her land.[1]
I’m not going to comment too much on the court’s decisions except the fact that this is a wrong decision where no one can change it besides the parliament. Many articles are available on this, do your own search on that case reference below, and you should be able to understand the whole case in detail.
It’s my duty however to share with you few tips on how to save yourself from con-man:
(1) Always engage a trustworthy lawyer ( solicitor ) to represent you
· Some lawyers are better in criminal cases (advocates), some lawyers specialize in intellectual property rights, and some lawyers are busier than others (always not in office). Always ensure your lawyer is well-versed in conveyancing cases and can always/readily attend to your case personally rather than his legal clerk. You might find this amused, but I’m telling you that many house purchasers or owners haven’t even got a chance to see their lawyers throughout the whole transaction, they only get to see the legal clerk!
(2) Always request for Quit Rent copies for MORE than one year
· Previously, we only request the most updated/current quit rent receipt in most instances. However, should you have any doubt on the land’s ownership, be brave to ask for quit rent receipt for the past few years as well. Normally, conman will have only one year receipt the most.
(3) Talk to the neighbours
· Before purchasing this land, do visit the said land for a couples of times yourself, to see if you can get a chance to speak to the neighbouring owners, or talk to people at the closest coffee shop you can find, ask them about the ownership of the land, you will be surprised, very often, you can get very good indication from them.
(4) Always caveat[2] your own property when necessary
· What do I mean by necessary? Do I caveat ALL my properties? No, you don’t have to caveat everything. If you have lands, which are free of any encumbrances, vacant and idle, please always engage a lawyer to enter private caveat[3] on your property on a regular basis (renewal is required after a fixed term).
· For your extra reading, the right of a registered proprietor to enter a private caveat against his own land under the National Land Code 1965 was considered in two recent decisions of the High Court, namely, Eu Finance Bhd v Siland Sdn Bhd[4] (M &J Frozen Food Sdn Bhd, Intervener) and Hiap Yiak Trading Sdn Bhd & Ors v Hong Soon Seng San Bhd[5]. For your information, these two cases’ decisions conflict with each other. For those of you who are too busy to go through these law cases, well, just take my word for it, always register a private caveat on your property when necessary.
(5) Charge your land to finance institution
-Always remember, land which are free of any encumbrances, vacant and idle are easy targets for conman. If there are bank charges on the land, your land are normally much safer. If you don’t mind, you may also consider taking up a small amount of mortgage loan from the bank using this land as collateral.
Until such time when the Boonsom Boonyanit’s decision being overturned or the emerge of a proper amendments to our National Land Code, we will always be exposed to the threats of land forgery/fraud cases and we are not protected at all by the court of law in our very own country. Henceforth, do consider doing the above pre-cautious steps I mentioned above.
© 9th March 2007 Lim Boon Ping
Note: This column is brought to you by Tiram Realty for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Tiram Realty and Lim Boon Ping shall be liable to any reader who suffers losses as a result of relying on this column.
[1] Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng [2001] 1 MLJ 241
[2] In layman terms, i.e. to freeze your property from any dealings/transfer/transactions
[3] 323(1) of the National Land Code 1965
[4] [1989] 1 MLJ 1965.
[5] [1990] 2 MLJ 155.
I’m not going to comment too much on the court’s decisions except the fact that this is a wrong decision where no one can change it besides the parliament. Many articles are available on this, do your own search on that case reference below, and you should be able to understand the whole case in detail.
It’s my duty however to share with you few tips on how to save yourself from con-man:
(1) Always engage a trustworthy lawyer ( solicitor ) to represent you
· Some lawyers are better in criminal cases (advocates), some lawyers specialize in intellectual property rights, and some lawyers are busier than others (always not in office). Always ensure your lawyer is well-versed in conveyancing cases and can always/readily attend to your case personally rather than his legal clerk. You might find this amused, but I’m telling you that many house purchasers or owners haven’t even got a chance to see their lawyers throughout the whole transaction, they only get to see the legal clerk!
(2) Always request for Quit Rent copies for MORE than one year
· Previously, we only request the most updated/current quit rent receipt in most instances. However, should you have any doubt on the land’s ownership, be brave to ask for quit rent receipt for the past few years as well. Normally, conman will have only one year receipt the most.
(3) Talk to the neighbours
· Before purchasing this land, do visit the said land for a couples of times yourself, to see if you can get a chance to speak to the neighbouring owners, or talk to people at the closest coffee shop you can find, ask them about the ownership of the land, you will be surprised, very often, you can get very good indication from them.
(4) Always caveat[2] your own property when necessary
· What do I mean by necessary? Do I caveat ALL my properties? No, you don’t have to caveat everything. If you have lands, which are free of any encumbrances, vacant and idle, please always engage a lawyer to enter private caveat[3] on your property on a regular basis (renewal is required after a fixed term).
· For your extra reading, the right of a registered proprietor to enter a private caveat against his own land under the National Land Code 1965 was considered in two recent decisions of the High Court, namely, Eu Finance Bhd v Siland Sdn Bhd[4] (M &J Frozen Food Sdn Bhd, Intervener) and Hiap Yiak Trading Sdn Bhd & Ors v Hong Soon Seng San Bhd[5]. For your information, these two cases’ decisions conflict with each other. For those of you who are too busy to go through these law cases, well, just take my word for it, always register a private caveat on your property when necessary.
(5) Charge your land to finance institution
-Always remember, land which are free of any encumbrances, vacant and idle are easy targets for conman. If there are bank charges on the land, your land are normally much safer. If you don’t mind, you may also consider taking up a small amount of mortgage loan from the bank using this land as collateral.
Until such time when the Boonsom Boonyanit’s decision being overturned or the emerge of a proper amendments to our National Land Code, we will always be exposed to the threats of land forgery/fraud cases and we are not protected at all by the court of law in our very own country. Henceforth, do consider doing the above pre-cautious steps I mentioned above.
© 9th March 2007 Lim Boon Ping
Note: This column is brought to you by Tiram Realty for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Tiram Realty and Lim Boon Ping shall be liable to any reader who suffers losses as a result of relying on this column.
[1] Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng [2001] 1 MLJ 241
[2] In layman terms, i.e. to freeze your property from any dealings/transfer/transactions
[3] 323(1) of the National Land Code 1965
[4] [1989] 1 MLJ 1965.
[5] [1990] 2 MLJ 155.
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