The advantage of internet advertising of real estate

In our daily life, we are flooded with a variety of advertisement from the various mode of media such as newspaper, television, radio, magazine, billboard, flyer, email marketing, internet etc.

Advertising is an integral part of business as business owner need to reach out to consumer to promote their products or services.

However for the advertising to have an impact, the advertising will have to be placed or aired on a consistent basis as there are simply too many advertising in our daily life and it is simply not possible for us to notice or absorb all of them. One of the example is the real estate advertising whereby one can find at least 10 pages of property classifieds in our local newspaper. As advertising cost money, many or most house seller resort to placement of smallest classified possible and this results in the classifieds section of local newspaper look like a flood of fine print, it is not possible to read through or sieve through all listing simply because there are too many of them.

Moreover, to increase the chance of the listing being noticed by house buyer, house seller would need to advertise more than once as potential buyer may not read their advertisement on the day the advertisement is posted. The longer they post their advertisement, the more they would have to pay.

That is where internet advertising excel. For a start, internet advertising are mostly free, there are quite a number of property listing web site and classifieds web site that allow house seller to post their house for sale without charging a fee for listing. Some web site allow free listing up to a year period and even if the house is not sold after a year, the user can repost his listing until his property is sold or rented.

Most of the property listing web site is equipped with advance search function whereby house buyer can search for the property they wanted based on certain criteria such as location, price, type of house etc, the search engine will search through the database and list out only listings that fit the search criteria, therefore the buyer does not need to read through the entire database, the search engine carry out the short listing, thus saving time.

Apart from the above, the property listing web sites are also regularly being indexed by the search engine such as google.com, yahoo.com, msn.com and many others. All listing details are also picked up by these search engines and when web users search for a particular property, the search engine can also return results that originated from the listing at the property listing web site.

As internet listing exist in the cyberspace over a long period and with the availability of search engine, there is an increasing chance that the subject property will be noticed by potential buyer. Most important of all, it can be done at almost zero cost except for the internet connection which is anyway needed for other purposes.

In the future when the chidren of this generation grow up, one can expect that internet advertising to take over the conventional classified as it is unlikely that the children of today are not exposed to internet.

Malaysia property, to buy or not to buy

Recently, the new property launches by property developers have shown trend of price increase especially the properties in the higher end bracket.

This has inevitably caught the attention of some real estate investor as to whether there is a property bubble in the formation or is the bubble about to burst. The reason being that we are approaching year 2007 where we are now almost 10 years since the previous peak in economy.

While many believe that property prices move in a cyclical manner, the question is whether the cycle now hold true to the historical pattern of 10 years.There are however conflicting view from the various people I spoke with. Some are predicting that the down trend will come soon since we now almost reach the end of 10 year cycle. Some argue that we have yet to see a real property boom since 1997/98 as there aught to be a boom before there is going to be a bust.

We actually prefer to adopt a view based on analytical thinking. The situation today is rather different compared with the previous peak in 1997/98.

Firstly, the bank interest rates scenario is very different, back in 1997/98, the highest fixed deposit rate is about 13.5% whereas today the fixed deposit rate for 12 month tenure rarely exceed 4%. This imply too the difference in base lending rates of two different time.

Secondly, the recent inflation that we have been experiencing is attributed to the cost increase resulted by the increase in fuel price. It is not caused by the increase in demand due to speculation.

Thirdly, the recent credit thighthening in bank borrowing is aimed at the auto sector where prices have plummeted due to NAP. Many bank still offer loan at 90% margin with additional 5% for MRTA insurance.

The increase in property prices is generally due to three factors :-

1. Land cost at strategically good location has risen substantially over the years.
2. The increase in fuel prices has made transportation dearer and building material cost more these days.
3. The developers are generally building larger units nowadays.

So to buy or not to buy, that is still a multi million dollar question, but if you are buying property for your own occupation and if the house you are looking at is at the location that you like, then anytime is good time to buy your dream house.

