How To Finance An Apartment Purchase In Malaysia

If there was a contest to determine the most popular business in Malaysia, mortgage lending could certainly compete. Just about any institution with cash i.e. banks, or access to someone else's cash i.e. insurance companies, wants to be in the residential lending game. It is a fact one can easily confirm with a quick glance at the local newspapers. You will see pages after pages of mortgage lending offers.

There are many lenders in the market, and the first time apartment buyer should talk to as many people as possible. The reason for this is to find the best mortgage lending offers available. In additional to the newspaper, good mortgage lending offers can also be found in the yellow pages, real estate directory and by asking real estate lawyers, real estate brokers and agents, and people who have bought apartments recently.

For many years the best known mortgage lenders were Malaysian local banks such as Maybank, Public Bank and Hong Leong Bank. In the recent years, the insurance companies have jumped on the mortgage lending business bandwagon. Even tough the insurance companies are not primarily in the mortgage business, they have managed to packaged mortgage plan bundled with their insurance product. In some cases, first time apartment buyers can obtain access to insurance funds only through mortgage bankers and mortgage brokers.

Mortgage bankers are individual and organizations who loan their own funds and the funds of others to real estate purchasers. Once a mortgage is made, the mortgage banker typically sells the loan to an investor. A mortgage broker, unlike a mortgage banker, does not have capital to lend but instead loans money that belongs to others. He makes his money on fees, charges and points. In addition, a mortgage broker may also service loans.

Just like in any country, to finance an apartment purchase in Malaysia can be a daunting task. A typical mortgage payment term for the average Malaysian is from 15 to 30 years. The best thing for a new apartment purchaser to do is to get advice from the right people before signing on the dotted line of a mortgage agreement.

Article Source: http://EzineArticles.com/?expert=Will_Yap

How To Find The Right Property Location In Malaysia

In the strategic property locations such as Kuala Lumpur and Petaling Jaya, you'll be surprise that even traffic congestion there has not lessened the values of these areas. Their attraction sometimes has to do with tradition. Generally, people are naturally drawn to certain areas and are not drawn to others. This has been the town planners nightmare. They draw plans proposing certain areas for development and those areas fail because they are not attractive enough to people.

If a property location is so important, that should be our primary concern when we are doing our investment research. To find the right property location in Malaysia, firstly the location should be good. One that is popular and has a lot of amenities. However, the location may be a new one and untested in the market. So what should you do in this case? In such a case, you have to look at the surroundings. Avoid if you can places such as ex-mining land, ex-dump sites and hill slopes.

Those are places with hidden problems for if the developer does not take precautions and do a good job on the foundations. You could have problems with sinking floors, cracked walls, unstable roofs and landslides. Retaining walls have been known to crumble and roads to collapse. You could also be subjected to unwanted smells and diseases in the case of ex-dump sites. Other undesirable locations are the surroundings occupied by squatters, graveyards and sludge ponds. Of course, there are those who will not like house located at T-junctions, near busy roads or other nuisances such are petrol stations, restaurant and next to a school.

Finding the right property location in Malaysia will depend largely on what the public prefer. The "ideal" location should be one which is attractive to most people acting as a natural magnet drawing people naturally to the area.

Article Source: http://EzineArticles.com/?expert=Will_Yap

Financing For Investment Property

Understanding different types of loans, and knowing when to use them is essential for investing in real-estate. Different loans are used for different reasons. Specific loans may be used for holding property long term, and specific loans are used for short term holds. Each type of loan has a specific purpose when investing in real-estate. Learning each loans purpose is essential to ensure the right loan is being applied to the correct investing strategy. Investors can get crossed up very easily, costing them a lot of time and money. Knowing when to use a specific type of loan can be the difference between making a lot of money and losing a property to foreclosure. Below is a list of the most popular loans used by investors.

