BOTH SIDES, OWN VIBES: Under-Construction Vs Sub-Sale Property

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2 BOTH SIDES, OWN VIBES: Under-Construction Vs Sub-Sale Property REAL PROPERTY VIBES

3 Copyright 2018 by Real Property Vibes dot com All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law. For permission requests, write to the publisher at:

4 DISCLAIMER If you choose to follow any of these tips, it will be at your own risk and in no event will the author be held liable for any damages arising from the use of information from this book.

5 INTRODUCTION Buying a house can be exciting and terrifying at the same time, especially for first time home buyers. The decision-making process of buying a property can be complex as it requires the decision-maker to consider various factors before arriving at his or her decision. Despite giving due consideration to these factors, can one be completely certain that the right decision has been made or only time will tell how good the decision was? Among the frequently asked questions that will be playing in one s mind are: a) How do you choose the best location? b) Price vs Location? c) What s the tiebreaker if you like 2 places equally? There is even a less tangible way to decide, i.e. to trust your intuition or gut feelings. Most buyers form an impression within the first few seconds after they walk into a house. Someone once said the first and only way to begin the decision-making process is to grab your calculator. A dream home becomes a nightmare the moment you can t afford it. Home buyers today are more well-informed due to easy accessibility of information. In the past, Developers/Owners highlighted the features of their properties but now they have to highlight the benefits of each of the features for differentiation purposes. Just when you thought that you have it all figured out now that you know the right time, the right budget, the right location and the desired benefits, here comes the next BIG question: Should you buy a Under-Construction OR a Sub-Sale Property? 1

6 An Under-Construction Property is also known as New Development whereby the property is ready for sale even though it has not been built yet. A Sub-Sale Property is a previously owned property in the secondary market. This book serves to provide home buyers with a comprehensive list of the CHARACTERISTICS (not pros and cons) of both Under-Construction and Sub-Sale Properties. Each characteristic can be a pro for someone yet for another it may be a con. Hence, it will be up to the reader to decide if the characteristic is an advantage or a disadvantage depending on the individual s specific needs and preference. 2

7 Characteristics: Under-Constructions 1. Sell & build Generally, this means that a Property Developer may sell the proposed property even before the property is built, while it is under construction and also after it is completed, but still new. The buyer may purchase the property directly from the Developer or through their appointed agents. The buyer will be the first owner of this property. 2. Uncertainty, Risks There will always be an element of risk when it comes to Under-Construction Property especially if it is a yet to be developed area. However, if the risk is well-calculated and one trusts the foresight and vision of the Developer, taking such a risk can be highly rewarding in the end. One such example that comes to mind is the development of Sentul East and West by YTL Land. Who would have thought that when Tamarind and Maple were launched back in 2002, it was the beginning of a much sought after address right after the properties were completed and today it is an iconic location? 3. Discounts & Freebies In today s highly competitive property market, giving away discounts, cashback, fee waiver and other freebies by Developers is almost mandatory just to grab prospective buyers attention to attract them to find out more about the property. 4. Value Appreciation Although there is no guarantee that the value of a new or under construction property will appreciate in value, the chances of this happening is relatively higher given that the buyers are the first owners of the property. The 3

8 introductory price will normally be lower with incremental price increase for every new phase and as time goes by and if all goes according to plan. Hence, there are perks of being an early bird and having first mover advantage, in the form of gaining higher capital appreciation of at least approx. 20% - 30%. 5. Information Overload There will be loads of information on the Developer s website as well as other independent property websites and portals including online forums. Step into the Sales Gallery and the agents will be all set to furnish you with more details than you can ask for. 6. Draw My Home You have a free-hand in designing your new home, especially the interior, just like how you have always wanted your dream home to be. There are no existing used built-in fittings standing in the way of your creativity. Your new home may come fully-furnished but at least you know that the furniture and fittings are brand new and unused. 7. No Previous Occupants There is something about newness and freshness of a new property that exudes the peace of mind. No guesswork is required as in whether who have been staying in this house before and what the history is like. Everything is new, fresh and clean. 8. Warranty (standard 18 months), ensure no defect liability There will be a warranty entitlement of standard 18 months. This is to ensure that there is no defect liability within that timeframe and should there be any defect, it has to be rectified immediately by the Developer at no cost. 9. Various Fees Fees incurred for under-construction property include MRTA/MLTA, fire insurance, stamp duties, legal fees etc. 4

