In this day and age, part of the journey into adulthood involves not just the shouldering of responsibilities but an increased amount of pressure to perform in practically all aspects of life. Each day brings on a myriad of decisions that need to be made, which can be either simple or downright mind-boggling. Gone are those carefree days where the biggest dilemma used to be saving up enough pocket money to buy ‘keropok lekor’ or Doraemon comics.
Reality mercilessly hits you in the gut as soon as you leave college or university, throwing you into the deep end of the pool, gasping for breath. After spending years of lying on a comfortable, cushioned floatation device (The Bank of Mum and Dad), suddenly the time comes for you to grow up and take charge of your own life. Goodbye worry-free spending and ‘hello’ bills!
Based on my own amateur scouting skills, I find that I will have to spend a minimum of RM400,000 for either a small condominium unit in the outskirts of KL or a decent terrace house past Rawang or Bangi. Here comes the predicament. Do I choose to settle for less space or less travel time? I know I can’t have both but either option isn’t ideal, especially for someone who plans on starting a family soon. Hence the battle of space over time ensues. A 900 sq ft condo unit is hardly the best place to raise children. On the other hand, if I choose to live in a bigger but further place, being 2 hours away from my workplace in central KL would mean I would have to leave my house at 6am every day and only return at 8pm the earliest. Furthermore, the added distance will increase the amount I would have to spend on travel expenses.
Here’s the million dollar question. All things aside, will I be able to afford a home worth RM400,000? A quick calculation using an application on my smartphone tells me that for a loan that spans over 30 years, I’d have to fork out at least RM2,000 for the monthly repayments. If on average, a person my age earns an approximate RM3,000 after deductions, I’ll only be left with RM1,000 to spend on my basic necessities. Out of that, around RM200 will go to maintenance fees for my property, RM300 for my travel expenses, RM200 to pay for electricity, water and phone bills, another RM300 for monthly groceries and personal care items, RM200 for insurance, RM 200 for… Wait. I have run out of cash haven’t I? And I haven’t even taken into account the quit rent and assessment tax. Yikes!
At this rate, I’ll most likely have to re-strategize my game plan in order to breathe life to my currently unfulfilled dream of owning a home. I have not quite figured out the how’s, the when’s and where’s but I’m guessing it will involve me taking a chance on myself. Colin Powell once said, “A dream doesn’t become reality through magic; it takes sweat, determination and hard work.”
With that in mind, I’m determined to purchase my own home despite all the obstacles I will inevitably face. I will persevere and learn how to swim in the deep end of the pool, smiling, no less.
I recently had the pleasure of meeting Prudence Wong, a charming property entrepreneur and the creator of SIMVES, a tenant and cash flow management software who was kind enough to provide me with some useful tips for first-time homebuyers to remember when buying property.
What in your opinion are the biggest problems that first-time property buyers face today?
I would say that would be obtaining the financing. Property prices are rising and the majority of buyers do not earn enough to secure a loan. Bank regulations are also stricter these days. When an individual decides to buy property, the golden rule is that it is not necessary to splurge on something that you cannot afford.
When I first decided to purchase a property for investment purposes, I chose to buy in a low-cost area because it was affordable, tenants were easy to come by and returns were a given. Determine what factors matter to you and always remember to research the property, area and developer before you make a purchase.
When is the right time for an individual to consider breaking into the property market?
Firstly, they must ask themselves if they are financially stable. Do they have a steady source of income, be it in the form of a stable job or their own business? Before an individual can think about buying property, they must be able to accommodate expenditures related to their basic needs. If they have money left over after putting some aside as savings, then they can by all means start to look at the option of purchasing property.
Do you think that Gen-Y is having a considerably more difficult time in terms of attaining financial stability? Why?
Yes. Prices of goods and services have skyrocketed and fresh graduates these days usually have low starting salaries.
To work around the fact that what they earn is not particularly substantial, they need to learn how to plan their expenditures. They need to identify if they are vigorous spenders or careful ones and determine how they can work towards becoming more financially aware. It all boils down to the individual and the initiatives that they are willing to take.
What advice would you offer a first-time property buyer?
Always ask yourselves what your budget is and stick to it. Invest only in areas that fit your budget requirements .If you have fallen in love with a place you cannot afford to buy, rent first to gauge if you really like it.
Wait until you have saved up enough money to purchase the property. Also always read the agreement and get the lawyers to explain the legal jargon to you. Remember to check the value of the property you are interested in with a banker and speak to an agent about the average market price of property in that area. When you have all the facts, you will be able to better negotiate the price.
There is a lot more to be discussed about this important topic today. If you are like me and you need some more information about buying an affordable home, iProperty Focus has provided a selection of articles which you can read. Alternatively, you can check out our Featured Properties below RM400,000 or fill up our form and one of our trusted agents will help you with your quest. All the best in your quest!