15th April 2015 - 8 min read
The place you come home to should be a sanctuary from everyday stresses, but not all have the financial resources to live in a relaxing villa overlooking the ocean. Still, with a little determination and time, you can find a home that is right for you and your wallet.
Choosing the right home is a big decision but eager real estate agents may be forcing you to close the deal sooner than your ready. Hold on! Don’t be persuaded into something you aren’t sure about yet as a home is a pretty big thing from which to suffer buyer’s remorse. At the very least, you’ll need to ask yourself some of the basic questions.
First, Let’s look at some of the questions you will need to ask (and seek to find the answers to!) when choosing a home to buy or rent.
1. Is it within your budget? Deciding if you can afford a property is more than just deciding on the price of purchase or rental. You will still need to see all the other costs associated with staying in that particular house/locale.
For the price or rental, establish a rough figure of what you can afford and take into account all other expenses and commitments such as car loan repayments and transportation costs. A good rule of thumb is to allocate no more than ⅓ you monthly income.
But do also consider if cost of living in that town is high or low; if transportation around and to work is feasible; and if you will be able to afford the tariff of amenities.
2. Does size matter? If it’s just you, a smaller place might be perfect but note that smaller does not necessarily equal cheaper. Homes in prime spots generally cost more despite its size and ultimately any amenity that makes a home more convenient will drive up its value.
For example, gated or guarded homes close to public transport and near a mall will be more expensive to rent or buy as compared to homes further from the city and without security.
Consider what is more important to you: the size of the unit or the convenience of the location. Unless you can afford the best of both worlds; you will probably have to choose one over the other.
3.What about the living conditions? Renovated, partially or fully furnished homes tend to fetch a higher price than older homes with little or no restoration works done. Some choose to find cheaper, less attractive homes to purchase with the intention to make improvements on the home once they have the funds. Same goes for renting as less-than-perfect homes draw lower rents.
Fixer-uppers can cost less up-front but eventual expenditures to renovate and refurbish the property can be high. Thus, some just prefer to fork out the cash now rather than later and buy a home that is already in good condition.
4.How much do utilities cost? Properties in mixed developments or ones built on commercially designated grounds are charged more in utilities. This is due to commercial rates being applied on such residences, mainly condominiums and serviced apartments.
In addition, some condominium management companies have been known to set minimum payment amounts on some utilities (such as water), which can cost anywhere from RM5 to RM30 per month.
So you’ve found a nice-looking place that fits your budget. But you’re not done yet! Do you know all there is to know about the property you are taking on?
Two commonly cited terms when purchasing a home are ‘freehold’ and ‘leasehold’. Freehold ownership states that land and property belong to the title owner in perpetuity (forever).
Leasehold properties have time frames attached to the ownership, for instance, if you purchase a leasehold home, you are the owner of the home for 99 years (usual amount of years). After that time, the land on which the house is built (including the house itself) goes back to being the property of the State.
Leasehold properties tend to decline in value after the 30-year mark and owners will need to pay a premium to renew the lease.
To some, the renewal of a lease is no big deal as they don’t intend to pass the property on to dependents or they feel that their dependents should not have a problem renewing the lease. There is no right and wrong choice: only the right and wrong choice for you.
If you are choosing to buy your home for investment value, note that the rate of appreciation on returns depend primarily on Location, Location, and Location! This is because townships in close proximity to amenities with prominent eateries, clinics, good schools, major shopping malls, and projects like the MRT line tend to appreciate quickly.
Conversely, some areas experience a slower rate of appreciation due to a lack of these amenities, township underdevelopment and an increase in crime. Do your research on the area and if the house is particularly cheap – you might want to seriously ask yourself (and hopefully, the right people) why.
When buying a home, you will be subjected to maintenance costs and charged taxes for land. Major maintenance work such as roofing, water damage due to leaks and electrical problems are your responsibility and they can be expensive to repair. In addition, the homeowner will bear the cost of property taxes levied such as Quit Rent and Assessment Tax.
Quit Rent is a form of land tax collected by the Land Office of your state government, whereas Assessment Tax is collected by local authorities such as DBKL or MPSJ for management costs and maintenance work like rubbish collection, tree-trimming and road cleaning.
Whilst these are issues which may persuade you from your dream home – you will still want to know to properly gauge if the investment is worth your while.
For renters, some of the above considerations may apply but not all of them. These are some of the question which need to be exclusively asked by renters.
1. Am I getting the best deal? Be sure to research the average price range of similar homes within the area and consider also the amenities in a home that you can do without. This way, you can avoid unnecessarily paying for water heaters and air-conditioners installed in the home if you already own these appliances. If you do not need a fully furnished home – then don’t pay one.
Sometimes, the rent for a units in condos to vary greatly in price despite the size and offerings being the same. This is due to the owner’s wishes and monthly home loan repayments. However, sometimes real estate agents and owners simply up the price for no good reason other than to make more money.
Do your homework and ask other agents selling units in the same condo – you can then make comparisons to find the best deal on the unit of your choice.
2. How Much Will Maintenance Cost Me? As mentioned, the landlord will cover maintenance costs and major repairs, however, if you break it – you buy it. This means wears and tears or any other little mishaps will be borne by you unless you have an agreement with owner that states otherwise.
Older houses that have been improperly maintained may cost less to rent, but will incur more expenditure by way of additional repairs and replacements. Expect to be fixing little things around the house at least every other month in the beginning but take heart – older houses tend to also be bigger, have the best locations and be otherwise better value for money.
3. Is My Contract Tenure Expectations the Same as My Landlord? Rental contracts in Malaysia are termed for an average of 1-2 years, but more committed tenants and landlords may seek a longer term.
It can be beneficial for both parties to agree on an extended contract, this is because the tenant can avoid moving costs and tiresome packing (and subsequent unpacking!) whereas the landlord evades real estate agent fees or the hassle of finding a new tenant frequently.
Choosing the best home for you may be a time-consuming, stressful battle of wits and negotiation skills, but coming home to a place that truly comforts your mind, body and wallet will be worth the trouble.
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