• Fixed Rate Mortgage - This loan is probably the most common loan used by average real-estate investors. It is also one of the safest to use. The interest rates are locked for the entire life of the loan. This loan usually comes in terms of 15 years, 20 years, 30 years, or 40 years. The longer the term, the lower your payments will be. Obtaining the lowest payments may sound good, but a longer term equals much more interest paid to the bank. Choose a term that will allow the most cash-flow out of your investment property. This is the perfect loan for a property that does not need rehab and is to be held as a long-term investment.

• Adjustable Rate Mortgage- This is the same type of loan that has recently been the cause for many foreclosures over the last couple years. People have been steered away from these loans. This is not a bad loan if investors understand how to use it correctly. These loans usually come in 10/1, 7/1, 5/1, and 3/1. The number before the one indicates the length of the first term. After the first term the payment will increase to a higher fixed interest rate. The first term payments may be cheaper than a conventional loan, but after it adjust the payments will significantly go up. This loan is best used for property intended to be sold before the end of the first term. The advantage is that the investor will have a low mortgage payment for the first term.

• Interest Only Loan- This loan can be used for property with a lot of equity already built into it. If investment property has a lot of equity in it, then paying down the principle and creating more equity may not be important. Accomplishing positive monthly cash-flow may be more important. For example, let's say an investment property was brought, and the seller left $50,000 in equity for the buyer. The buyer decides to rent the property and then sell it in 5 years. The investor can make cheaper payment to the bank because he is only paying interest on the property and no principle. Therefore, the investor can make more money renting the property because he is paying less in mortgage payments. The investor has $50,000 in equity, 5 years of appreciation, and 5 years of profitable rental income. In this case an investor may want lower mortgage payments, instead of paying principle and interest on property that already has equity-- and will be held for only 5 years.

• Seller Financing- This is good way to buy a property from someone who may own a property free and clear. A lot of times you can negotiate these deals with no money down and no credit check. People who own property that may need repair are more likely to agree to seller financing. Many people avoid buying property that need extensive repair. These properties are hard to sell, so the owner is probably open for different ideas of getting rid of the property. The goal is to get 0% interest and no payments. This may seem unlikely, but surprisingly some seller financed deals are structured this way. If the seller does not agree, then negotiate the cheapest rate and term possible.

• Hard Money Loan- This loan is normally used for property that is going to need repair. This type of loan allows investors to finance the money needed to buy and fix investment property. Be very careful. Be sure you are able to get out of this loan quickly. These loans are short term, and a balloon payment is due 6-12 months after the loan originates. Buy and fix the property, then refinance before the loan is due. Although, lately investors have been getting caught with their pants down. The banks have been making it harder, and harder to refinance out of these types of loans. In some cases, investors cannot refinance due to seasoning issues, and the loan becomes due before they can secure permanent financing. Before using this loan get pre-qualified for long-term financing, and be sure the investment property adheres to all guidelines and financial conditions for the new loan. In some instances, investors can walk away with money in their pocket if everything goes accordingly.

There are many other loan products on the market . Each loan is designed for a specific purpose and a specific person. Each loan has its own risk, some more than others. The important thing is to learn and understand the loan. Plan your strategy and choose the loan that makes the most sense for the strategy in place. Make it work for you and not against you.

Article Source: http://EzineArticles.com/?expert=Khalid_Johnson

How to Get Rich in Property Investment

Investing in properties is a sure but slow way of getting rich. Many people have become rich through property investment by steadily working at it. You don't need to have a lot of money to start investing in properties. Because of the power of leverage, you can buy properties using other people's money. The basic idea of property investing is that the lesser your money you can put into buying a property, the greater your chances of making a higher return on your investment. To better understand the power of leveraging, let's compare investing in properties with investing in equities.

Power Of Leveraging:- Properties vs Equities
By investing $100,000 in equities, you get to control $100,000 worth of equities. A 10% increase in the price of your equity would generate a 10% profit in your investment (i.e. $10,000) while a 100% increase in the price of your equity would generate a 100% increase in your investment (i.e. $100,000). In contrast, by investing in a $100,000 property, you do not need to come up with $100,000 as you can apply for a loan from the bank to finance a major part of your purchase. It is common for banks nowadays to offer up to 90% margin of financing to assist you in your property purchase. Therefore, by investing only $10,000 of your money, you get to buy a $100,000 worth of property in which 90% of the property price is financed by the bank. A 10% increase in the price of the property (i.e. $10,000) would already generate a 100% increase in your investment as the money you put in is only $10,000. Wouldn't it be easier for a property to increase by only 10% compared to the price of an equity to double before you make a 100% return on your investment? That's the power of leveraging at work.

