The GoodPlace Blacklist: Properties That You Should Avoid

Denise Chan @GoodPlaceHQ

The numbers for the first quarter of 2014 are just recently released by NAPIC (it’s about half a year late but heck, it’s not my fault), and the picture’s ain’t pretty. The oversupply situation is now hitting red alert levels with KL getting hit the worst with 13.4% dip in transactional volume compared to the last quarter of 2013. Other major states like Selangor, Johor and Penang have also registered declines of 10%, 4.5% and 0.3% respectively.

Last year the volume of transactions drop 10.9% year on year, and this year we are not going to be faring any better…

malaysia-property-transaction-volume

It is indeed a buyer’s market right now, and it’s good news if if you’ve got the moolah to spare then you’re spoilt for choice. As such, you can afford to be choosy, and indeed, you should be shopping around as much as you can as long as you’re not overdoing it. 🙂 However, don’t mistake the quantity of choices for quality. Indeed, in the midst of the glut, there are just too many crap properties out there which we would steer clear from.

At the height of the property boom, I’ve seen many of these “duds” get taken up mainly by flippers who are out there to make a quick buck, and boy, are they paying the price right now. As usual, in our bid to save the world, I thought that I’d write a quick list of the properties that I’d usually avoid to share with everyone.

I’ve compiled this list with the advice of the Mentor, and as with everything else about him you’ve read here in this blog, his opinions may or may not apply to every situation. For example, he is pretty much convinced that student rentals are dud investments, but I personally know someone who makes an absolute killing from those (read this previous guide). If you agree or disagree with anything in this list, leave me a comment below. 🙂

The Mentor’s comments are quoted in verbatim.

The GoodPlace Dud List: Properties To Avoid

Bad Feng Shui

“I am not a believer in Feng Shui. But some of my prospective buyers and tenants do. Why cut myself short? You don’t have to employ a friggin’ Feng Shui master to look at the place. Just observe some basic tenets: no facing a T-junction, no line of sight between the entrance and the kitchen exit, no backyard slopes.”

Student Rentals

“High churn and high maintenance. I like my investments to be as passive as it gets. I don’t want to spend my time dealing with tenant issues and neighbour complaints. And worse, when you’ve decided to unload the property, the potential buyers are limited to investors who want to rent out to students. I for one sure heck won’t want to love next to students! Avoid.”

“Love-It-Or-Hate-It” Houses

Weird building!

“Some people have peculiar taste in homes. Awkward, out of place properties are duds. When you look at a property, and if it rubs you the wrong way, then you’ll know that it’s a dud. Go for the boring. Go for what predictably sells.”

Condos With Less Than Two Car Parks

“Two car parks per condo unit is the bare minimum. I’ve sold condos with standard one car park per unit, but my easiest sales were those with three car parks and more. Number of car parks is a strong differentiator, especially when you are dealing with upmarket condos. Don’t overlook this.”

Busy Street Residential Properties

“Unless you’re on Bintang Walk, avoid the main street. Also watch out for roads which can be potentially be busy. Connecting roads between residential areas are always bad news.”

Small Apartments

“I don’t care what they are called these days: Soho, Sofo, Sovo, Sowhatever. I like my properties to have mass appeal to both tenants and buyers alike. I heard from my developer friends that there will be a slew of sub 450 sq ft apartments coming into the market next year, priced at RM1,000 PSF. I won’t be buying those.”

Condos With Rental Guarantees

“Many buyers don’t know that prices of rental guarantee condos are inflated so that the developer can “guarantee” the rental later. In short, you’re paying the developer to give you the guarantee. I’ll avoid these just like how I avoided properties bought with DIBS schemes.”

Agree or disagree? Let me know in the comments section below.

About Khai Yin

When I am not writing for GoodPlace.my and helping my readers find properties though the DealMatcher service, I spend time doting on my three kids: Wenyi, Qinyi and Eian. My personal stuff, some published essays and contact details can be found at khaiyin.com

Comments

  1. Thanks again for sharing your insight.
    Student rentals are sold as “guaranteed rental return” & “better than FD returns” – that is until you want to offload like you said. Or the adjacent college goes bust! I’m glad I missed THAT boat!!

    • I’d avoid those. But that’s just me. I know of a dude who makes an absolute killing in that market. He also spends his evenings entertaining calls from angry neighbours complaining about chor-dai-dee sessions next door. 🙂

  2. angie lim says:

    Heard hse w lot of corner is bad feng shui? Road higher then hse also bad feng shui?

  3. Hi KY, I agree with your blacklist. Just to add, how about BIG apartment?
    More than 2000sqft. I think it is a no no also unless for own stay.
    What say you?
    Thanks for sharing.

  4. Soho , sovo n etc. Generally is over supply at certain area. But if the concept n location is alright. It can generate good yield. Personally I invested in ONE SOHO aka Subang Soho. Residence quality and rental yield are good.

    Thru my observation. Gen Y n X, many of them stay single or tend to marry at a much older age. Mostly 28 n above.more ppl work from their home because of internet. Huge space no longer needed due to internet. They tend to eat outside more than cook from home. smaller family size. Location more important.

    They need to get their own space and move out from parents. A normal condo might be too expensive , too boring, too big and etc.

    SOHO fits their needs perfectly. Affordable, easy to maintain, classy and convenient.

    Make sense?

    • Sure. Everyone’s investment preferences are unique, and as such, the “blacklist” in this article might not be applicable to everyone.

      Personally I don’t have Soho units in my portfolio, but I’ve rented two Soho units as office space (Setiawalk and Empire Subang) and so I am speaking from a tenant’s perspective. Long story short – I won’t be renting another Soho. 🙂

  5. BIG sized apartments may not be popular but there will always be a point where the similar sized landed properties are just too expensive. Thats when these huge apartments come in as a good choice. First time buyers may look for smaller units. Once they are married, they may opt for a 1,000sf and after a few more years, with two babies and parents, if they are doing exceptionally well, a landed, gated and guarded semi-detached. Otherwise, a bigger condo would be preferred. Parents helping to look after kids, thus extra rooms and space is definitely welcomed, not to mention the safety factor too. My parents have started to like condo lifestyle too since they don’t drive a lot these days likes to bring my baby daughter for a walk on the huge park within my huge sized condo. regards.

  6. Kenichi Takei says:

    KY

    Good list on property types to avoid. How about other considerations like, say, income potential / appreciation, tenancy, valuation, etc? Thoughts?

    Ken

  7. Hi KY.

    with regards to bad feng shui backyard slopes. Does it count if the slope comes after the boundary of your land (ie after the fence) or are we strictly talking bout slopes starting within the backyard?

  8. Devendran Ramasamy says:

    Thank you for sharing. How about lot number 4 and top floor of walk up apartment?

  9. I enjoyed your good articles and audience response.

    May I seek your opinion for out of Klang Valley projects?

    The sleepy town (Ipoh) is waking up on high rise developments due to previous success by the haven and prices has reached more than RM500/sq feet.

    There’s a new condo development named as Upper East by Andaman and many more developers are popping up condos project one after another in Kinta Valley as well following the former pioneering success.

    Kindly share and advice the potential of UpperEast Ipoh vs Ipoh South Precinct (TKB), Polo Residence project in comparison. I am keen as to invest due to lower entry cost, ETS train services and pretty good small town to retire in 20 years time.

    Thanks a Million!

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