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Commercial Properties Any comment on the Commercial Properties Development in Perak?

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  #1  
Old 26-01-2011, 11:25 AM
fortune fortune is offline
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Default Investment on Commercial Property

Jan 26, 2011
Making money from commercial property


Property coach Dr Peter Yee started his investment journey in his late 30s, after going through many of life’s trials and tribulations. In just six years, he managed to attain financial freedom and today, he is living in his dream home.

In his recent workshop titled “How to make money from commercial property”, Yee says that property investment is an art and not science, because the future is unknown. One needs to have the courage to take action. However, he cautions that one should invest intelligently.

He says, “Each property is just like a human. It has a lifecycle. Rich people work for wealth, while poor people work for money.” Yee adds that the journey towards richness is a process. It does not matter how you fast you go, as long as you continue to grow.

This thought is parallel to property investment. One has to keep going, or be left behind. This doesn’t mean that you should rush into it, but instead do it at your own pace. After a quick lesson on defining networth, cashflow and financial freedom, Yee delves into the various types of commercial properties out there − shop offices, factories, retail units, industrial lots and bungalow factories.

“For shop offices, it is good for rental and capital gains. The first and second floor is preferred if it is a walk-up property,” Yee advises.


Options for financing
With the loan-to-value (LTV) ratio of 70%, some investors have relooked at their investment strategies, such as switching from investing in residential properties to commercial properties. This is because commercial properties require a downpayment of 80%, although the value of a commercial property is more often than not, much higher than that of a residential property. Plus, financing by banks is between 80% and 90%, depending on the individual banks.

Dr Peter Yee shares a few ways of “raising funds”.
• Refinance your home
• Sell your liabilities, such as non-performing properties
• EPF (Employees Provident Fund), if you purchase shop-apartments
• Partnership: form a company with two or three other people, or form a real estate company
• Recommendations: be a real agent and get the 2% when you find good properties

“For primary markets, if there are no residents to support, the project can be abandoned. For example, Bukit Beruntung. Some of the lots have been turned into a deer farm and birdhouse. So, in the worst-case scenario, if you have made a mistake, do something about it. Just rent it out. Also, do buy from reputable developers,” Yee says as he amuses his class with interesting pictures of how some commercial lots have been transformed for swiftlet farming and so on.

He adds, “Put your money in a basket that you know best or know very well.”




Financial sense
Dr Peter Yee then shares a few important calculations, to gauge whether a commercial property is worth investing in, from a financial perspective.

1. Calculating Rental Yield
Rental x12
------------------------ x100%
Purchase price
The percentage should be more than two times of fixed deposit rates aka 6%.

2. Calculating Cashflow / ROI (Return On Investment)
Cashflow per month x 12
------------------------------------- x100%
Downpayment
The percentage should be more than two times of fixed deposit rates aka 6%. or at least positive.

Success factors
There are many factors to ensure that your purchase is the right one. Here are the three key factors that Dr Peter Yee advises to look into thoroughly.

1. Location
• The residential area should have more than 70% of mobile population (who can access to property)
• Residential support – ratio of 1 shop lot to 20 houses
• Property should be located on the left side of the road where there is heavy drive-home traffic
• Near facilities (catchment area, supermarkets, food outlets, etc.)
• Commercial units in the longest row – people are most likely to walk along the longest row of shop lots
• Purchase at same building or area where franchises are located e.g. McDonald’s, Tesco, Jusco and so on.
They would have done their respective research, so just “follow them”.

2. Accessibility
• Available parking space at the area
• Take note of the flow of people/traffic in the area
• Availability of public transport – LRT, bus station, taxi, etc.

3. Visibility
• Frontage should ideally be on the same level as the road
• At a t-junction is not necessarily bad for commercial properties, unlike residential properties
• Ensure that your unit is not blocked by electrical boxes, telephone poles, hydrants or flyovers
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  #2  
Old 01-06-2011, 01:43 PM
fagalcromy fagalcromy is offline
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Propex is the online platform that allows its members to lodge electronically, receive and store real estate investment opportunities.Commercial tenants will also tend to maintain much better than the look and condition of the property is important for businesses.
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Old 09-08-2011, 07:35 PM
jayme jayme is offline
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This forum is very much like a autopsy of the field of commercial investments and I found the factors which are given for deciding the financial worth of the commercial place are just remarkable. This has cleared most of my doubts about the financial worth of the place. Thanks for sharing.
==

Deleted your adv...

jayme is another spammer from India.

Last edited by Uncle-Cle : 09-08-2011 at 09:12 PM.
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