Capital Appreciation vs Rental Returns
To be successful in property investment, you will either need to make a huge capital appreciation from the disposal of your properties or generating good rental returns from your tenants. If you prefer to buy and sell properties only, then you will need to have the holding power or ample reserves to be able to meet your monthly bank installments (for properties that are financed via bank borrowings) before you eventually dispose off the properties at a profit unless you paid for them in full by cash. The other common option for most of the property investors starting out would be to rent out their properties to good paying tenants who are helping them to meet their monthly bank installments. Make sure that the monthly rental you receive from the tenant is more than the monthly bank installments to enjoy a positive monthly cash flow.

Once you have successfully rented out your property, rinse and repeat the process to build up your property portfolio and start enjoying this passive rental income so that you can let your properties appreciate over time to make a good profit later should you decide to dispose them off. Therefore, it is imperative for you to be a good and successful landlord in order to be a successful property investor. Always keep in mind that your tenant's rent is paying for your mortgage and other expenses and this will eventually make you rich in the long run.


Written by: Juanita Chin
Article Source: http://EzineArticles.com/?expert=Juanita_Chin

Tips For Investment Rental Property

The drop in real estate prices have made this time one of the best times to buy investment rental property. But if you don't know what you are doing, rental property can turn into your biggest nightmare. Here are some tips for investment rental property that can help you get started and keep you on track.

1. Get past the fear - lots of people fail to pull the trigger on investment rental property.
2. Get some knowledge - this goes a long way towards getting past the fear
3. Learn what type of property is the best one for you
4. Its all about location - don't buy property in a war zone - who will rent your property?
5. Start with something simple like buying single family houses
6. Learn how to finance investment property - there are dozens of creative real estate investing ideas to chose from
7. Save money for a downpayment - no money down real estate usually has negative cash flow
8. Clean up your credit record - a good credit score can lower your monthly payments significantly
9. Buy houses in the "starter homes" price range
10. Only buy houses from motivated sellers - you earn your money when you buy
11. Hire someone to do a home inspection until you have experience to do your own
12. Use a "subject to" clause in any contract you submit to a seller
13. Don't over improve a rental house
14. Use a lease-purchase strategy to get the best tenants and best rental income - if you make the tenants 'potential owners" you can even get them to do some maintenance
15. Always do a background check on potential tenants
16. Follow your lease to the letter. If you give tenants an inch they will take a mile
17. Keep accurate records of your income and expenses

These are just a few tips for investing in rental property. Like any profession, knowledge is power. Take time to study what successful real estate investors do. Join a real estate investment club and associate with people that are buying investment rental property.

Article Source: http://EzineArticles.com/?expert=Paul_Beauchemin

5 Unique Ways to Find Funding For Real Estate

Despite the current slump in the housing market, it can be an attractive time to acquire funding for a real estate property. I made my move into the real estate business at a time where it was not a sure thing, but I have comprised key skills that continue to allow me to not only survive the slump, but profit from it. I had a mere $800 to my name when I decided I too wanted to make real estate work for me. Over time my success keys have been shared with others, and I will share them with you.

There are great ways to obtain the capital necessary to launch a future in the real estate market. We will look at five, though there are many.

Grants:

The government dishes out millions of dollars each year in grants to those seeking funding for real estate ventures. This is mainly because one of the government's main duties is to provide housing for U.S residents. Not only are the grants there to help the brokers, but also acts as an outsourced entity for the government. There are not only federal grants for which you can apply, but also state level grants as well.

