Real estate investment has 5 main types, namely residential, commercial, retail, industrial, as well as Real Estate Investment Trusts (REITs). If you’re looking to earn from a property investment, you can either buy-to-rent or use flipping/buy-to-sell.
Property investment is an investment on land, an increasingly scarce resource similar to gold and silver.
There are several ways to investing into this resource, in the form of different types of properties, with each one carrying its own pros and cons.
Below are the 5 major types of property investment: Residential, Commercial, Retail, Industrial, and REITs. We’ll also dive into how you can profit from your own properties. First things first: Let’s debunk some common myths surrounding property investment.
Common Misconceptions About Property Investment In Malaysia
1) You need a ton of capital to get started
Many Malaysians assume property investment means having to buy a unit of your own first. Truth is, there are plenty of ways you can earn without forking out for an entire property under your name. We detail these in the article.
2) You need a perfect credit history
While poor credit history will affect your ability to own a home, it doesn’t necessarily mean you can’t profit from other forms of property investment.
3) Property investment is easy and passive
Property investment is touted as a hands-off passive income method, but that’s rarely the case. Even as the landlord, you’ll need to get your hands dirty with maintenance, marketing and tenant care.
Residential investments are investments into Residential titled properties such as terrace houses, apartments, condominiums and other types of properties that come with Residential land titles.
The exception to this rule is commercial land titled properties which are protected under the Housing Development Act (HDA).
These property types may be commercial titled but are considered to be residential titled because they are protected under the HDA.
These commercial property types are such as SoHo (small office home office) developments, which are the most common and popular form of investment.
The purpose it has a lower entry price point where investors and home buyers can obtain higher loan margins (margin of financing up to 90%) as compared to the other commercial property investment options.
However, not all investments will yield the same monetary results due to many factors – the main one being the location of the property.
Hence, proper research is crucial because if the place that you acquire is not in high demand or is not located in a “preferred” area, the rental received may not be enough to cover the loan instalments and interest, and the sale prices will not be optimized.
From the rental end, owners typically need to pay all the bills for the properties including maintenance fee, sinking fee, assessment fee and sewerage fee.
With higher maintenance cost monthly, this property investment could be a burden and deficit for the investor if the rental collected is below the instalment and maintenance amount.