KUALA LUMPUR: PROPERTY investment is a long-term game. It’s either you play the game right from the start, or watch the play to learn!
Three individuals who are experts in their respective fields — Miichael Yeoh, Chris Tan and Richard Oon — have implemented a model that would be useful to first-time house buyers and those who have bought houses before.
They called it the BLT (bank, law and tax) property investment model.
Tan said the BLT concept aimed to give house buyers a better understanding on what they should do before making a decision to buy.
“Each buyer faces his own unique set of circumstances. He has his own preferences, financial standing and understanding of the market. He needs to know what he wants, and how he plans to get it.”
Tan said there were essentially six steps in the BLT property investment model called the “OPRIME”, which represented the typical six steps involved in property investment.
They are:
O - Objective
P - Plan
R - Research
I - Invest
M - Manage
E - Exit
Tan advised house buyers and investors to understand the BLT model first before making a purchase.
Buyers must know why and what they were buying, he said.
“They should know whether they are buying to stay, to rent, to keep as a short-term investment or to pass it on to their children. Once you have identified your objective, then you do the planning followed by research.
“You must do your own research on the house you are targeting. This should include a study on the property, the developer, the location, rental prospects and your neighbourhood. You cannot just depend on the developer and make a buy decision. Research is the key element here.
“The next step is to invest. This is where you must decide on how you are going to pay for the property and how much loan you may want to take. Buyers must know their options and whether they can leverage on someone else’s profile who has a clean record to have a better chance in getting his or her loan approved, with high credit,” said Tan.
According to Tan, leveraging on someone else’s profile means having a joint loan application either with their spouse, siblings, parents, a close relative or friend who can be trusted.
After the investment is made, buyers must know how to manage the property whether they are going to stay there or going to rent it out.
A well-managed property will have better re-sale value than one which is unkempt or damaged.
If a property is for rental purposes, Tan advised home owners to hire a professional to manage it for them, which would help lift the burden off their shoulders.
Finally, home owners must have an exit plan, said Tan.
“Before they buy a property, they should ask themselves how long exactly do they want to keep it. If it’s for five years or 10 years, then they should have a plan to exit and re-invest in another property.”
Tan said by using the BLT diagram, house buyers should be able to plan their investment in a much better way instead of just attending a property launch and putting down their money without any understanding of how the market works.
“Every house buyer or property investor, when they invest in real estate, their ultimate aim is to make money from the sale of the property, whether in five years, 10 years or 20 years, but it comes with a risk. They must know the risk involved right from the start so they can plan ahead,” he said.