Private Investors:

If you can be provided with an opportunity to sit down with someone who is willing to entertain putting forth a little investment capital for a possible venture, wear your best suit and tie. Have a professional proposal detailing your outlying costs and show the bottom line of your profit margin. A Private investor will be more concerned with your bottom line than perhaps, a bank would. Chances are your investor will be looking for a faster return on their money than a financial institution will.

The seller (can you believe this?):

Yes, you can possibly obtain the money needed for a property from the seller. It may benefit the seller more to finance your purchase than to maybe face foreclosure. In some instances the seller is willing to add additional monies to the price of the property to account for the down payment and closing costs. This additional money may need to be covered in a certain time period such as a deferred down payment. It will increase your interest to carry that extension on your balance; however it will buy you some time to earn more capital.

Liquefying any assets:

If you feel strongly about entering in to the market and have tried other avenues to obtain capital; you may think about liquefying any available assets. You can cash in any stocks, bonds or other savings. Also you may contemplate turning over your 401K in hopes that you can replenish your retirement fund with a much more lucrative investment in larger sums. Especially if you can invest then into a CD account which yields higher interest.

Loans:

If all else fails, It is still possible to obtain an investment loan from a bank or credit union. You may be required to possess a higher credit score and/or have substantial collateral to convince the bank to fund your venture. In this instance you may or may not receive the full amount necessary, and will also need to consider the interest rate that will be assessed above the loan. This will be essential when completing a bank proposal.

Article Source: http://EzineArticles.com/?expert=Dave_Lindahl

RM7b for LRT extension

Syarikat Prasarana Negara Bhd, the state-owned public transport operator, plans to spend up to RM7 billion to extend light rail transit (LRT) lines in Kuala Lumpur.

It already has RM4 billion in hand and will call for bids from construction companies next month.

Group managing director Datuk Idrose Mohamed said work on the extensions of the Kelana Jaya and Ampang lines, which cover a total of 34.7km, is due to start early next year, after all approvals from the authorities have been obtained.

The LRT extension is among a few major deals eagerly awaited by the construction industry, which has not seen large contracts of late.

Construction is expected to be completed by the end of 2012.

Of the RM4 billion it has, half is internal funds. The balance was raised from an Islamic bond sale recently.

“The other RM2 billion (from the bond sale programme) is expected to be raised somewhere in 2010,” Idrose told reporters at a briefing in Kuala Lumpur yesterday.

Prasarana was set up as part of efforts to revamp the public transport system in Kuala Lumpur and its surrounding areas.

Feasibility studies for the LRT extension started in 2006. However, it is unclear why the project took so long to take off.

“Of the various alignment options we received during the feasibility studies conducted in 2006 and 2007, we view the proposals submitted to the government last March as the most cost-effective,” Idrose said.

Approval for the extension was obtained from the government last month

Idrose said there will be minimal land acquisition for the project as the lines will go mainly through Tenaga Nasional Bhd’s cable area, road and river reserves.

At least 10 alignment options were received for each LRT line, he added.

Idrose said the preferred alignments for the Kelana Jaya line extension will begin from the Kelana Jaya station, passing through 13 new stations, including Subang Jaya commuter station and USJ, before ending at Putra Heights, covering a total of 17km.

As for the Ampang line, the proposed extension will begin from the Sri Petaling station, passing through Kinrara and Puchong before ending at Putra Heights, covering 17.7km with 13 new stations.

A display of the extension can be viewed at the Subang Jaya Municipal Council, Petaling Jaya City Council, Shah Alam Municipal Council and Department of Railways.

The public will be given three months to voice their opinions before the plans are finalised.

By Business Times (by Azlan Abu Bakar)

Rosy outlook for property sector

Exhibitors at The Star Property Fair 2009 at G Hotel and Gurney Plaza in Penang were pleased with the huge crowd turnout during the three-day event which they declared a resounding success.

Belleview Group managing director Datuk Sonny Ho said the overwhelming response at his companys booths was totally unexpected.

We had, since the fair first started back in 2003, suggested that it should be held at a good shopping mall so as to attract the weekend crowd. But even then, I had not anticipated such a response, he said.

