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Looking to invest in a property in a prestigious location? Subsale properties might just be the hidden gem you’ve been searching for. In this ultimate guide, we’ll uncover the untapped potential of buying subsale properties in prestigious locations and provide you with all the information you need to make a savvy investment.
Whether you’re a seasoned investor or a first-time buyer, navigating the subsale property market can be a daunting task. But fear not! We’ve compiled a comprehensive guide that will walk you through the entire process, from understanding the benefits of subsale properties to negotiating the best deal.
Why should you consider subsale properties in prestigious locations? These properties often come with a range of advantages, including established infrastructure, prime locations, and the potential for capital appreciation. By exploring the secrets and strategies of buying subsale properties in prestigious locations, you’ll be equipped with the knowledge and insights to make well-informed investment decisions.
Join us on this journey as we uncover the untapped potential of subsale properties in prestigious locations and unlock the key to successful real estate investments. Get ready to discover a wealth of opportunities that await you in the world of subsale properties.
Understanding subsale properties
Subsale properties refer to properties that are being sold by their current owners, as opposed to new properties being sold by developers. These properties are typically a few years old and have already been occupied or rented out. Understanding the concept of subsale properties is crucial before diving into the world of real estate investments.
When you buy a subsale property, you are essentially purchasing an existing property from its current owner. This means that you are not dealing with a developer and the property has already gone through the initial stages of construction and occupancy. Subsale properties can offer unique advantages compared to new properties, especially when it comes to prestigious locations.
Advantages of buying subsale properties in prestigious locations
Buying high end subsale properties can come with many benefits, a recent study also shown that the sales of subsale property is increasing, showing that the prospect of subsale property is bright
- Direct Inspection of Actual Unit: You can physically inspect the actual property, unlike off-plan developments.
- Immediate Understanding of Maintenance and Facilities: Assess the maintenance of facilities, common areas, and overall property condition.
- Surrounding Area Appraisal: Evaluate the surrounding areas for infrastructure, amenities, traffic congestion, and population density.
- Insight into the Neighborhood: Get a feel for the community and potential neighbors.
- Potential for Good Deals: Sometimes find properties sold below market value by motivated sellers.
- Quick Occupancy or Rental Opportunity: Move in or rent out the property sooner compared to new projects with long construction periods.
- Established Neighborhoods: Benefit from mature neighborhoods with more amenities, established communities, and better infrastructure.
- Reduced Risk of Development Issues: Avoid risks like project delays or abandonment common in new developments.
- Negotiable Prices: Opportunity to negotiate the selling price.
- Upscale and High-Quality Living: Luxury areas feature high-end construction, finishes, and facilities.
- Prime Location and High Property Values: Enjoy central positions, accessibility, and proximity to business districts and entertainment hubs.
- Diverse and International Community: Particularly in areas like KLCC, there’s a significant expatriate presence.
- Excellent Infrastructure and Connectivity: Benefit from well-developed transport links and easy access to major city centers.
Factors to consider when buying subsale properties
Location and Value:
- Consider the strategic importance of locations like Bukit Jalil, KLCC, and Mont Kiara.
- Evaluate how the central position and proximity to amenities could enhance the property’s value.
Property Quality:
- Assess the quality of upscale properties, including high-rise condominiums, penthouses, and landed homes.
- Pay attention to the construction quality, finishes, and facilities offered.
Community and Demographics:
- Understand the significance of the international community, especially in areas like KLCC.
- Consider how the presence of expatriates, multinational corporations, embassies, and international schools affects the property market and rental demand.
Infrastructure and Accessibility:
- Examine the infrastructure and connectivity in KLCC and Mont Kiara.
- Assess the ease of access to major highways, public transportation, and proximity to Kuala Lumpur’s central business district.
Property Age and Condition:
- Evaluate how the age of the property may influence its current condition and future maintenance costs.
- Consider the potential resale value based on the property’s age.
Financial Assessment:
- Compare the asking price of the property with its bank valuation to ensure a fair deal.
- Consider any financing gaps that might arise from differences in valuation.
Resale Prospects:
- Analyze the historical price trends in the area.
- Consider the overall demand for properties in these high-end locations to gauge future resale opportunities.
Other considerations…
Renovation and Repairs Required: Depending on the age and previous maintenance, substantial renovations, including redoing electrical and plumbing works and repainting, might be necessary.
