NOTE: This is the excerpt from Benjamin Dover’s upcoming book, Ben’s Guide To Downtown Apartments In Kuala Lumpur, to be published by Sentinel Publications come January 2015.
Everyone is into condo living these days. Serviced rooms, maintenance, exclusive amenities, close security, prime city location – ahh, the perks and wonders of urban living. 🙂 For every urbanite out there, living in a condominium is the only way to go.
But that’s the thing residents say. What about real estate investors? What benefits does it have to investors’ money? And how do you make the most out of it?
First off, there are only two ways you can max out your condominium unit investment – to sell it or to rent it out. Both ideas are, if you play your cards well, very beneficial and have good returns for your money.
Reselling Your Condo Unit
The thing about reselling/subselling a condo unit is that you can hardly make any adjustments to the price but only solely base it on the market and the whole condominium complex’s market value. The market value of your unit depends largely on the market value of the complex itself – so age, location, and condition of the whole building plays a role in your unit’s marketability and value (that’s where house investments ace these high end living spaces). This Wall Street Journal article states that in New York, high-end condos are selling like pancakes– well, simply because it’s New York! Apart from that, any personal improvement made on the house can do very little to your market (if that is even allowed since some developers disallow any alterations made to the unit. If it is allowed, you are very limited to a few adjustments anyway. So when you are reselling/subselling your condo unit, you are selling the whole complex itself – flaws and all.
Also, to make the most profit, the time of purchasing a unit matters greatly too. Units bought at the launching price will have a better chance and lien space for repricing for profit. However, should you experience selling your home in a down market, you have to consider other options. Buying it second hand or further makes it a less than ideal item for reselling and would be better off for rental.
Renting Out Your Condo Unit
If you live in a city that’s big on tourism and gets a high population of tourists on a monthly average, you have the prime option and opportunity to put your property out as a rental property. Compared to renting out your vacation home, renting out your condo unit for short-term rentals are ideal because maintenance fees are covered by your condo developer, plus the location and accessibility of your condo gives you the chance to jack up your rental rate. Condo living is actually very ideal for people who are into a more posh backpacking experience.
You may also want to rent out your property on long term lease a la apartments. For example, if you want to rent out your Peak @Iskandar, Nadayu or Pavilion Residences unit, try to set out a contract, put up a rental rate and set up some house rules. It would also be necessary to inform the administration for formality’s sake.
The only problem with renting out your property is that you can hardly go further in pricing with your neighbors in the same complex. And like selling a unit, you’d have to market the entire complex. The only clear advantage to renting out is the fact that you can still rent it out even if you are the third, fourth, umpteenth owner as long as you have maintained your unit to an ideal condition.