Buy Or Invest In Properties

Top 5 things you need to know when you are looking to buy or invest in property.

The idea that buying a real estate will make us rich is not entirely accurate. However there are five main justifications for why we should and must buy real estate.

Roof Above Our Head

First and foremost, In the past and in the present, living in a property has been the primary motivation for most buyers. This is too make sure our family have a house to live in it and feel safe in. Additionally, it is an achievement for property purchaser as it is one of the most expensive assets. But buying property has become a form of investment, there is always a demand for residential property and it is necessity. Nobody will ever want their loved ones to sleep outside the streets.

Capital Appreciation

One of the best and simplest ways to profit from real estate is through property price increment. Property prices rise as a result of supply and demand, buyer and sellers attitude, inflation, government policies, the economy, changes in the price of construction materials and market confidence. When the value of the property reaches a certain point, we can sell it and profit from the difference between the sale price and the original purchase price.

Hedge Against Inflation

As time goes on, the value of money kept in the bank will slowly decrease due to inflation. When we invest property, the value of the money we put in can either increase or keep pace with inflation. For example, we purchase a property

8-10 years ago at RM400,000 with a monthly mortgage repayment of around roughly Rm 1,600, the monthly repayment today might be the same but the value of the property will now worth RM700,000 and the rental rate will also increase too. So, should we buy the property now for RM700,000 or would we have bought it ten years ago if we had known the price would double ?

Legacy For Future Generations

Imagine that the property we purchased today was fully paid and we passed on to our next generation. The rental return we receive monthly from the sale of the property can provide a lot of streams income for our next generation. Even after several hundred years, we can continue to live in our property and keep it up to date through successive generations to preserve our legacy.

Early Retirement

Once the rental return exceeds our monthly debt obligation, the passive income from renting our properties can help us fund our retirement. In the meantime, the capital gain from the property's capital growth can be put into an emergency fund or invested in other types of assets for better returns in retirement. Some of the real estate investors I know left their jobs at the age of 35 to enjoy their life with their family.