Ho said the company opened up 50% of its new Bukit Dumbar Residences freehold landed property for sale and would have been happy to sell half and follow up on the rest.

On the first day itself, we already achieved our expectations in terms of committed sales, and by today, we have achieved our quota, he said on the last day of the fair yesterday, adding that they also received good response for Phase 2 of their Palmyra Residences.

SP Setia Bhd property division (north) sales and marketing assistant manager Joanne Koay said the company generated good sales and did not mind the venue of the fair as long as the crowd kept turning up.

EUPE Corporation Bhd marketing assistant manager Chris Tan said the crowd at this new venue was slower but of higher quality than at the previous venue at the Penang International Sports Arena (PISA) in past years.

This turned out well as it provides us a chance to spare more time for potential buyers, he said.

Blossom Time Sdn Bhd assistant marketing manager Norita Ibarahim said they received more enquiries than expected.

The response for our The Residences @ Ferringhi Park was good, and some visitors even made the trip to the showhouse in Batu Ferringhi on the spot, she said, adding that they also received many enquiries about their beachfront condominium project which was open for registration.

Over at the lifestyle section, Kitchentech general manager Wilson Yeoh said there was a good flow of people and it was a good chance for them to showcase their products and enhance their value.

Cucina Kitchen & Wardrobe managing director T.H. Tan said the fair was always a good way to advertise and promote their products.

The crowd is good but the atmosphere is more relaxed, giving us the opportunity to pay attention to our customers.

A buyer, operations executive Chng Lee Hong, 49, and her husband who only wanted to be known as Lim, 50, made an impromptu decision to buy their dream home in the form of a double-storey terrace house in Belleview Groups Palmyra Residences project in Balik Pulau.

Chng said she was happy with the layout of the four-bedroom unit with two parking spaces while Lim said he was pleased with the location and trusted the developer.

A buyer who only wanted to be known as Mrs Lau, 38, said she and her husband bought two condominiums, one for their own stay and one for investment.

Well probably stay at IJM Land Bhds Platino in Jelutong, while the other unit Ideal Homes Properties Sdn Bhds One World 2 in Bayan Lepas is for investment, said the sales manager.

Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat noted that the visitors to this years fair were more affluent, and there was a great deal of interest in subjects pertaining to lifestyle, particularly going by the large crowd attending the health talks.

He said: People are aware that they need good health to enjoy their wealth.

Where property was concerned, Dr Teoh said quite a number of new projects attracted some attention, indicating that buyers had been waiting in the sidelines for the right time and opportunity.

The three-day fair, themed Modern Lifestyle, featured over 50 exhibitors occupying some 100 booths at the hotel and shopping complex.

Besides checking out property, home improvement products and financing packages at the exhibition booths, visitors also took the chance to attend various talks and forums, take part in the Surf, Click & Win and Lucky Catch contests, and watch performances such as belly dance and a fashion show featuring various pieces of jewellery which were auctioned off by Henry Butcher in aid of the Penang Pure Lotus Hospice of Compassion and Asia Community Service.

The Star Property Fair 2009 was organised by Star Publications in collaboration with Henry Butcher and supported by The Expat Group.

By The Star

Investment Growth In Malaysia

Malaysia shows solid potential as a promising emerging property market for foreign investors. Below is an overview of some of the factors that are contributing to the growth of Malaysia as a successful investment arena.

International real estate investors looking to target a well priced, strong economy for sustainable growth and yields over the medium to long term are considering Malaysia as a highly lucrative option.

The government’s blueprint for economic growth and diversification for a four year period between 2006 and 2010, known as the “Ninth Plan”, aims at vast improvements to Malaysia’s infrastructure as well as economic developments. This progress is predicted to directly and positively effect the real estate market in Malaysia, bringing with it strong growth potential.

