Thursday, April 25, 2013

Should I Rent or Buy?

Many people who are considering moving to Penang or elsewhere in Malaysia ask me about where they should live or should they rent or buy. The answers to those questions really depend upon a number of things, such as affordability, security, location, convenience and how much you want to immerse yourself in the local culture. I will try to offer my views on this subject in hopes of answering the questions.

First of all let me say that buying real estate here is nothing like buying real estate at home in the US or Canada. As a newcomer you are at the mercy of your agent. Unlike the West the agents are not all licensed. Also you may not only pay commission to your agent or agents, but you may have to pay a commission to someone or some people who simply told your agent that your house was for sale. Finding the right agent is paramount when you intend to buy or rent property here or any other country. And as always, "buyer beware".

This being said we next turn to what you want to do, rent or buy, and whether or not you want a condo or single family home (known as landed properties here). Since I first moved here 4 1/2 years ago home prices have increased dramatically, and so has the minimum price MM2H holders are required to follow. The minimum used to be RM350,000 (about $113,000), but now it is RM500,000 (about $161,000). Here in Penang there are numerous units available at or way above the minimum price. You can pay millions of US dollars for a condo unit, especially if you are looking for 5 or 6 thousand square feet. There are many so called supercondos selling in the millions, but I am sure most retired expats are looking to downsize, instead of supersize. If you decide to buy a condo you must decide whether you want one already built or if you want to wait a few years until the complex is built. If you buy one already built, you have the benefit of seeing the finished product and whether or not it has the amenities you may like. Also an established project should already have he bugs worked out. All you have to do is buy your furniture and appliances, do a little repainting or remodeling and then move in. If you prebuy a unit it is a little different. What many Westerners don't realize it that when they buy a unit to be built, the only thing you get is a shell. There are no air conditioners, no electrical fixtures, no kitchen cabinets, often inadequate electrical outlets and other features which would be included back home. After you have spent a lot of money for the unit you will have to spend quite a bit more to make your new home livable. If you have the money and the time there is no worry. If you are concerned about the prices you can buy a previously owned property where you don't have to do so much renovating. A good agent can help you find what you are looking for.



Because the minimum purchase price has increased so much and the property prices have skyrocketed many expats have decided to rent. Rental prices for decent condos can range between $300 and $1000, depending on size, location and features.

Other than condo living, you have the choice of living in so called landed properties, which we call single family homes. Even though they are called "landed properties" don't expect a lot of land as you would have at home, unless you are ready to shell out a few million US dollars for what we would call a yard. These home are also surrounded by a high wall or fencing, which to me resemble a prison. There are also detached and semi-detached houses, similar to our townhouses. You have the choice of free standing housing units or units in a gated community, where you have an extra layer of security. Houses such as these are naturally more expensive, so you don't have to worry about satisfying the minimum requirements, unless you choose to live in the sticks, away from urban life. There are many of these homes for sale and also for rent. As in the case of the condos, many people are choosing to rent, rather than buy.



Westerners looking for a home here must realize that in many cases they are not going to find the same style kitchens or bathrooms as they have at home. Many of the older condo units don't have ovens and the kitchen cabinets may be quite a bit higher than what you are used to. This is really not that much of a problem as you can buy a toaster oven or buy a Western style oven rather cheap. If you don't want to change the cabinets, use a step stool like I do. The older units mostly have Asian style bathrooms, where there are not any bathtubs or shower stalls. The bathrooms are simply a small room with a toilet and a sink with a shower attached to a small water heater on the wall. When you shower everything gets wet and stays wet until you mop it up or it dries by itself. Hot running water is also a rarity and can be a bit expensive. People here do not use hot water to do dishes or wash their hands.There are also no electrical outlets in the older bathrooms. If you can't get used to the "wet bathrooms" you can always spend some money to remodel. All of the newer builds are usually built to Western specifications. You may also find that there are not enough electrical outlets in your home, but it is very cheap to add them. Also all of the walls are concrete, so even hanging a picture is a major undertaking where most people choose to hire someone else to do it, for a small price.

The next concern for potential home buyers or renters is security. In my opinion it is more secure to live in a gated community or a condo with good security. Don't expect to be able to call the police if someone is breaking in to your home and have them show up within a few minutes, if at all. That is why there are large walls and gates surrounding most of the homes here. You would also need a very good security system for your landed property. If I were to choose to live in a house I would definitely choose a gated community with a guard house staffed by a reputable security company. If you choose a condo make sure they have a reputable security agency protecting the building. Break-ins in condos are not unheard of and at times have been carried out by security guards themselves or with their help. It is advisable , if you do live in a condo, to have a security camera installed at the entrance to your home. In my opinion Malaysia is just as safe as any country in Europe or North America, but as in living anyplace in the world you have to be aware of your surroundings. You can refer to my previous post on Safety and Security in Malaysia for more information.


The next concern is location. As the old saying goes "it's all about location, location, location".  If you plan on living in Penang or some other large urban area you don't need a car, as public transportation is very good and taxis are cheap. Some homes and condos are very close to foodcourts, banks, clinics and shopping areas which are within walking distance. Others are a little less convenient and require a car or taxi to access shopping and other conveniences. For me I chose a condo where just about everything I need is only a few minute walk away. Many condos are located in areas where there is a larger population of expats and tourists  than locals. Many people prefer to live in these areas rather than in areas of where there is either a mixture of expats and locals or a majority of locals. Since I moved here to be with Malaysians I chose to live in a condo where I am in the minority but never even give it a second thought. It's all a matter of choice.



If you come right down to it there is not really that much of a difference from buying or renting here than there is any many other countries. Being in a foreign country you have to be a bit more cautious and trusting when buying or renting property as the culture is different and you are not familiar with it. There are many real estate agents or property agents in Penang and some are good, some are okay and some are to be avoided. If you are not familiar with Penang you have to do some research in order to find the right agent for you. It is best, if you know someone who has bought or rented here, to ask them for advice. I can recommend someone I have known every since I have lived here, who does give honest and personal service to her clients. If you are interested in properties to rent or to buy, or just looking, you can contact Potjut, at P & O Properties. Tell her I sent you. If there are readers here who have gone through the experience of using a real estate agent to buy or rent a property please feel free to recommend your agent or share your experiences in the comment section.


1 comment:

  1. Very good and in depth article.

    The two biggest issues I found with condos is renovation (or rather completion!) work in new blocks, which you will likely get for 2 years or more if you buy a new build and, in some, noise, both internal (design problems with air-wells funnelling every sound in the block to your apartment) and external (traffic, bikes, kids, yapping dogs etc etc etc). What might appear a peaceful residence at 3pm on a Wednesday may be totally different at 11pm on a Saturday!

    My preference is mostly for condos here given the more 'lock it and leave it' approach it to living it allows, great for frequent travellers. There is also less of an issue with pest / vermin control than this is with landed properties IMHO, esp those surrounded by more greenery.

    On the whole I still prefer to buy than rent if staying long term. I always see rental as dead money and recouping it by investing the property purchase sum I think is more problematic in the current financial climate. But I would always rent for 6-12 months before I bought anywhere.

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