Property investment for beginner invest compass
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Making money through property can sometimes be complicated, especially for beginners. Most new investors tend to look to seminars or talks in order to learn more about property investing, and often times, these platforms offer knowledge or information that would sometimes be either too advanced to digest or downright confusing. Well, everyone has to start somewhere, so here are some tips and pointers for those who would like to take it slow and to learn the basics of property investing.

Type of Property to Buy

1. Residential

Also known as one of the most profitable, easy to liquidate, and safe investment. Below are what you can expect from investing in this type of property:

- Resale Potential

There is almost always no short supply of buyers for residential properties. So this means high liquidity rate. Should you have the need for a sum of money during urgent times, it’s safe to bet that you will encounter less trouble trying to sell a residential property compared to a commercial one. However, other factors like location and condition of the property will also have to be taken into account.

- Potential Yield and Income

Given that demand for residential properties is much more constant, opportunities of finding tenants to rent out the property to will be much better. When you do find a tenant, it could also mean a stable income from your rental yield.

However, renting out your property also has its risks. As such, always do what you can to determine whether you are comfortable facing the potential hassles of renting. Most seasoned landlords will tell you that students and families should be avoided, while individual working adults may be a better choice. But in the end, it all boils down to the type of residential property you are investing in, as well as the potential tenants themselves.

Extra read: Spy-Worthy Background Checks on Tenants before Renting Out Your Property

- Rental trend and supply

Most young adults today follow the trend of renting their own place to stay as soon as they secure their first job, while most continue to rent for a long period of time due to increased prices of homes these days. These factors contribute to a constant supply of tenants for property owners, especially residential ones. Young married couples are also of no exception, where many choose to rent while saving up in order to buy their own house one day. This trend will not likely subside and experts predict that it will only continue to increase as the population grows.

- Financing

The Malaysian government has taken steps to ensure that Malaysians can afford to own a house. This opens up opportunities for many financially-abled individuals to get loan from banks. Down payment for these types of properties are also considerably lower. Moreover, depending on the type of property that you want to buy, you can get as much as 90% to 100% loan.

Read more: Things to Look for When Applying for a Housing Loan

2. Commercial

Commercial properties are shop lots which are used for business purposes. Before owning a commercial property, one has to consider things such as economic cycles. When the economy is doing well, yields from rental of commercial properties are usually good and consistent, but otherwise stagnant when in recession.

Apart from that, the amount of loan you can obtain from banks are usually around 80% or less. The financing cost of it is also higher compared to residential property. Also worth noting is that utility bills for this type of property is much higher than residential properties.

- Potential rental yield

One of the best perks of owning and leasing a commercial property is the amount of income that you can potentially get from it. We are looking at 6 to 12 percent of the purchase price in annual returns, which is significantly higher than residential properties. Nevertheless, location still plays a role in determining the percentage of rental yield.

- Consistency

Generally, business owners rent your property to do their business for extended periods of time. As such, the rental yields from this type of property will generally be more consistent. They are also more likely to pay rent on time in order to avoid rental disputes and allow their business to go on smoothly.

- Maintenance

Every property will eventually deteriorate overtime, but commercial properties will probably remain better maintained for longer periods of time. Those who rent commercial properties usually do business in it, and will have to maintain their establishment in order to give good impressions on their customers, lest their business suffers. As such, maintenance will not be as prominent an issue for your part.

- Wear and Tear over Time

One of the main reasons commercial properties last longer than residential properties is the fact that most businesses run according to the normal 9 to 5 working hour. Unlike homes where some people are there 24/7, commercial properties will most likely be vacant at night. The reduced amount of usage or occupancy of your commercial property will put much less strain on it in the long run.

- Valuation benchmark

Based on the type of business conducted by your tenant or other tenants in the same area, you can easily get the general idea of their income potential. This will be a good pointer for you to decide on how much monthly rental your property could go for.

3. Serviced Residences

Serviced residences is a commonly confusing category of properties. Nevertheless, one thing that you should note is that serviced residences are commercial-titled properties that are also designed for residential use.

- Flexibility

Given the role of serviced residences, this type of property is able to cater to different sorts of tenants. The units are also commonly rented out semi or fully-furnished, appealing to both renters who prefer short-term and long-term stays. Serviced residences also usually comes with hotel-like amenities such as a main lobby, front desk concierge, housekeeping, 24-hour security, parking, and other facilities.

Extra read: Condominiums or Serviced Apartments- 7 Things You Must Know Before You Buy

Valuing Your Property

Knowing what property to buy only wins half the battle, knowing how to value your property will get you through the whole campaign. Here are some factors which may affect the value of your property:

(i) Location Matters

Location is one of the most essential factors when considering an investment property, such as distance from schools, offices, and retail outlets.

For residential properties, the closer your property is to amenities and other infrastructure, the more likely it is to increase in value over time. You should also take note of future developments in and around the area, which can also largely contribute to an appreciation in value.

(ii) Security

The safety and security of the neighbourhood in which your property is located is also important, given that properties in unsettling neighbourhoods or areas may see a dip in value if there are no improvements over time.

(iii) Accessibility

Be it by train, taxi, or bus, your property will be much more valuable when they are well connected via roads and highways which can enable easy accessibility. Accessibility to amenities nearby should also be taken into account.