But if you are buying for investment, then be prepared to put in some effort on risk analysis, however if you have the financial muscle to ride through any economy storm, perhap properties with good rental return will be more attractive as the depressed capital value of property with good rental return will not be that greatly felt during reccesion because even if you were not able to get rid of the property but at least the return from rental will still enable you to ride through the storm until better times return.

Debt consolidation, simply explained

Debt consolidation simply means obtaining a loan to settle all other outstanding loan and end up servicing one loan instead of many others. The advantage of debt consolidation is apparent for those who find themselves swimming in a pool of debt with high interest such as credit card debt or personal loan debt where interest could be in the region of 1.5% percent per month or close to 24% per annum.

The cheapest form of loan one can obtain from the financial institution nowadays is the housing mortgage loan and with the increase in property price over the years, it is most likely that those with property could refinance their property at interest of say 6% to 8%, on top of that the financial institution offer zero moving cost where loan documentation and legal fees are absorbed by the bank. By obtaining additional financing from the property loan to settle the all other debt, one could potentially save in interest payment and allow a person to end his debt earlier. This type of loan will enable one to pay off all of his debt with one payment each month, rather than by having to make several monthly payments. Moreover the loan available for property come with a lot of flexibility where one can choose to pay back more in monthly payment if extra fund is available and hence even further cut short the time frame for one to get out of debt.

By obtaining a debt consolidation loan, one will enable himself to pay off all the debt he has incurred and only have one left over, which will be the loan.

Build-then-sell concept vs Sell-then-build concept

The Malaysia government recently approved the concept of build-then-sell for housing development project. The build-then-sell concept is essentially a 10:90 concept whereby the house purchaser pay 10% of the purchase price first and then pay the remaining 90% of the purchase price upon the completion of the house with certificate of fitness issued.

The conventional sell-then-build require the purchaser to pay 10% of the purchase price upon the signing of the sale & purchase agreement and the remaining 90% is progressively paid to the developer in accordance with term of payment accoding to stages of construction as stipulated in the sale & purchase agreement. The developers are required to adopt the term of payment approved by the housing ministry for the remaining 90% of the purchase price. The house purchaser can pay the developer by cash or bank loan. In essence, in the sell-then-build, the house buyer part finance the developer in the construction of the project and the financial institution basically lend the money to the individual purchasers.

In the build-then-sell concept, the developers will not get to be financed by the purchasers like in the case of sell-then-build and therefore the developers will have to obtain more financing from the financial institution to finance the project up to the stage of completion.

In order for the build-then-sell concept to work, the bank will have to play a major role by providing the additional financing up to the stage of completion and this will inevitably increase the risk exposure of the financial institution. The bank normally will prefer to lend to individual purchasers in many smaller parcels instead of lending it all to the developer in one parcel.

Hence, for those companies that has just started to venture into the property development field where they do not have the necessary track record, it will be rather difficult for them to convince the bank to provide them with the financing to do it in the new build-then-sell way.

Fortunately the two concept will be allowed to run parallel otherwise many aspiring up-start developers will not be able to kick start their project.

Buying land for development with no money down

There are many books in the market and many websites in the cyberspace that advocate the purchase of property with no money down. While it is possible to purchase property with no money down in many countries, it is rather difficult to do so in Malaysia as the maximum margin of financing offered by the financial institution for the purchase of residential property is 95% of the purchase price and the maximum margin of financing for purchase of land for development is only in the region of 60% to 80% depending on whether the borrower has track record or has good relationship and good standing with the financial institution.

Most often than not, those who intend to purchase a piece of land for development purposes need to fork out substantial amount of cash as down payment let alone to purchase with no money down.

However the developer can always strike a deal with land owner to jointly develop the land in a joint-venture deal where the land owner provide the land for development and the developer bear all other expenses in connection with the development of the land. Upon completion of development, the land owner is then compensated by the developer a certain percentage of the completed units which can range from 20% to 50% depending on the value of the land. In such a joint-venture development, the land owner is normally compensated a value higher than the amount that the land owner will get if he were to sell his land, thereby effectively sharing the profit of the developer.