As a resort destination Malaysia’s affordability is a great attraction, bringing growing numbers of visitors annually to boost the economy. Tourist arrivals in Malaysia rose to 16.5 million in 2005, a rise of more than 160% in five years. This is an astonishing achievement for tourism in Malaysia and is good news to many property investors in the coastal resort hotspots, such as Port Dickson. The first low cost airline offering global services from Malaysia is planned for July 2007 and will connect Manchester and Luton as well as Hangzhou near Shanghai and Tianjin near Beijing from a later date – all good news for Malaysia and its growing tourism and investment arena.

While the country’s economy keeps flourishing, inflation remains low, overseas export opportunities continue to expand and more businesses are establishing regional centres in Malaysia. Malaysia is the Asian leader in terms of attracting interest from foreign investors, most of whom are from the Middle East. They see it as a viable and attractive emerging market with high medium term growth potential. The amount of foreign investment into the country continues to increase and international investment into the property sector in Malaysia is firmly predicted to grow at unprecedented levels.

Another particularly positive factor in favour of real estate in Malaysia today is the value of the local currency, the ringgit (MYR). Valued below the euro, dollar and British pound, foreign investors buying into Malaysia are reaping the rewards of buying so much more for their money. Meanwhile, property per square meter in all Malaysian towns, cities and resorts remains at a fraction of the cost of similar properties in the likes of London or New York.

Demand for real estate is high from an affluent expatriate market as well as an increasing Japanese, Indian and Singaporean market leaving many investment options open to shrewd investors in Malaysia.

Capital Growth Predictions

Depending upon location, off-plan residential property both in the city and within coastal resorts has seen price increases of between 14 and 15% per annum. With economic indications showing Malaysia can only continue to grow at a steady pace, many investors are purchasing now in order to achieve the highest returns on their investment.

Rental Yield Predictions

The best yields are possibly available in the commercial property sector or KLCC serviced apartments, with returns of 8% not being unusual. It is possible to invest in “tenanted” residential or commercial properties with guaranteed yields of 8%-10% available. We also suggest looking at off-plan commercial premises that will net yields well into double figures, while a number of hotels are also available with gross yields in excess of 17%.

Tourist resorts offer strong rental and capital growth potential with recorded yields in Port Dickson last year reported at 9.36%.

Malaysia Economy

Economically, the outlook in Malaysia is very positive. According to a recent study from ING Real Estate, Malaysia will be the Asian country with the biggest increase in work force from 2003 to 2013, with worker numbers increasing to 13 million, representing a 27.9% increase over the 10 year period.

Growth has been driven by a spurt of corporate investments, sustained consumption, improved external trade facilities and foreign investor friendly fiscal and monetary policies, that have boosted Malaysia’s economy to new levels.

Reasons Why Malaysia is an Intelligent Property Investment Location:

• New tax incentives and the relaxation of laws governing real estate purchase by foreigners.
• The government’s “Ninth Plan” will have a positive impact on the Malaysian real estate market through further improvements to the infrastructure and economic policies.
• Stable economy and government.
• English is widely spoken by a multi-lingual, experienced and qualified workforce.
• Local currency valued at far below the euro, dollar and pound sterling, allowing foreign investors to buy a lot more for their money in Malaysia.
• Property prices per square metre in all major Malaysian towns and cities are at a fraction of the cost of similar investments in many other worldwide destinations.
• Great demand for quality new real estate from an affluent expatriate market.
• Malaysia ranks among the top three countries among the 53 Commonwealth countries for the greatest number of tourist arrivals, according to the World Tourism Organisation.
• Malaysia attracted 20.88 million foreign visitors in 2007, representing a 19% rise on the previous year
• Location near the Equator, hence a year-round tropical climate, ideal for tourism.
• Extensive, beautiful, white sandy beaches at luxury resort areas offering an escape from hectic life just south of the bustling capital of Kuala Lumpur.
• Low buying costs currently at between 3.4 to 6.75% of the property value.

How to Avoid Making Costly Property Investment Blunders

Real estate investments enable you to accumulate wealth and to you attain your financial goals within a desired timeframe. Unfortunately, many novice investors who lack an understanding of the common real estate investment pitfalls can easily lose instead of make money.

