By now, you would’ve been aware that Malaysia is going through tough times with its political uncertainty. If you’re unaware, here’s a little recap:
On 23 February 2020, in what is now referred to as the “Sheraton Move”, a meeting involving leaders from Bersatu, Barisan Nasional, PKR, PAS, and Gabungan Parti Sarawak (GPS) occurred at Sheraton Hotel, which brokered a deal to form a new government, and led to the resignation of Malaysia’s 7thPrime Minister, Tun Dr Mahathir.
The impact of the country’s political turbulence continued into this week despite the rise of a new government in the country led by the newly appointed Prime Minister, Tan Sri Muhyiddin Yassin.
The turmoil of course does not exclude that real estate industry. According to The Malaysian Institute of Estate Agents (MIEA), the property market is expected to be adversely affected by the current challenges being faced by the country particularly the ongoing novel coronavirus (Covid-19) outbreak and the political crisis.
MIEA president Lim Boon Ping during a press conference after the opening of the Malaysian Annual Real Estate Convention (MAREC) 2020 stated that, “It is still too early to see the adverse impact of the Covid-19 virus and political uncertainties on the property market in Malaysia. But we have to admit that in the midst of all the political situation and the virus outbreak, we do foresee that it will affect the property market in an adverse way although we can’t say to what extent right now.”
So what does this entail for the Malaysian property investors? Is there a way in which they can utilise in order to gain returns on their investments?
Here’s the solution to your questions, hire a property manager and let them sort it out for you.
Real estate investing and political uncertainty in the same sentence leaves a bad taste in one’s mouth. A political uncertainty instigates a lot of fear from consumers and investors. But if we step away from our fears for one moment, we realize there are ways for an investment property to endure it.
The great thing about real estate is its eternal demand. What’s even better it is it guarantees monthly rent check. Therefore, while other investments during a recession may be riskier, a rental property still generates an ongoing income. During political uncertainty, home ownership decreases and the demand for rentals increases. Prices are low, so property owners are holding, not selling.
With that being said, it’s important to target the right tenants during a recession. Hiring a Property Manager grants you the advantage of utilising their vast connections in finding you a tenant that ensures a return of investment. Typically, property managers are real estate agents as well. Which means they’d have access to multiple listing services and databases, providing them with a wealth of data to help in the process of tenant screening, including running credit checks, potential blacklisted background checks which may affect the client’s tenant turnover.
Due to their exposure in the real estate industry, property managers have a better idea of how to select the right tenants; those who will pay their rent on time, have a longer tenancy and create fewer problems.
Using Predictive Analytics to Find a Recession-Proof Investment Property
Predictive analytics is analysing past events to predict future outcomes and trends. Investors should always practice predictive analysis especially when the market is down as it allows investor to get projection of rental income, cash on cash return, occupancy rates, expenses, etc. This is an intelligent way to secure investments and understand outcomes during a recession.
Investing during a recession is not ludicrous but investors should minimize risk as much as they can. Frugal spending and avoiding debt are important. Investing always requires thorough research but even more so during a recession. It’s important to look at market trends during specific periods and in specific locations.
While all these jargons may sound intimidating and confusing, engaging with a property manager will aid tremendously in determining your next viable move for your property investments. This is due to the fact that property managers have a wealth of history and knowledge about the residential real estate market in your area and would be able to provide you with apt information, helping you plan ahead and ease your process of managing your investment properties.
Strategize, Strategize, Strategize
If an investor can offer a longer lease and possibly lower rental rates, they can secure income and ride-out the recession. All these aspects can be sorted out by a property manager, who typically has access to databases that’ll help determining the optimal rent rate. It is crucial to determine the right price and doing it requires knowledge of the local real estate market, data on similar units, and access to professional rental rate tools.
On the other hand, property managers can also help in mitigating rent losses by working out payment programs with good tenants that have good payment histories, trying not to incur large vacancies problems by keeping the better tenants if at all possible. Saying all that it is important that tenants are not allowed to fall too far behind because many will never be able to get caught up, which is why having a property manager that ensure smooth flow of rent collection is crucial, especially during these trying times.
Aside from that, property managers commonly have their go-to trustworthy contractors, in which can help in keeping up with the maintenance of your properties at a lower cost. Obviously stretching the dollar in tough times becomes a necessity, however it is crucial that your property remains in immaculate condition to retain its market value. Therefore, engaging with a familiar contractor may be your best bet.
Good property management is key to success during political uncertainties, hence finding the right person to manage your investment is utmost pivotal. Here at Profere Property Management, we ensure each client gets satisfactory services, so you would no longer have to worry about being affected by economic uncertainties.
Call us now at +6019-2758200 for a FREE consultation!