The developer in effect sacrifice part of their profit to compensate the land owner but the developer is spared from forking out a lot of cash for down payment of the land as well as spared from paying holding cost of the land. As the units are only distributed to the land owner upon completion of the development, the developer effectively only pays the land owner upon completion of development. Therefore effectively buying land for development with no money down.

How to save interest on housing loan

Buying property almost always involve financing especially for most of those who are buying their first house. Majority of those who buy their first house buy it when they are young and when they are not that financially strong and financing is always used to finance the purchase.A home mortgage or housing loan is a long-term credit that a house buyer or a house owner obtains from a financial institution to finance his property purchase or refinance his existing property. In general , the subject property or house is used as the collateral for the mortgage, thus the term "home mortgage" is commonly used to described credit facility that is extended by the bank or financial institution. A home mortgage is usually comprised of a large loan which is why in most cases a home mortgage or home loan can take 15 , 20 or even 30 years before the borrower can pay back the due amount. In a home mortgage, the due amount to be paid by the borrower include the principal amount of the mortgage and the interest owed relative to the outstanding balance which usually translate into a fixed monthly installment over a fixed number of years.

It is possible to repay the loan earlier than the stipulated repayment period by making lump sum payment midway through the loan tenure and most bank or financial institution require prior notice to be given or some may only allow such lump sum repayment at end of financial year with ample notice. Paying off the housing loan earlier in this manner save the borrower a lot of interest charges but the only disadvantage is that the fund that is being used to repay the loan in the lump sum manner is no longer liquid unless the property or house is refinanced.

For those who wish to pay off a home mortgage quickly, there are things to be considered. First and the foremost, the person must make sure that he has a stable source of income. He has to ensure that paying off his mortgage will not over-extend his cash flow. There are many such considerations that should be carefully planned and organized before deciding to pay-off home mortgage. Second, it is also important that he has a ready reserve of cash just in case of emergencies.

There is however many choices in the market place today as far as the housing loan is concerned. In particular there is a type of housing loan that is offered as an overdraft facility rather than the term loan which is to be repaid over over a fixed term.

The overdraft facility that is offered in place of the term loan allows borrower to deposit any amount more than their monthly installment anytime, and as often as they wish. Any extra amount deposited will reduce the loan interest. Every ringgit deposited into the account will reduce the loan principal and cut interest cost and thus shorten repayment period. In addition the amount that is deposited earlier than required can always be withdrawn to meet individual financial need so long as the account is operated within the allowable limit. Therefore borrower can deposit even their salary as soon as they receive it and later withdraw by writing a cheque be it for personal use or to pay bills but in the mean time the principal amount is reduced until the amount is withdrawn. The borrower can deposit whatever fund they have to pay off the loan as soon as they wish and still have no worry as the fund is always available in case of emergency.

Therefore be sure to consider the various option available when you decide to take a housing loan. A wise decision can save you tremendous amount of interest and paying off your home mortgage earlier can be a extremely rewarding experience. After all, nothing beats a worry-free, debt-free financial status.

How to be a property developer

Among the many various types of businesses in the economy, property developer rank among the top in term of prestige and profitability. It is by no accident that corporation big or small are involved in property development. Doing business as a property developer can be profitable and lucrative and at personal level can be very rewarding. However, to be successful as a developer, it is important to play by certain rules and apply certain proven techniques. Through this article we shall share some of the tips to help you become a successful property developer. The very first step in any property development project should be to carry out market survey and research. A direct method is to check with real estate or property agents as to what types of property is most popular and in great demand as well as the average selling price of the respective properties. Market survey and research will also help you to identify the area that has development potential. The real estate or property agents will be able to tell you what type of consumer goes for what type of property and what is the current trends in the area you have identified. The information collected will enable you to ensure that the properties you intend to develop meet the demand of the market segment you are targeting.

