Investment Analysis: Malaysia Property Investing?

by Speedprop on May 3, 2018

Investment analysis is the process of carefully examining investment opportunities in an attempt to decide whether or not such opportunities are worth investing in. Investment analysis refers not only to real estate investing but also to all types of investment in general. The same is true of Malaysia property investment. It’s therefore crucial that real estate investors are not to go blindly into any sorts of property investments without having first analysed all its critical aspects. But, what exactly is real estate investment analysis?

Real Estate Investment Analysis and Its Critical Aspects

There are several different aspects of investment analysis that a real estate investor needs to pay very close attention to. What are those aspects? They can be a rotation of seasons, that how its implications can actually affect the performance of certain properties real estate investors had intended to invest in, for example. In other words, before a real estate investor decides which properties to invest in, he or she needs to take all these different aspects into serious consideration. Below are a few examples of such aspects.

• Location

Location is everything. Location and its surrounding environment are perhaps the most important aspect of all in the domain of real estate investment analysis. This is because a location is but a static factor by which it can never ever be modified. It’s therefore crucial for real estate investors to get his or her research right about them from the get-go. A good case in point would be an investor who invests in a property whose location is deemed to be totally all right most of the time but when the rain comes, the property gets easily flooded. Traffic congestions, schools, public amenities, local communities and access to public transport are some the crucial aspects of any location.

• Comparative Market Analysis

Having decided on a location for an investment property, what’s needed next is, a comprehensive analysis of the perceived strengths and weaknesses of its market in the said location before deciding on which properties to invest in. First, do some research on the overall performance of the market in the area, namely its investment activity, its performance of investment properties, its investment opportunities, and where do you think the market is headed. Second, having collected all this crucial data, conduct a comparative market analysis. Study and compare investment properties in the area with the potential investment properties that you’ve decided to invest in.

• Investment Property Analysis

Having carefully selected potential investment properties in the market you deemed worth investing in, conduct an investment property analysis. The said analysis is to be completed by calculating the overall performance of the property based not on the overall performance of the area upon which the property is now stood but rather on the property individual stats and projections itself, namely its price, type, size and the estimated cost of renovation needed to make the property viable.

It’s best if such property analysis were to be structured according to the strategy of choice you intended to adopt. It’s therefore important for you to decide whether to adopt a rent out strategy or a fix and flip strategy beforehand. Once that has been decided, structure subsequent analysis according to these choices.

There are several essential metrics that can be adopted when doing an investment property analysis. The most important one is called – the return on investment. The said metric lets real investors know whether or not the such and such property is the right property to invest in. There are nonetheless two key metrics commonly used to calculate the return on investment. First, the cap rate. Second, the cash on return. The former calculates the property’s current value. The latter calculates the return on investment.

The Tools Used to Conduct Investment Analysis

True, investment analysis can be very time-consuming and unmistakably daunting. One such analysis typically takes months. Required steps include a) Doing research on the potential location along with its pros and cons, b) Acquiring enough set of robust data through market analysis and c) Calculating them for property analysis. These are some of the crucial steps a real estate investor needs to undergo to complete one investment analysis that works.

However, with the emergence of new technologies, investment analysis and its essential aspects can now be effortlessly studied and completed at a much faster rate. There are many fascinating tools out there on the internet to help you to get started with investment analysis. Nowadays, any real estate investors can learn on just about anything on investment analysis on the internet.

Online sources that any prospective real estate investors can make use of include websites that provide a large amount of important data and calculations, turning months and months of research into a few minutes. This definitely helps real estate investors to optimize their choices of investment property for his or her business.

Bottom Line

Investment analysis is the foundation of real estate investing. Without investment analysis, a real estate investor is consciously putting himself or herself at risk of failure. Having a solid foundation to base his or her investment strategies on is key to help real estate investors succeed.