Thursday, December 29, 2011

Project to Refurbish an Old Single Storey House

Lately I've been scouting for any reasonable condos which are close to the LRT for own stay or investment. They have to be within walking distance and must have at least 3 bedrooms. Freehold is preferred. Typically, what I found were in the price range between RM500k to RM700k depending on the luxury and condition of the place. Take Asia Jaya in Section 14 Petaling Jaya for example - Millenium condo and Menara Jaya in the picture below and Istara condo are in this range. Millenium is plastered with ads to rent or sell, but nothing below RM500k. They are all within a 5 minute walk of Asia Jaya LRT station and ranges in size from 800sf to 1600sf.

Then it occured to me that I should widen my search to include these charming single storey houses which are just inside the 500m radius of the station. Other places include Taman Paramount, SEA Park, Taman Mayang and Section 4 Petaling Jaya. They are also 3 to 4 bedrooms and most of them having 2 bathrooms. Sizes range between 1400sf to 1600sf, quite similar to the condos and best of all, they are landed which in Petaling Jaya, is a rarity today.

Note: Picture above is not the actual house

Price? Between RM330k to RM500k.... But work is needed... From a typical layout of an intermediate unit below, one can spend about RM100k to convert the interior into a very luxurious and beautiful house..much like the lofts in old TRIBECA New York.

Most of these houses, since they are intermediate lots, need to light up the middle part of the house. So, they have air-wells or roof windows like below. The Petaling Jaya City Council actually can give approval for these airwells to be converted into a loft - an additional half a floor or mezzanine. But this will add an extra RM50k to RM60k to the cost and affect time to market as well.

So, the half floor conversion is not important. We already have 3 or even 4 bedrooms. What's essential are obviously the following:

1. The bathrooms need to be "modernized"

2. Designer kitchen

3. Rewiring to 3-phase

4. Change the plumbing system and pipes

5. new Floor and fresh coat of paint

The damage? Just over RM100k and with all the acquisition costs, can still be cheaper than a condo with questionable quality. Here in this layout below, I have proposed to convert the bathroom to a designer open kitchen while installing a shower and WC in every room. Since this is personalized en-suite facilities, the showers and WC need not be "walled-in" - how about glass? Sexy and chic ;)

The Bill of Works:

1.Demolish wall & extend Room1 RM4000
2.Build Bath 1 with glass walls, sink, shower & WC RM10,000
3.Build Bath 2 with glass walls, sink, shower & WC RM10,000
4.Demolish half wall & extend Room3 RM2000
5.Build Bath 3 with glass walls, sink, shower & WC RM10,000
6.Change roof of Dining to sky-light tempered glass RM6,000
7.Demolish Bathroom and raise floor RM3,000
8.Build modern open kitchen with granite top and cabinets RM20,000
9.Refurbish Toilet and build shower RM7,500 (for Room 4)
10.Build Room4 RM2,500
11.Change roof tiles RM25,000
12.Hardwood flooring RM10,000

13. Plumbing RM10,000

14. Rewiring RM20,000

TOTAL RM140,000





Kampung Warisan Refurbishment

When I bought a unit in Kampung Warisan, the maintenance fee was only RM0.26psf, which is one of the lowest in Kuala Lumpur for this standard of facility. Last year, the management corporation called for a meeting among others to discuss about increasing the maintenance fee to RM0.36psf. This seems fair considering inflation, higher wages and wear and tear of the huge compound. Many people who attended the meeting agreed with the proposal which was tabled as the last agenda. As the meeting dragged on, most people decided to leave early. By the time the meeting arrived at the agenda, the decision was to raise the fees to RM0.50psf instead of RM0.36. Many of us were stunned. I found it incredible. 1st of all, since I read the agenda to increase the fees to a fair amount, I decided I did not have to attend the meeting because I agree with it. Had I known it would be this high, I would make sure I'd attend to ask questions and if not satisfied, I'd like to vote the proposal down. Many owners felt the same way.

Kampung Warisan is almost 20 years old and many things are falling apart. It is also an extremely challenging environment, damp in some areas and heavily wooded in some. The meeting made the decision to raise the fees to RM0.50psf to pay for the refurbishments for a period of 3 years. Beyond that, we understand the fees would be reverted to the earlier proposed RM0.36psf.

