Investing in property is absolute gold if you know how to cash it in.
With the rise in capital appreciation over the years and opportunities for regular rental income, investing in property makes for a good short-term and long-term investment.
But it does not end there. You can be creative with your options to make the most out of your houses. Here are five great ways to get a good return from your house.
1. Rental
One of the most popular ways to earn from your properties is to rent them out. If you bought your property with a loan, it can help ease up your loan instalments and also leave a residue as passive income.
To make the most out of your rental, make sure to buy a property in a strategic position with ample amenities in the surrounding area.
In general, the rental yield in Malaysia is 3.72% but if your house is in a highly sought-after location with a great deal of popularity, the yield will be higher.
To ascertain a fair price for your rental, follow these steps:
Calculate your Annual Rental Income = Monthly rent x 12 months.Calculate your Property Value = Purchase price or market value of your property.Calculate all the Yearly Expenses related to the property including tax, void period, renovation, management fee, etc.Calculate the Net Rental Yield = Annual Rental Income – Yearly Expense/ Property Value.Compare the Net Rental Yield with the location’s average rental yield to determine the rent of your house.2. Rent by room
Malaysia is a magnet for international students and tourists. Though there is a lack of demand in the market due to Covid-19, there are still people from the labour groups and singles living in the city who just need rooms to stay in.
You can attract this target market by categorising your property under “rent by room”.
This way, the amount of profit you would receive by renting out rooms will be more than that of renting the whole house.
For example, say you can rent a fully furnished three-bedroom house for RM2,000. But, if you break the rental down into three rooms, you can rent the master bedroom for RM1,200 and the smaller bedrooms for RM600 each, which will bring you a total of RM2,400 in profit.
This means you will be earning RM400 extra per month, which will give you a gross extra income of RM4,800 per year.
However, if you are considering renting out your house on a per room basis, you will have to handle more tenants for your property, which means more paperwork and more maintenance.
So, weigh in the pros and cons to determine if this is the best option for you.
3. Refurbish and sell
You will often find dilapidated old houses that are very cheap in price, so be sure to check out different locations and neighbourhoods. Then, do a thorough check of the interiors and determine the improvements it needs.
If you are an interior expert and know your way around decorating a house, you can buy the house at a cheap price and then give it a makeover.
Calculate the base price of the property and the refurbishment cost to make the house presentable. Later, you can sell it at a profit to get a good return from your investment.
4. Vacation house
If you like this option, but don’t want to sell your property, there is another alternative.
Turn it into a vacation house and provide the same amenities as a hotel but make it more convenient and homely.
Your house can be a relaxing getaway for both local and international visitors to unwind over the weekend or during their children’s school holidays. You can add in extra activities such as tours to the city or games and entertainment to make their stay more memorable.
This option is suitable if you have experience in doing such things or can hire help to make the place a grand vacation stay.
This will need more effort than the other options but the return will also be more as you can charge people by the number of days they stay in your house.
5. Flip the property
Flipping property is a very common option for property investors. If you choose this option, you must have a good knowledge of the property market.
Choose a strategic location with a growing neighbourhood. See if there are any MRT or shopping complexes under construction. Try to buy the property when the market value is low to get it as cheap as possible.
Then, wait for a few years for the property price to rise. The neighbourhood will be more prominent in the next few years, so the value of your property will increase and you can sell it off at a good profit margin.