After identifying the particular area that you intend to commence your development project, the next step is to source for a suitable piece of land for the intended development based on your budget and proposed size of your development. You will also be need to get important information or data by checking with local planning authorities and such data may include the zoning of the area that your proposed land fall within. The local authorities should be able to tell you whether your proposed development is inline with the overall master planning.

In addition, bearing in mind that your aim as a property developer is to buy land at a low price and sell the finished products (housing units) at high prices. A good buy will very much reduce the risk involved and hopefully will enable you to achieve the profit margin that you desire. The other aspect to consider is how much you will need to spend on purchase of the land and the building of the properties to achieve your desired selling price and then work out the necessary cash flow. Careful planning on the financial aspect will enable you clearly understand your financial need so that you will have time to apply for the necessary financing at the very early stage of the development project which will inevitably reduce the risk of you being caught off guard in any financial demand mid way through the project. It is also essential to have a good understanding of the practicalities and the steps involved in property development. Before buying, make very sure that you understand the building regulations that will affect how you will develop the property as well as the risk involved.. In conclusion, if you have carried out the market survey and research thoroughly and are targeting the right group of customers, if you buy well, if you manage your costs carefully and if you market the completed properties efficiently, you could make a lot of money as a property developer.

Renovation & structural soundness

Everytime a house owner purchase a new or old house for his own occupation, most likely he will do some renovation to the house he bought. The extent of renovation depends on individual requirement or budget. Whenever a house owner want to have renovation done to his house, he will most likely look for a interior designer and a renovation contractor. The renovation contractor will construct the skeleton of new extension or make modification to the existing structure of the building as well as the various services such as plumbing installation works, sanitary installation works and the electrical wiring works. The interior designer will then work together with carpenter to finish off the renovation by putting of the finishes and furniture.

Most of the time, after confirming the quotation of the renovation contractor, the owner will allow the contractor to proceed with the construction work without much intervention. The house owner normally get the renovation contractor through recommendation of friends or relatives and they assume the contractor to be competent as far as construction is concerned.

While most renovation contractor are competent to a certain extent in construction works, many small timers acquired their experience from years of involving in the business, many will built according to what they know when they were not provided with a structural plans. While not all renovation involve structural changes, some major renovation may involve extension and changes to the existing structure. In the absence of structural plans, the contractor will built the structure based on his experience and unless the contractor himself is a qualified engineer, his experience in structural soundness of building actually leave much to be desired. There may be cases where the owner may want a certain pillar (known as column in engineering terminology) to be removed and the contractor obliged without advising the owner on the consequences in taking down the column. There may be cases where owner decided to add another floor to the building and the contractor do so without strengthening the column and the foundation. Hence it is advisable that the owner engage a structural engineer to design and supervise the construction so that the end product is structurally sound. Or at least the owner should include the engagement of the structural engineer in the scope of works of the contractor so that the owner can request from the contractor a stamp and certified copy of the structural plans before the commencement of construction and with the structural plans, the owner can liaise with the engineer concerned so that the construction work is actually carried out in accordance with the certified plans.

The engagement of structural consulting engineer is important as the construction of the structure only account for a portion of the total cost of renovation where the other cost that involved include the finishing works and the furniture and fittings that is installed in the property itself. There are many cases where the house owner proceed with the renovation without a structural consultant and when the renovation completed with major works and much money spend in putting all expensive finishing and fittings, suddenly they found their house start to crack here and there and when all things have been completed, it would cost a lot to rectify the construction as a lot of construction works will have to be carried out again in the correct manner and in the process, all expensive finishes will have to taken off and majority will be damaged in the process of them being demolished and of course the labour cost involved, not to mention the wastage of money.