It has been a year. And the refurbishments are underway, roads paved, lawns regrown and roof tiles replaced. I must say I am satisfied with the quality fo work. So now I feel I don't mind paying the extra fees or levy. For sure Kampung Warisan will look much more beautiful and the value will certainly increase.

Friday, December 23, 2011

Renewing the Lease of Lease-hold Properties

One might remember that back a few years ago, many aged property owners in Petaling Jaya were thrown kicking and screaming out of their homes as the 99-year leased has expired and the government wants the land back. These poor old folks inherited the houses from their parents who in turn inherited them from their parents... So, the saying about not being able to out-live your 99-year leased hold property does not hold water after all.

So, some of these old chaps who have no money nor family to take them in, retired from their jobs and too old to get a bank loan to buy a new house eventually ended up in welfare homes. Sad, but true.

Actually the lease for a leased-hold property can actually be renewed by a simple application and payment of fees. There is a method to compute the fees by considering the land size, the property valuation and the number of years the lease is due. However, the fees can come up to well over RM10,000 and even as high as RM50,000 or RM60,000. Many of course don't have this kind of money.

I've just learnt that the new Pakatan Rakyat state government of Selangor has introduced a scheme whereby owners only need to pay RM1,000 to renew the lease up to 99 years. To deter profiteers and speculators, terms and conditions apply... one of them is, if the owner wants to sell the house, he has to top up to the original fees before he can do sell it.

For more details, visit your District Land Office...

Thursday, December 22, 2011

Property Speculation

Before I continue my tirade against greedy property developers, I'd like to for a moment train my guns on some speculators. This picture above is a single storey corner house at Petaling Jaya Section 14, about 300m to the Asia Jaya LRT station and the Tun Hussein Onn National Eye Hospital. At the back of the house, you can see the mixed commercial and residential project by Malton. Obviously, the location is very good despite being leasehold and about 40 years into the 99 year-lease.

Last year, this charming little basic house was in the market. The owner who bought it 1st hand paid under RM90,000 for it. Back then RM90,000 is a lot of money. Initially the owner wanted to let it go in 2010 for only RM280,000. Eventually, he managed to get RM385,000 for it. Which is fair price, considering the interests he has paid and the appreciation over the years. The new owner who bought it has no interest to either live in it or rent it out. Instead, he has put it back in the market immediately for RM650,000.

Without going as far as condemning this, I'd just leave it to all your own opinions. Some say fair enough, everyone just wants to make some money. But my very own opinion is:

1. People seeking to buy properties for their own stay will end up not affording it or have to look further from the city or at the very least, have to bear more interests from the bank - not to mention having to shell out a huge upfront as the valuation is much lower than the asking price

2. Investors who bought it for the location will need to charge a much higher rent in order to cover the capital costs and interests payment

Only one winner here as far as I can see...

Always Blame Owners, What About Developers?

Yesterday, BERNAMA reported that property prices will see a slowdown next year. In the report, I decided to highlight in big red letters, a comment by the CEO of one real estate company who mentioned that, "“Prices will remain stable, with asking prices, not values, becoming more reasonable as owners check their values to real pricing".

No doubt, the property speculators among us have been buying and flipping properties to make profits. This has contributed to property prices going up to the all time high today. These very few speculators are obviously causing many genuine and needy home-seekers finding owning a home becoming unbearably unaffordable.

Although I acknowledge that property speculators and owners looking at liquidating their properties are responsible for this, it is not as bad as the developers launching their new projects at record prices each and every time. Just look at all the new KLCC area launches. Nothing below RM1000psf now. And even Petaling Jaya and as far as Shah Alam, new condominium launches are going at RM800psf. In comparison, a 15 year old condominium in Pantai Panorama for example is RM420psf and in the KLCC area, you can still buy a unit at Menara Bukit Ceylon 1,600sf at RM600psf.

