How To Profit From Real Estate Investment?

February 01, 2018

Do you think is the right time to invest or make a profit from Real Estate Investment? There are so many houses for rent in Malaysia, such as house for rent in Puchong. With the increasing cost of living and stagnate pay cheque, many people have started buying properties for investment purpose. Be a smart investor and always seek for professional advice. 

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Property investment is a good way to earn passive income. This article will give you some basic ideas to make profit from real estate investment

1. Buy to let

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a. Right Target Market

This is the important point as you need to do your research and aim for the right target market before you decide to buy to let. It is important to know what type of property you plan to buy, who is your target market, and where your property locates before you invest in a buy to let. 

b. Calculate Rental Yield

After that, you will need to calculate the rental yield. Do check the market rental rate first before you decide on your rental rate. The rental yield will be the total income you get from your rental property and is usually calculated on a yearly basis. Only by calculating the rental yield then you will know if your investment will be a promising one or not. 

2. Rent To Rent

A rent to rent is also known as sub let. This is similar to buy to let, with the only difference is that you rent a property at a cheap price and rent it out to make a profit. You make a profit from the difference between the rental you pay to your landlord and the rental you get from your tenants.

3. Flipping

There are 2 ways to do flipping:

1. Buy a cheap property and sell it off;

2. Buy a worn out property, refurbish it then sell it off. You will be able to generate profit after the price appreciate from the renovations and improvements made.

However, there are so things that you should avoid to ensure you are making the best out of flipping:

a. Not Paying Enough Attention To The Property Market

You need to keep yourself updated to the latest and most current real estate trend to know which neighborhood is the best for flipping. You will need to do enough market research to find out more on the property market.

b. Miscalculation Of Budget

You need to bear in mind that you are not only paying for the house itself, but also the miscellaneous fees such as renovation costs, legal fees, taxes, utilities fees, maintenance fees and so on. You might also need to apply for a short term loan. All these should be taken into account when it comes to calculating your budget.

c. Auction Property

Buying an auction property for flipping purpose is not a smart move as all property auction do not allow you to do an inspection of the property, which makes it a risky thing to do. You might end up paying more than what you should if you get a house that is not in a good condition. After all, it is a no guarantee business. 

d. Going Big On Your First Attempt

While it might be true sometimes when people say ‘go big or go home’, this does not apply when it comes to flipping. It is always recommended to start small to reduce risks. 

e. Ignoring The Red Flags

Do take note on problems or state of the house even though it might seem like a small problem, such as burst water pipes. They might seem like a small problem but it will definitely cost a bomb if the bursting is serious. Therefore, check the condition of the house thoroughly before buying to prevent spending money on repairing and renovation that will cost a lot more than you imagine. 

f. Trying To Fix The House On Your Own

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Before renting out, you might want to consider to fix or paint it. No doubt getting hands on will save you a bit of money, but you might be making the situation worse instead. Engage the professionals to help you in fixing instead of doing it yourself. It will definitely be smoother and faster. 

g. Wrong Pricing For The Property

You should do your research and homework to decide how much to price the property to make a profit. A price too high will cause your property to sit in the property market and a price to low will gain unwanted question from people. Therefore, you can do your research by comparing your property to other properties that are selling in the neighborhood, find out the supply and demand, and check listing history. 

4. Repossessed Property

A repossessed property is also known as a ‘lelong’ property. Buying a repossessed property from banks could be a good opportunity for property investors at a cheaper price that is below the market value. To make a profit from a repossessed property, the tip is to resell the possessed property at a market value or a price slightly below market value quickly after you have bought the repossessed property. You could check out on some property portals or banks’ websites to look for available repossessed properties.  

In conclusion, there is no shortcut when it comes to making money from property investment. Therefore, you will need to do your homework and research to generate more income for you. Check on the location, the type of property and amenities available before you buy a property for investment purpose. 

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