Criteria for identifying good rental property

Buying a residential property is a big-time investment for many. You certainly do not want to buy one that you cannot sell, rent out or expect to double in price in the future.

B&G Capital Resources Bhd man­aging director Danny Goh Meng Keong, a savvy property investor, believes that a residential property that is 20 years old must have appreciated in value at least five times and can be rented out as well.

If you can only get a one-time appreciation for such a property, Goh considers it as “losing money”. Worse still, if you are unable to rent out your property, it will hinder you from investing in a second and a third property.

Based on his research, Goh came out with five factors to determine successful residential property developments which are able to get your property rented out.

They are location, amenities, security and design concept, township’s size and branding, and lastly, the developer’s commitment.

Goh believes they can be used as a guide to help house buyers understand why a certain location performs better than another but the price of its prop­erties can be lower when compared to another location.

Using these criteria, he says it can also help buyers to identify rentable residen­tial properties. He explains that following the sequence of these five criteria is very important.

While acknowledging that there is no perfect location, which is also subject to an individual’s needs, the foremost factor is the location’s proximity to work and business opportunities.

Citing Greater Kuala Lumpur, Goh says the Kuala Lumpur City Centre (KLCC), which contributes 5% of urban migration, is the most matured area, offering the most job opportunities and highest income group.

He observes, however, most of the people working or doing business in Kuala Lumpur do not stay in the city centre. So, what is the acceptable distance to travel to work and how do you identify a location that is accept­able as a place to reside in?

Based on his research, Goh feels that a comfortable or ideal distance from a residential area should be 45km via the highway to the KLCC.

With Greater KL’s second-biggest number of job opportunities extending from downtown KL to suburban areas such as Bangsar, Petaling Jaya, Subang Jaya, USJ, Kepong, Cheras and Puchong, he reckons the acceptable distance of your residence to these suburbs should be 15-30km.

Elaborating on the first criterion, location, which can also be used to determine whether your property can be easily rented out, Goh says the distance of the nearest neighbourhood shops to your residential property should ideally be between 5km and 15km.

Goh also observes that the gated and guarded concept has become a basic requirement, not a luxury.

Also, projects with a better security system are able to get higher market prices and rental values for their properties.

This is an excerpt of an article first published in the March 21-27, 2015 issue of Focus Malaysia. To read more, visit www.focusmalaysia.my