Yes, blame! But be fair and blame the developers who bought their land years ago cheap and cashing in on the property boom today. Then they throw in DIBS and all sorts of incentives to encourage even more speculation. And at the end of the day, at least the property speculators pay tax every time they flip their properties!

Property market to see a gradual slowdown next year

(Bernama) 22 December 2011 - The Malaysian property market is likely to see a gradual slowdown next year, taking into consideration the uncertainty in the global economic situation.

President of Fiabci Malaysia, Yeow Thit Sang, said the high-end residential units were already seeing a slowdown both in pricing and the take-up rate.

“There are fewer expatriates from multinational companies (MNCs) coming here and rentals with a yield of between six and eight per cent are no longer achievable.

“Investors in these units will have to wait longer to realise their investment. The slowdown in global economy is definitely affecting the high-end property market,” he told Bernama in an interview recently.

He also saw a fallout for office space next year, saying the category was already overbuilt and the overhang felt in the market with rental falling and a slow take-up rate.

However, there is a huge demand for low medium and medium-cost residential units below RM300,000 with most developers building high-end units to cash in on the good time.

“The government’s effort in building such units in joint venture with developers will help the low income earners to own affordable homes.

“Building such units will not be fast enough to relieve the pent-up demand over the last five years,” he added.

Meanwhile, Zerin Properties’ chief executive officer, Previndran Singhe, said the slowdown in the property market would only last in the first quarter next year and the industry will be stable afterwards.

“Prices will remain stable, with asking prices, not values, becoming more reasonable as owners check their values to real pricing.

“At present, sentiment is down due to the eurozone financial crisis and the US double dip fears, which has been faring for a long time, but I think we are more Asia focused,” he told Bernama.

If and when China goes on reverse gear, then there would have to be concerns in the market, otherwise, barring external shocks, the industry should have a stable year next year, he said.

Contrary to common belief and expectations, the property market has registered 214,764 transactions worth RM64.75 billion within the first half of 2011.

Against the first half of 2010, the volume and value of transactions recorded double digit growth of 18.1% and 29.7% respectively.

Sunday, December 18, 2011

PJ SS22.... Paramount View Condo

This is one of those niche condos with about 200 odd units nestled right in the middle of Old Petaling Jaya. It is located in Jalan SS22/44, and 600m walk from the Paramount LRT station on the Kelana Jaya line. This condo, which was only recently completed has been quite controversial. It was built on this narrow patch between some 1970s bungalows and the LRT tracks. The owners of the bungalows protested the construction from the start. As usual, rich people complain the most but apparently some guy's house sank due to the excessive piling and earth works. To top it, when the condo was completed, it was issued with a Temporary CF despite not having any access road. So, the owners of neighbouring bungalows got a huge shock when contractors came about to cut down age old rain trees to build the access road. A court case ensued. However, it was made known that the project, access road included was approved in 2005 by the council (MBPJ) which was then under the control of a different state government... the corrupt kind...

So, nothing can be done now, therefore the project is now the completed Paramount View Condominium, complete with access road.

Beside Paramount View, there is a low cost apartment called Sri Aman which has direct access to the LRT station. Despite sitting beside Sri Aman, Paramount View dwellers need to walk a big loop around Sri Aman to get to the LRT. Sri Aman is pretty popular, rent here for a 600sf flat fetches RM900. However, being a low cost apartment, there are purchase restrictions i.e. only those who earn less than RM2500/month among other conditions apply. Therefore, one who qualifies can buy a unit here for less than RM100k, if one can find a seller. There is an auction unit starting at RM90k.

Sri Aman is dense and rather scary.... Paramount View with an almost similar star location and condo facilities obviously costs much more. 1st hand buyers got their 99 years leasehold units for less than RM300k. There are 2bedrooms and 3 bedroom units. They now costs well over RM300k and fetching RM1200 rental for the 2br units and up to RM1800/month for the 3 bedroom units.

As usual, the corner units are most desirable as well as the units facing the pool. The intermediate units are all built with an airwell at the back which I throughly dislike as they always end up as smelly, damp and noisy.

