Believe that you may heard how the property investment experts buying properties with little or even no money down.
Buying properties with little or even no money down is a hot topic and creative strategy of property investment in recent times. Many first-time property investors are tend to be applying this strategy to starting their property investment journey as it doesn’t requiring large funds. Unlike the traditional property investment field that you can only start to get involved in this field, if you have a lot of money on hand.
With the changes in era, most of the property experts are find out the new ways to help others to joining in the property investment field. For those youngsters who have not much money on hand but desire to create wealth from property investment, here are the following ways of buying property with little or even no money down;
1️⃣ Utilize the government schemes wisely️
By consider many youngsters or young families who can’t afford to buy a house due to the inflation of property market, the federal government have launched some schemes to assist the selected targeted groups to letting them own their dream house.
The schemes are MyDeposit, My First Home Scheme, Programme Rumah Mesra Rakyat and People’s Housing Programme (PPR).
2️⃣ Buying property from sub-sale market
Be careful of buying property from sub-sale market as the banks will only give out the finance that lower of the S&P Agreement of property valuation price. So, to achieve little or no money down, you must be smart to buy the property below the market and valuation price, preferably 10% to 20% lower. Hence, the skill of negotiation is very important at this point.
3️⃣ Barter or exchange
If you are in a profession where the developers or sellers are agreeable and could make use of your services or products, you can ask them whether can waive the initial down payment of the property by provide them the free or subsidized services. You can then borrow the rest of the purchase amount from the banks.
4️⃣️ Buy from the developers who have offer pre-arrangements
In order to make the property affordable and attractive for potential property buyers, the developers have come up the new marketing strategies where they works as follows;
➻ The developers will mark up the sales price of the property to make buyers to acquire the higher financing from the bank.
➻ The developers may work together with their panel banks to offer a 90% loans to the qualified property buyers. In some cases, the banks may even offer 100% loans to cover all of the costs such as legal fees, stamp duty, MRTA and home furnishing packages during buying a property.
➻ In some cases, the developer will give you the discount from the property sales price once your home/ mortgage loan have been approved by the bank.
5️⃣️ Buy vacant units and take early ownership
In order o explain to you clearly, let’s take an example. Assume that you bough an apartment is currently vacant, you’re qualified for a 90% loan from the bank and you are allow to have the rental rate @ RM 3,500/ month (follow the rental rate in current market and the tenants are agreed with this rents).
You can request for early ownership by paying the earnest deposit of 2%, and another 8% will be paid after. It can be done upon signing of S&P Agreement and the sellers are agreed with your request. Then the total amount you will have paid at this stage is 10% of RM 300k which is RM 30k to the seller.
You can then rent out the apartment with the rental @ RM 3,500/ month quickly. Once you got the tenants to rent your property, you will collect at least 2 months rental deposit and 1 month utilities deposit with the tenants which works out to RM 10,500. If the transaction need to takes 5 months to be completed, you will get 5 months rental of RM 17,500. The total amount you will have now is RM 28,000 which almost can cover your initial cash outflow of RM 30k. While, the other 90% will be taken care by the bank loan.
6️⃣️ Borrow on the strength of your tenants
If you can find the long-term tenants such as Degree/ Diploma students or Embassy at RM 3,500/ month, you can then borrow up to a 100% of the property purchase price based on the strength of your tenancy agreement.
For take the above example, repayments for a 20 years loan of RM 300k with interest rate at 8% p.a. and hence you will have to pay RM 2,546/ month to the bank. This is more than enough to cover the monthly service charges of your apartment as well as give yourself some pocket money every month.
As you can see, all the above ways are require negotiation skill. If you have an excellent negotiation skills, buy property with little or even no money down is not a problem for you and you may be able to enjoy the other benefits from the sellers or developers.
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