There is something that seems common to many Indonesians – namely, the joy of owning property. Of course, this is made more difficult because most of us want to live near the business area (CBD) of a big city, near the beach, or close to other great amenities that make work and non-work life enjoyable.
One of the perhaps slightly positive impacts of the Coronavirus tragedy is the trend of working from home, which is sure to see more company leaders encourage their staff to work productively from home.
This will increase the demand for property in the outer suburbs that may be one to two hours from a major city or business and work center.
At this time of the pandemic, many CBD apartments that were once easy to rent out for tourists or foreign workers and students have become difficult to rent for the long term and some investors / property owners have even decided to sell them. This means that some apartments that may have been too expensive for young people to buy in the days before the pandemic are now more affordable, especially if they are bought for rent.
Many first-time homebuyers, unable to buy property in the city where they want to live, can actually buy a house and rent it out until they can afford to live on the property they purchased. By doing so, you can benefit from the tax deductions that make the buy-for-rent deal successful.
- Do you really understand how the investment works and structure? This includes the tax benefits and how you’ll make the payments.
- What is the business case for the investment? Would the average person buy this property? Do you know what it will actually cost you? How much will you make if you keep the investment for five or 10 years?
- Does it commercially make sense? Is this the best use of your money? Could you buy cheaper, better and with more potential capital gain?
- What could go wrong? Are you able to pivot if interest rates change or a tenant doesn’t pay your rent, etc?
- Can you easily obtain the due diligence on the investment and people engaged in it? Do you have the lawyers/experts to make sure you don’t buy into a bad investment? Remember those who bought into apartments with cracks in the walls and fire-threatening panelling!
- Will my investment withstand an unexpected economic shock or event? How would your investment deal with another pandemic?
When it comes to big investments involving borrowed funds, we argue that you need to treat the investment like a new business.
These questions help you create a business or property investing plan. Don’t buy property without one!