How to make “instant” capital gains when buying a new property

When considering buying a new property, there are some situations that can give the buyer a high chance to make some sort of “instant” capital gains. Below are the things to look out for the next time you look for a new property:

HIGH REBATES

Nowadays, it is quiet common to find developers offering 10% to 15% rebates to entice their potential buyers to quickly make a booking. Such rebates are only given on the condition the buyer signs the Sales & Purchase Agreement and Loan Agreement (with the bank) within a stipulated period, normally 14 or 21 days from booking date.

To get some sort of capital gain, make sure the bank value of the property (assuming all things equal) reflects the S&P price i.e. price before the rebates. For newly launched projects, the end-financing bank would recognise the S&P price as the market value.

A buyer who sells his property at a later date would already make a profit upfront from the rebates given by the developer. In addition, the price may increase once the property is completed, provided all the units are sold out by the developer.

For example, if you purchase a property for RM800,000 with a rebate of 15%, you will already make RM120,000 immediately after the property is sold out.

PROPERTY LAUNCHES OVER SEVERAL PHASES

For big projects, developers will normally launch their projects in phases. The purchase price of each subsequent phase is always higher than the previous ones, even though the property (layout and dimension) is the same for the different phases.

For example, if a project has 5 phases, the last phase would be the most expensive as compared with the earlier phases.

People looking for property should always be on the lookout for new property launches that have several phases. Try to get properties that are in the first phase. By the time all the phases have been completed, you would already make at least the capital gains between the purchase price of the first phase and the last phase.

One should not purchase properties that are in the last phase unless the property in question has high rental potential.

Happy investing.

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