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Real Estate Investments Available in Malaysia


For most of us, the word Investment, yet alone, Real Estate Investment seems like the kind of activity for those with a diamond studded seat in the Billionaire Boys Club.

Moreover, most would also have the notion that investing in real estate would first require you to purchase a property before you can rent it out or “earn”, in a traditional sense — as in, becoming a landlord.

Credit: CBN News

Worrying about the condition of your property and the stress of dealing with difficult tenants? Ugh..

Now wipe out that negativity as this is where we share the good stuff. Not only is now a good time to invest in real estate in Malaysia since more growth is likely on its way, but there are also more ways than ever to invest in housing without dealing with tenants or the other headaches involved with being a landlord.

Yes, it is possible to invest in the property market without a massive amount of capital or the luxury of time due to current work and/or family obligations we all have.

1. Real Estate Investment Trust (REIT)

A REIT is similar to the concept of unit trust investments and are bought and sold on the major exchanges, like any other stock.

Credit: Gila Hartanah

REIT’s are created when a corporation (or trust) uses investors’ money to purchase and operate income properties within the market.

Like regular dividend-paying stocks, REITs are a solid investment for stock market investors who desire regular income. More importantly, REITs are one of the more “liquid” options because they are exchange traded.

This means that if you wish to cash out on your investment, you won’t need to pay a realtor to get you a title transfer.

In comparison to other types of real estate investment, REITs allow investors access into nonresidential investments, such as malls, shop lots, office buildings, hospitals, that are generally not feasible for smaller, individual investors to purchase directly.

Basically, REITs are a more formalized version of a real estate investment group. No landlord work here.

 
2. Amanah Hartanah Bumiputera (AHB)

AHB is an effort established to provide opportunities to Bumiputera investors to participate in owning prime commercial properties through the holding of units in AHB as unit holders.

AHB is a Shariah-compliant unit trust fund that invests primarily in commercial properties in prime locations within Malaysia.

Credit: Kakiproperty

These commercial properties include but are not limited to office buildings, shopping complexes, commercial centres, logistics and industrial complexes AHB is also considered a type of REIT, with the main difference being that the cost of the unit prices are fixed.

In other words, when the unit prices do not fluctuate, there are no risks of drastic rise and fall in your investments.

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This is also a unique investment due to the fact that it focuses on prime locations in Klang Valley and is fully shariah compliant.

 
3. Mortgage Backed Securities (MBS)

Those that have watched the movie The Big Short would be familiar with the term Mortgage Backed Securities. MBS’s are investments that are secured by mortgages.

They’re a type of asset-backed security. In this case, the security is an investment that is traded on a secondary market. This is where it allows investors to benefit from the mortgage business without ever having to buy or sell an actual home loan.

Credit: eduCBA

When you invest in an MBS, you are buying the rights to receive the value of a bundle of mortgages. That includes the monthly payments and the repayment of the loan amount.

Since it is a security, you can buy just a part of the mortgage and you will  receive an equivalent portion of the payments. With this method, you are given more flexibility with regards to the capital and investment period which suits you.

4. Are there other Real Estate Investments?

Besides the ones listed above, there are also other existing, more advanced and complex options. Unfortunately, those options are not yet made available to us at this point and time.

Credit: FMT

To name a few are Collateralized Debt Obligation (CDO), Derivative Products Underlying Asset, Bitcoin, Cryptocurrency and many more.

In fact, beyond the borders of Malaysia, lie endless opportunities to invest in foreign property as well as foreign investment groups.

Even the major investors such as PNB & EPF are investing in international real estate. Why shouldn’t you? Or, you could still consider being a landlord. The choice is yours!



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