Another case would be upon the completion of construction and if the interior finishes involve the putting up of ceiling below beam level and the wallpaper on the wall where all brick wall and column is covered up. In which case, any cracks that appear may not be visible to the occupant of the house and any visual warning to the impending failure may not be available and dweller may be caught off guard if there is any collapse that happen suddenly.

Therefore it is always wise to engage an engineering consultant if you intend to embark on a major renovation to ensure that whatever extension and modification to building is done in accordance with acceptable code of practice and standard before one even put in all the expensive finishes and fittings.

Tips on buying auction property in Malaysia

Buying auction or foreclosed property is regarded as a way where people can create a stream of income according to some famous authors. But buying an auction property is by no mean easy, there are many things one should look for when buying an auction property. Normally a notice for an auction sale is advertised in the local newspaper two weeks prior to the actual auction date and buyers are to do the necessary inspection before going to the actual auction. When the property is to be auctioned off, normally some of them are already abandoned by their owner and locked and this make inspection rather difficult unless the buyer want to enter the property in an unauthorised manner. Another possible case is that the owner is still occupying the property and inspection under this circumstances is rather impossible as normally owner would not welcome buyer to enter their property knowing well that if a successful sale occur, they will have to move.

Prospective buyer is also advised to do the necessary search at local land office to confirm the rightful owner of the property. To qualify for the auction, prospective buyer are required to prepare a bank draft or banker’s cheque equivalent to 10 percent of the reserved selling price.

During the actual auction day, if the property is priced at a very attractive figure, prospective may have to fight with others by bidding for a higher figure where quick decision are required at the auction hall.

If there is no bidder on that faithful auction day, then the property will be auction again with a cheaper price, normally 10 percent below the previous tender price. So if there is no bidder, you may want to wait for the next auction but bear in mind lower price may attract more bidders.

Successful bidder is normally given 90 to 120 days to settle the balance of purchase price. Sometime for a property to reach a stage of it being auctioned, there may be many outstanding bills like assessment, quit rent, maintenance charges or utilities bills that have yet to be settled. Apportioning those outstanding payment between yourself and the financial institution that called for the property to be auctioned may take some time. This coupled with some other red tape may make release of payment from your financing bank rather slow and make 120 days seem like a very short time. So it would be easier if prospective buyer has some kind of financing ready like having some other property to charge to the bank for ready financing in which case the purchaser would be able to purchase with cash obtained from the other financing taking the burden off the purchaser to obtain financing using the auction property itself within the very short time frame of 120 days.

Another thing the buyer should take note of is that if the buyer is buying the property for trading purposes with the intention to resell it to third party for a profit, then the buyer should take note that the transfer of the auction property cannot be transferred to the third party directly. The auction property must be transferred to the name of buyer first by the court before the buyer who is now the new owner can transfer the property to whoever that buy the property from him which mean that buyer who buy the auction property for trading should take into account the government stamp duty and legal fees involved in transferring the property into his name first. The transferring process can take quite a long time too therefore if the buyer of the auction property resell it to third party, he will probably have to wait quite a while before full payment eventually materialised. Because the long period of time involved, interest and financing charges have to be taken into account too. Otherwise the person who trade the auction property may find that trading auction property is not as profitable as he initially thought.

As there are difficulties involved in inspection of the auction properties as mentioned above, prospective buyer who want to buy the property for whatever purposes has to allow for repair cost as sometime the exact condition of the property cannot be ascertained.

Prospective buyer should also check whether there is a caveat on the property as removal of caveat may require court order and therefore incur cost.

If the original owner is occupying the property, there could be a case whereby the owner may refuse to vacate the property when the bidder has successfully bought the property in which case, court order may be required to evict the occupier and therefore the cost involved.

It is because of the uncertainty and hassle involved in buying the auction properties that make the general public reluctant to even try, therefore sometime even when the property is priced very cheap, there may be not many or no taker. However for those who are daring, with strong heart and financially sound, the auction may just present an irresistable opportunity for fantastic return on investment.