2016 has been an interesting year for Malaysia’s property market. Recent data indicates that both transactions and property values has dropped. Many players are bearish with the prospects of Malaysia property market in the next few years. But we felt that there are few cause for optimism as there are many large infrastructure projects that has been complete and announced this year, such as :
- STAR Bukit Jalil – Putra Heights LRT Extension
- PUTRA Kelana Jaya Putra Heights LRT Extension
- MRT 1 – Sg Buloh – Semantan operating with Kajang – Semantan will be operational mid next year
- MRT 2 Sg Buloh – Putrajaya confirmed and to be completed in 2022
With many developers using LRT and MRT as selling point to sell their projects, we decided to interview the one person we know who loves buying properties along LRT/MRT. He has purchased over 20 properties with LRT / MRT connectivity so we hope that he will spill the beans on why he likes the LRT/MRT story. His name is Faizul Ridzuan, who is the founder of the property investment firm FAR Capital.
Why do you love to buy along the train lines?
“Make money looo! *Chuckles*. Having invested in properties in the last 11 years, I found that buying alongside the train lines gives me a huge advantage in terms of great capital appreciation and great rentals of the properties.”
“When I started investing in properties, I was told that properties can give you either cashflow or capital appreciation but not both. What I discovered initially by accident is that property along MRT/LRT lines can give you both. Since I can get both rental and appreciation, I then make a conscious decision to replicate this multiple times over. Hence why most of the properties I buy in Klang Valley today must have access to LRT or future MRTs.”
Do you mind sharing some success you had in your portfolios along these train lines?
“Sure, let me put it this way, to give some examples of properties that I have invested that were under-construction properties were as follows.”
- I bought Zest in Bandar Kinrara 9 at RM230,000 in 2009. 6 months later they announced there will be LRT station nearby and boom, today some units in Zest is transacted at over RM600,000.
- Titiwangsa Sentral, I bought it at RM250,000 back then, now it has appreciated to RM630,000.
- Thirdly is Casa Mutiara, I bought it at RM160,000 in 2007. Casa Mutiara has risen in value to RM340,000 in 2011 (today its around RM360k-380k).
“Now you can see why the properties alongside train lines tend to appreciate in price.”
What about the properties you missed to buy? Are there any properties that gives the investors good capital appreciation?
“Yeah, there’s plenty other examples. Thinking about these missed opportunities makes me want to cry. Pantai Panorama, for example, it used to be RM220,000 in 2008. Today, Pantai Panorama has appreciated in value to RM600,000 onwards.”
“Seri Maya was RM250,000 back then in 2008. Seri Maya has appreciated to RM 700,000. Casa Indah is another good example, it was sold at RM220,000 in 2009, now it has appreciated to RM600,000. Of course, hindsight is always 20-20. All these misses made me a lot more decisive today when I see properties with similar potential.”
Are the rumors we hear about you buying 7-8 units in a single development true? By the way, what about the rentals of those properties?
“Hahaha, we should all stop listening to rumors. I was once told by a SarjanaHartanah student that a developer claimed I bought 30 units in their development, which was a complete b*** s**t.”
“On rentals, my property at Titiwangsa Sentral has been rented out at RM2,500 to RM 3,000. That’s about an average of 10% in rental yield. All my 4 units in Axis Ampang was been rented out at RM1,500 to RM 2,000 nowadays, and I paid RM150k to RM220k max for those properties. So far, all of my properties with completed LRT/MRT connectivity gives me above 10% gross rental yields, and most if it have double in values.”
Listening to you makes us wonder, why don’t we all just buy properties along LRT and MRT lines. You make it sound so easy!
“Well, it isn’t that simple. Just because something is located next to a LRT/MRT, doesn’t mean it’s a screaming buy. Plus there are many other considerations one has to look at which is why during my Sarjana Hartanah program, I go great lengths covering what are the things an investor needs to look at before buying a property.”
“Just because you know what to buy, doesn’t mean you will be able to get the same results. Knowing what to do with the property after you buy it is just as important as knowing what to buy. I have followers who have blindly following what I’ve bought in the past and they cant get the same rents and results as I do as they don’t know how to optimize the returns of their property.”
We noticed that you give many examples of properties purchased before 2010. Is there any examples of property purchased post 2010 that you have made?
“I have always maintained the view that property is always going to be a medium to long term investment instrument. So anything shorter than 5 years isn’t enough to gauge a properties performance and potential. For example, Pantai Panorama condo property prices barely moved in the its first few years since it was completed. Had one bought a unit from developer and sold it after just 3-5 years, they wontbe able to make even RM30,000 profit.”
“But those who keep it for 10 years now seeing prices have doubled or even tripledfrom RM220,000 and now well exceeding RM600,000. So if you not prepared to hold the property for at least 5 years, do not buy it.”
“Let me share then some of my recent and completed purchases :”
- Regalia in KL City Center for RM360k in 2013 and RM420k in 2015. Both units today commands average rentals of above RM2200 per month and valued at RM480k to RM550k today. (Walkable to LRT)
- Summer Suites that was completed last year. Both units were purchased at below RM340k and today commands a rental of RM2200 and now transacting at above RM500,000. (Walkable to LRT and Monorail)
That’s amazing Mr. Faizul. Do you have any advise for our belowbankvalue.com readers?
“When you buy properties near train stations, you can potentially enjoy properties that have capital appreciation and great rental yields. But you have to pick carefully. Not all properties will make great investment just because its near LRT/MRT. As a general guide, I can say that if one can acquire a decent property at RM500psf or below and its walkable to LRT / MRT, your future upside and rentals will be fair.”
- Buy below RM600,000
- Try not to pay above RM600psf unless it’s a small unit
- Rental for a new 3 bedroom condo walkable to LRT today can be as high as RM3500. Average is above RM2,000- RM2500 for a fully furnished, newly VPed condos.v
- Rental per room can be as high as RM900-1000 per room if walkable to LRT
- Need to furnish correctly as per the best target rental segment
- Caveat : NOT ALL property walking to LRT/MRT is buyable
- Caveat : LRT extensions might not have the same impact as primary lines
Thank you so much for your generous sharing Mr. Faizul. It really has been an eye opener. Looking forward to talk to you again in the future.
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