Tuesday, November 04, 2014

Could SoHo be a good investment?

Nowadays you can see a lot of these type of housing called SoHo, especially in Cyberjaya and KlangValley area. These type of property consists of 1 room for normal type and 2 to 3 rooms for the duplex type.
From my research, I see a lot of people buying this piece of property with the intention to rent it out, flipping, or drawn with a discount/low downpayment that always comes with it and also because of the talk by this famous guy called Faizul Rizuan (correct me if Im wrong, this is all from what I read on the internet).

I never heard Faizul Rizuan's talk before. Most definitely he bought one of this SoHos 10 years back and the investment pays back so he encourage people to buy it too. I also dont know about flipping but i assume you buy it and then sell it after 3-5 years when the price increased. Im not sure whos gonna buy it then.
But for those who plan to rent it out, I wonder who wanted to rent a 1 room apartment of 454sqft. for 1200-1500rm per month.

Kanvas Soho, Cyberjaya

Just take Cyberjaya for an example, most of the developer use the point that there's a lot of huge IT companies around like Dell, HP, IBM, TM, T-Mobile, Shell and also with private uni such as MMU, CUCMS and Lim Kok Wing means that there's always some kid with rich parents or those who work there or somebody to demand accomodation around Cyberjaya. I dont think thats the case.

First off, MMU itself has its own hostel. Eventhough it can be a pain in the ass sometimes but its still the best accomodation for an MMU student until now. And I hear its currently upgrading too. I stayed there for the whole 5 years I was there and I can say all the rich people send their kids there too.
Secondly, people who work there doesn't live there, they live in Putrajaya, Puchong, Dengkil, Seri Kembangan or Bangi/Kajang where the rent is way cheaper.
So i dont think renting out is an option. You can still risk it if you want, there might be people who want to rent it after all but with the numbers of SoHos and other type of apartments/condos currently under construction around Cyberjaya, I dont like SoHos chances.

De Centrum Soho, Kajang

Then why  buy SoHo?
First probably there are people who want to live there by their own, Cyberjaya is a place far from hassle (or at least now it is) or newly married couples who didn't plan to have kids yet.

But my main reason is the idea of SoHo itself. Small Office Home Office.
Nowadays a lot of younger people, starting to have their own side business/part time/online business on top of their day job.
So for me, with the down payment from 1000-5000RM, these people whether individual or couple, could buy the property and kick off (or expand) their small business there, like a little HQ for their own 'company'. 
Doesn't matter whether its an online clothing shop, freelance web design/graphic design, online cupcake shop, part time photographer or just about any other business. Maybe a newlyweds where the husband are selling bundle clothing and the wife are selling perfume online or have a part time sewing/altering clothes business, they can share the space, and this type of apartment could be useful. In few years they can probably sell it and get a bigger place for themselves.


Centrus Soho, Cyberjaya

Normally these group of people might still live with parents or rent out with friends, so having small online business might require some space for all the stocks, equipment and workplace and could be an eyesore for the family and friends who share the area. These SoHo can be a place to dump all their stocks and equipment and they can messed up the place however they want since it is their own place.

Yes people can argue with that amount of installment, these group of people can rent out bigger place that is NOT SoHo, They can, but other properties require 10% down payment of which most of the newly grads or those who just working 1-3 years might not afford it yet. Unless they have a rich and generous parents of course. Also sometimes it can be the location or individual own preference.
That's one of the pros to consider for SoHos. 

With RM1000-5000 capital, they can develop their own business AND own a property at the same time.

Evo Soho Suites, Bangi

Yes business have its risks. But so does other things. In any case, the buyer should consider every factor possible before purchasing a property. In this case, whether or not the sales of their small business will cover the installment of the house and make some extra profit.
Also backup plan if the business doesn't panned out. That factor MUST be taken into account as well.

I know its not the norm nowadays but maybe these SoHo will plant the idea of small business ownership among young adults. It could be a lifestyle.

But for renting out purposes or big family living, we can definitely look for other options.

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