Before jumping in, it’s extremely important to understand and avoid the main causes of failure. These are:

1. Lack of Right Education

The major cause of most real estate investment failures is probably careless investing. Many beginners start off by listening to friends and family members. They get free advice on what works and how to succeed. What they may not realize is that free advice can be very expensive. It may be the case of the blind leading the blind. Learning to invest from people who have only bought one or two properties in their lifetime via the trial and error method is time-consuming, frustrating and expensive. You pay with mistakes – costly mistakes! One wrong property purchased can cost you thousands of dollars and may take a few years of your life to undo the damage done!

With a small investment of time and money, you can easily avoid costly mistakes and reap profits from day one. Take the time and trouble first to read all the relevant property investment books and attend educational courses on this subject. After all, the best real estate you can ever invest is in the real estate between your two ears! You should also look for the right mentors who started at the same financial position as you - and who has achieved success with several properties. Learn from their experiences, avoid their mistakes and replicate their successes.

2. Inadequate Research

Another major cause of real estate investment failure is inadequate research. While it’s not that difficult to find investment properties, finding the one that is profitable is another story. Many become so excited about owning a property that they get blind-sighted. They may buy a property that looks good on the surface rather than investing time and effort doing research.

A savvy investor would usually watch the market for a few months before diving in. He would select a few specific locations and get to know it well. He would get to know all the negotiators specializing in that area and details of all properties available for sale and those that have been transacted in the last few months.

By doing these, you will acquire a solid foundation needed to determine which properties and locations make investment sense. When the right property in the right location comes up at the right price, you would be able to confidently purchase it without any hesitation.

3. Emotion-Based Decisions

The third major cause of real estate investment failure is emotion-based decision making. Successful investing is purely a numbers game and it’s done without any emotions.

One of the biggest challenges a real estate investor has is in studying the numbers on each and every potential property. It takes discipline and experience to pass on properties that may look good initially, but don’t stack up number-wise. Buying based on emotions or impulse can cost thousands of dollars, hours and headaches. Before investing in real estate, ensure purchase decisions are based not on emotional reasons, but on sound facts and figures. Whenever in doubt, it’s advisable to get appropriate impartial advice from other like-minded property investors.

4. Paying Too Much

Another major cause of real estate investment blunder is paying too much for a property. Once the papers are signed, few things are worse than discovering you paid more than you should have. Paying in excess of a property’s worth requires time to recoup the extra expenses and lowers your return on investment.

While individuals who buy property to live in are prepared to pay more for emotional reasons, investors should always aim to pay the fair or lower-than-market price. It’s all about the numbers. Conduct thorough research on the area and compare prices to ensure you can get a decent return on investment. Also, get a valuation report before confirming your purchase price. In property investments, profits are made at the point of purchase, and not at the point of sale. Buying is entirely within your control, whereas selling a few months or even a few years down the road may not be entirely within your control.

5. Lack of Direction and Commitment

One more cause of real estate investment failure is lack of direction and commitment. Treat your real estate investments as a serious business and not a hobby. Hobbies don’t make much money, businesses do!

If you treat real estate investing as a hobby that you indulge in whenever you feel like it, you’ll get hobby results. If you set aside the time and treat is as a business, you’ll be able to earn a profitable outcome. For example, one of my seminar graduates made over RM1 million in profits by flipping over 10 properties in the last 5 years. He treats his property investments as a serious business sideline and his goal is to flip a minimum of 2 properties each year.

6. Neglecting Inspections

The sixth major cause of real estate investment failure is neglecting inspections. Buying old properties are riskier, compared to buying brand new from a reputable developer. Obviously, the older the property, the greater the risks. But the risk factor can be reduced when you take all the necessary precautions and budget additional expenses for repairs.

Professional inspections are a must when investing in real estate. You may find properties that seem like bargains to the untrained eye, but an expert inspector could discover thousands of dollars in repairs that are necessary to keep the property running. While inspections do add one more cost to the investment equation, they’re necessary to the successful real estate investor.