Outdated Built-in Furniture and Fittings: If the existing furnishings and fittings are not to your taste or are in poor condition, you’ll need to invest in renovations.
Potential Hidden Defects: There might be defects in the property that only become apparent after living in it for some time.
Possibility of Unfavourable History: Some units might have a history that could affect their desirability or value.
Risk of Seller Backing Out for Better Offers: There’s always a chance that a seller might choose not to sell to you if they receive a more attractive offer from another buyer.
Higher Acquisition Costs: Costs like the Sale and Purchase Agreement (SPA), loan agreement, stamp duties, and other fees can be higher for subsale properties.
Fading of Shared Facilities: Over time, shared facilities within a development can become less appealing or functional.
Bank Valuation vs. Asking Price: Sometimes, there’s a discrepancy between the bank’s valuation of the property and the seller’s asking price, which can create financing challenges.
Is high end subsales suitable for first time homebuyers?
According to Darren Goh, Group Leader from Dutama Properties, the suitability of high-end locations for first-time buyers hinges on their personal preferences, budget, and the specific attributes of each property and area.
He advises first-time buyers to carefully evaluate if a property’s price is within their financial reach. Properties priced below the market rate or those with strong appreciation potential could be attractive options, even in high-end areas.
Darren points out that properties in upscale locations may offer higher rental returns due to demand from expatriates and wealthy tenants, which should be considered if rental income is part of the buyer’s investment strategy.
However, Darren warns that high-end properties often come with higher down payments and more stringent loan criteria. First-time buyers need to ensure they qualify for a mortgage and can manage the repayments comfortably.
For first-time buyers considering subsale properties, Darren emphasizes three critical areas:
- Legal Matters: Check the legal status of the property, including its ownership records, land titles, and any pending disputes or legal encumbrances.
- Local Amenities: Assess the nearby amenities like shopping centers, hospitals, parks, and schools, as they impact both quality of life and property value.
- Negotiation Skills: Be ready to negotiate. Do your homework on market prices and be willing to walk away if the deal isn’t right. Make offers respectfully and professionally, considering all the details like purchase price, deposit, financing, and closing date. Negotiations can take time, so patience is key, and rushing into a decision should be avoided.
What steps to take when purchase a subsales property?
Determine Your Budget:
- Understand how much you can borrow and calculate your affordable price range using tools like iProperty Loan Care or PropertyGuru Home Loan Eligibility Calculator.
- Consider your gross annual income, loan term, interest rate, and other financial obligations to estimate your maximum mortgage payment and loan amount.
Search and Shortlist Properties:
- Begin your property search within your budget.
- Visit and assess the properties at different times to get a comprehensive view of the area and the unit.
Property Inspection and Professional Help:
- Inspect potential properties carefully for condition, layout, and any necessary maintenance or renovations.
- Consider hiring a reputable real estate agent for insights and assistance in negotiations.
Make an Offer and Secure the Unit:
- Once you decide on a unit, make an offer.
- Sign the Letter of Offer to Purchase and pay an earnest deposit (typically 2% to 3% of the purchase price).
- Engage a lawyer to assist with the property transaction.
Apply for a Mortgage Loan:
- Compare different bank financing packages.
- Be prepared for a higher down payment if the bank’s valuation is lower than the asking price.
Signing the Sale and Purchase Agreement (SPA):
- Sign the SPA within 14 days from the date of the Letter of Offer.
- Pay the remaining deposit, which is typically 7% to 8% of the purchase price.
- Include an inventory list of items to be retained or removed in the SPA.
Loan Agreement and Memorandum of Transfer (MOT):
- Sign the loan agreement to confirm your financing.
- Proceed with the Memorandum of Transfer for property ownership transfer.
Vacant Possession and Final Steps:
- Expect to receive keys to the property upon completion of all payments.
- The entire purchase process usually takes about 3 months, subject to various conditions and approvals.
Financial Preparations:
- Prepare for costs such as down payment, legal fees, stamp duties, real estate agent fees, mortgage insurance, valuation fees, bank’s processing fees, renovation costs, and monthly maintenance fees. If you have difficulty to finance your home, you can see this list of initiatives set up to help first time home buyers.
- You can also see the list of cost needed to purchase a property here
- First-time buyers may be eligible for stamp duty exemptions under initiatives like Malaysia’s i-Miliki.
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