Did you know that PropSocial’s “Neighbourhood Review” page tells you what amenities are in the area and even the highways nearby?

(iv) Leasehold VS Freehold

In short, leasehold property is considered as a fixed asset with a certain lease period (usually 99 years). When the lease expires, buyers will then have to apply with the relevant governmental authority to extend the lease. Should the application be rejected, the owner will then have to vacate the property. Whereas freehold-titled properties owner may own the property with no time limit, unless they decide to sell.

Given the complexity and fear of “not owning” a property if it’s on lease, most buyers prefer freehold properties. This will definitely affect the selling and buying price of a property. However, debate is still ongoing as to whether Freehold or Leasehold title really matters when it comes to buying a well worth property.

(v) Future Development Prospect

Despite it all, one of the most determining factors in property investment is the future of the property. Regardless of whether you’re buying in a well-established neighbourhood or one that is upcoming, it is essential that the property has a good prospect of further development in the future. Look to both developer and government-planned facilities and infrastructure in the coming times, as well as other upcoming developments like shopping malls and so on which will contribute to the growth of your property’s surroundings.

Knowing the Legal Aspects

So now you’re all set? Well, not quite yet. Before jumping into property investment, having knowledge of the legalities is also important, where the Housing Development (Control and Licensing Act) Act is one of the most important one to be familiar with.

Additionally, you should also consider the Difference between Commercial and Residential Titles, which will greatly affect your choice of investment, as well as give you an idea of what rights that you have as a buyer over the developer and what laws and measures are in place to protect you in cases of disputes, such as the Tenancy Agreement.


Property investment is not a trade that can be mastered overnight. However, by being equipped with the knowledge of what different types of properties offer, as well as factors like location which play a role in the appreciation and value of your property over time, you will certainly be starting off on a better footing.

Don’t know where to start? Propsocial has all the features you will need to find the right property to invest in! Sign up now and join in our community who’ll give you great insights on property investment at the Discussions page.

(Written by: Muhd Hanafi, 22nd June 2017)


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Most importantly purchase within your means progressively and don't over speculate. So that when the market consolidate or turn for the worse, which will happen because of the cyclical nature of the property market, you are able to resilient through and not forced to sell at losses.  

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One of the pros of owning commerical shoplot property VS residential or apartment...

You do not need to pay any security/maintenance fee or do any renovation before you rent out your new shoplot.

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@domng If the commercial property is within an integrated strata development eg. shop/offices with share car parks or office suites, you still need to pay the monthly security/maintenance fee. However, most of the time the tenants will do the renovations and fit-out and they tend to stay for a longer tenancy period provided their business is sustainable.  

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Thanks for sharing, each property has its pros and cons in investment

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Can consider this since no downpayment and low entry cost:

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In such cases where the security/maintenance fee is applicable to commercial properties. Typically does the Tenant or Owner pay the fee?

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This is a good piece of article for new young first time investors. Especially these days, many parents are helping the younger generation with the downpayment and they will handle the monthly repayment from there.

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Even without the support of parents to cover the initial down payment. 

There are home buyers which take up to 110% loan. Extra 10% for renovation and furniture cost. 

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@domng the 10 % usually count under personal loan, if not mistaken. 

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@domng In the tenancy agreement, it is the obligation of the Landlord to pay the monthly maintenance fee and sinking fund. The tenant only pays for the utilities bills.With this in mind, the Landlord may want to factor this cost into the gross rental.

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Does Indah Water come under utility bills?

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@domng Yes. It use to be under the same water bill but now separate billing after privatisation of sewerage maintenance.

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For me, if I like it and can afford it, then I buy it. But I usually like properties that are in central location, which I think is the most crucial requirement for property investment.

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@Zara I think not just you, many would go for centralised location too. Also safer investment because of the demand in that location. Especially if you are intending to rent out.

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Centralised location helps, but it is not the only factor when tenants are looking for a unit. 

Also the location needs to have a good mix of Residential and Commercial areas. 

Lastly, if you get everything right. Still need a bit of luck!

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Thanks for sharing!

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I mean, a central location must come first (or at least somewhere near enough to civilization), then comes the consideration of population mix, commercial areas and all.

If not, I would likely cross-out the property without much thought.

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Haha. "Near enough to civilization". Sounds like living in a jungle. 

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Buy good location which is easy to rent out, high occupancy area and also the area have a lot agent willing to work for your unit. 

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Don't forget to have an exit plan (sell or own use) if the unexpected happens after you invest in a property. There is always a risk no matter how good the deal is. :^)

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沒有. 但是, 如果那土地已经开发了/ 盖房了 /  有农作物 了 ,  适当的赔偿是有的 ( 但只限于你的建筑物/ 农作物 市值). 

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Yes, that is why it is called leasehold and not freehold. 

There is no ownership guarantee for the property owners after 99 years lease expire.

Unless there is a clause in the SnP which guarantees leasehold renewal, but i doubt will have.

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I was replied to Adrian's enquiry of whether there is compensation or not to the owner of leasehold land upon expiry of the leasehold term. Your comment is irrelevant to the question.

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@candy 可是如果是建築物或是房子的話, 他們有時不會賠償,反而是一屋換一屋哦。那就要看你自己決定了

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Compensation is either in the form of money or property.

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Yes exactly, need to let adrian know as well.

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@admin_ps good sharing