9 10. Up to date The architecture, landscape and design of property, be it the individual unit or the entire integrated development are dynamic as they change with times and according to the needs of home buyers. Advancement in technology has enabled the construction of state-of-the-art features and facilities of the property. Even the exterior projects modern futuristic designs while maintaining its grandeur. 11. Green Building Index Certification To score points to attract home buyers who champion green environment as well as the Developer in playing its role in promoting green environment awareness and taking action, more and more Developers are ensuring that their property/project is Green Building Index certified. A green building is an environmentally sustainable building, designed, constructed and operated that can provide energy and water savings, healthier indoor environment, better connectivity to public transport and the adoption of recycling and greenery. Green building focused on increasing the efficiency of resource use such as energy, water and materials, while reducing building impact on human health and the environment including minimising emission of toxic substances throughout the life-cycle of buildings. 12. Savings on Renovation cost Renovation is not necessary for a NEW property but if the owner insists on it, the cost of renovation would be much lower compared to renovating or refurbishing an older property. 13. Better Security (gated community) New property comes with new technology and this includes better security. Most of today s new property can boast of up to 4 levels of security from the carpark, to the lift, to the respective floor and intercom inside the house. For landed property, there will be a guard house within a gated community. 5

10 14. Sourcing Made Easy In this digital age, looking for potential new properties has never been easier. There are many dedicated websites just for new projects. Social media platforms like Facebook and WhatsApp are widely used by Agents in promoting new projects. Countless Facebook ads are featured daily, so much so until home buyers are spoilt for choice. 15. Low Down Payment The upfront payment required of under-construction property is relatively lower compared to sub-sale. Many Developers are offering rebates and cashback that can be used to off-set the down payment. Hence, it is not uncommon to find as low as 1% down payment or even zero percent down payment for new projects. This is extremely suitable for first-time home buyers or the younger workforce as a big chunk of cash in hand is not required. They start-off by paying interest before going into the home loan instalments, according to the progressive scheduled billing based on the ongoing construction of the property. 16. Neighbours You would have no idea who your future neighbours are. There may be a sense of anxiety of the unknown but this could also turn out to be an interesting and exciting part of moving into a new property. 6

11 Characteristics: Sub-Sale 1. Reality Telling and seeing it as it is. The place may not look as attractive as the show unit of a new project but at least you would know very well that what you see is what you will get. The show unit will probably look a hundred times more presentable due to staging at its finest but it may look ordinary when you minus the interior design and when reality sets in. 2. Immediate ROI and cash flow One of the quickest ways to obtain return of investment (ROI) and cash flow is to purchase a sub-sale property that can be rented out immediately, especially if the property is already currently tenanted. 3. No Risk of Construction Delay A fully constructed property will pose absolutely no risk of construction delay. 4. A Proven Track Record You would know the better, if not the best proven location and other desired criteria. There is no need for trial and error. 7

12 5. Know Thy Neighbour It is common to find people buying properties within their neigbourhood. Why is this so? This is simply because they already know their neighbourhood, e.g. they live in the same neighourhood or they want to buy the house next door if it is for sale, for expansion purposes. 6. Tried, Tested and Approved Buyers are able to check on the spot to ascertain if there are any defects or damages of the property during viewing. Such defects may include cracked wall, leaky ceiling, plumbing and piping issues and the buyer can get the current owner to rectify all defects and damages first even though the warranty period of the property has long expired. 7. Informers Even though you may not have lived in that area before, you can still talk to the people staying there to get a feel of the area and ask them if there is anything that you should be aware of pertaining to the property that you are thinking of buying. 8. Viewing the Future Now You know exactly what the view is now and not wait for a proposed building or tower that may or may not even be erected when the time comes. 9. Concrete Infrastructure In Placed You would know exactly what infrastructures are available currently and not merely based on a proposed project. E.g. when the MRT Line 3 project was recently cancelled, it has affected a few home buyers who have purchased the under-construction property based on the understanding that by the time the property is completed the MRT Line 3 would have been completed and this will in turn, increase the value of the property. 8

13 10. No Abandonment Not only there is no risk of delay in construction, there is also no risk of Developer abandoning the project half-way. Getting stuck and serving interest to bank for an abandoned project is the worst nightmare of any home buyer. 11. Negotiate Your Way There are opportunities to negotiate with the property owner for a better price, something that is not possible if you are purchasing a new property from the Developer. Even more so if the owner is desperate to let go of the property urgently to improve cash flow. 12. Move in Now You can move in immediately for own stay if the need arises. 13. Renovation You may need to spend relatively more on renovation and refurbishment, depending on the condition of the property. 14. Feel the Vibes When the house is sold using the open house concept, you literally get to see and be in the house when it is at its best. What do you think of it and what kind of vibes does it give you? 9

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