The facilities are on the 3rd floor. They've got a pretty basic gym, sauna, a small-ish swimming pool, tuck shop, laundrette and a cafe. There are also some units on the 3rd floor with almost 16feet tall ceiling. Although high ceiling is desirable, I won't know how to handle this height. They've also posted list of maintenance fees defaulters on the management notice board. It seems like there are over RM100k of arrears from various owners. This is kinda worrying...

But in my opinion, it isn't the defaulting owners or the controversial construction which worries me about this place. The electrical high tension wires are located literally less than 30m away from the condo. Problem is, future buyers will think the same way as me and shy away from investing here.

so close, you can hang your clothes to dry...

Sunday, December 11, 2011

Jalan Raja Chulan Serviced Apartment

Few months ago this plot of land fronting Jalan Raja Chulan, opposite the Weld was put up for sale. I thought it would be a really good idea to build a hotel or serviced apartment here. And true enough, a developer bought it and is planning a 29 storey building, 20 floors serviced apartments with 7 floors of parking and 2 facilities floors.

The location is indeed superb. There is no hotel or serviced apartment on Jalan Raja Chulan despite being slap bang in the middle of the KL CBD. And this stretch of Jalan Raja Chulan is a dual flow traffic road unlike St Mary, which is directly opposite but access is via one-way Jalan Tengah. The Pavilion mall and KLCC are all within minutes of walking.

However, the plot is rather small and the developer is putting up about 10 units per floor. This is not too bad after all, with such low density, competition will not be too tough if the project is carried out well enough to compete with the apartments in KLCC and Bukit Ceylon.

Let's keep a look out on this one and hopefully it won't be another over-priced over-confident project.

Friday, December 9, 2011

My Day In Court

A few months ago, I placed a booking fee for a sub-sale property in KL through an agent. Prior to signing the S&P and paying the balance 10% downpayment, my ever vigilant lawyer asked to see the Deed of Assignment from the seller since the property has yet to gain a strata title. The owner was unable to produce one for weeks. He claimed he never had one despite having taken a loan out from EON Bank to purchase the unit. The agent advised me, in his "years of experience", such a document is not needed to conclude a transaction. That is bad advice. How then would my bank be able to confirm that the seller is indeed the rightful owner of the property without the existence of a title.

So, after ding dong for almost 3 months, I decided to call off the sale. According to the terms of any transaction, I should then be compensated with the same amount of the booking fee since it is the seller's default. But all the agent could do was to refund my booking fee and I am left to take the necessary actions against the seller. So, as far as the agent is concerned, his responsibility ends after returning the booking fee. Before that, he demanded a letter from me stating no liability on his part. I had to give him this letter.

After that, I called the owner and asked him what is the problem. He said he has family issues to deal with, therefore he could not sell the property. I therefore gave him a few more months to settle this and on top of that offered him an even higher price. He said he would get back to me.

After months, and silence, I decided to sue him.

Fortunately, the amount was less than RM5000, so I could take it up in a small claims court. The process is much faster and cheaper. Within a month of lodging the case, we all received a letter from the court. In the 1st sitting, the seller didn't turn up. So, the court set another date 2 weeks later.

After 2 weeks, the seller turned up and decided to settle the case out of court. Basically, if the court case was to be followed and if I received a judgement in my favour, the defendant would have to pay me. If the defendant fails to pay up, I have to fork out an additional RM1500 to "exercise the judgement". This is where the court will do whatever necessary means within the law to get the defendant to pay. So basically, I gave him the RM1500 discount and settled it out of court. He paid in cash and we informed the judge.

So, what have we learnt here?

1. There are too many property agents in Malaysia - they are all competing for business to the extent they fail to place proper checks if the owners or sellers are ready to sell their properties or not

2. Property agents in Malaysia don't really do much but in my case, if I had dealt with the owner directly, I'd probably have lost my booking fee totally. However, I would have used a lawyer to hold the booking fee in trust

3. Don't rush and succumb to pressure - make sure the seller has all the documents to enable the transaction and transfer to be completed within the time set within the S&P

4. Always limit the booking fee to RM5000 or less - if it is more than RM5000, the seller would be pretty confident you won't pursue it because the process outside a Small Claims Court takes much longer and costs more expensive

5. Get a good lawyer, NOT a property agent