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10 Pros & Cons in Buying a RUMAWIP / Residensi Wilayah

Pros

1) Low Upfront

  • Most of the RUMAWIP / Residensi Wilayah buyers are first time house buyer which is eligible to apply for My First Home Scheme which is 110% financing for the first home provided applicant salary is RM 5,000 and below, which the regulation Bank Islam and MBSB can DISREGARD (if they were in the panel for the project). The Full Stamp Duty Exemption will last until 31 December 2025, so the question is will you need to pay for the S&P Agreement & the loan disbursement charges to the lawyer? If it is free, you are basically paying nothing upfront to get your first house!

2) Low Monthly Payment

  • The monthly payment of the RM 300,000 for 35 years based on the interest rates of 3.05% is RM 1162.94. When you include the MRTA or MLTA, it add up to RM 1200-1300. The average maintenance fee will be RM 250. We are talking about the average of RM 1550 monthly to own a brand new house which renting a 3 bedroom 2 bathrom condominium will easily cost as much as this!

3) Demographic

  • Many dream to have their landed dream home, prime location, gated and guarded but reality is few can afford one. The next best thing is to have a minimum 2 to 3 tier security in a condominium with like minded people. RUMAWIP or Residensi Wilayah occupants are all Malaysians, at least for the first 7 years after hand over.

4) Urban Area

  • Compared to many Government Initiative, RUMAWIP or Residensi Wilayah is always located in the urban area, Wilayah Persekutuan. It is never situated in Bangi, Serdang or Kajang which is truly far away from where the job opportunities are.

5) Basic Condo Facilities

  • One of the requirement for RUMAWIP or Residensi Wilayah is to have basic condominium facilities but is is NOT compulsory to have a gym or a swimming pool. The fact is due to the fierce competition between property developers, MOST RMP OR RW usually have either a swimming pool or a gym and often include both.

6) Recession & Capital Appreciation

Due to the Covid-19 pandemic, the typical Malaysian investing mindset of buying a nice mid range property and flip in after 10 years to earn from the capital appreciation is really risky. Renting is actually a good option but was never an asian way to start a family. So buying this RM 300,000 project can be the next best thing because if you are not staying in it, you can rent it out legally (to Malaysians within 10 years after S&P stamped) to cover your monthly payment or partially wouldn’t be too bad.

7) Rental Income as Backup Plan

  • An experience investor once taught, to buy where you want to invest but rent where you want to stay! There is wisdom in this saying but sadly not many understand the logic of it. The reason for this saying is , you may not want to stay where you buy in the future due to change of jobs, spouse preference, children’s school location and etc. As for owning a RMW / RW, you may even earn a profit from your rental income if the location of your property’s demand is high, just in case you regret your purchase.

8) Relax Regulations

  • One must not own a property in Wilayah Persekutuan in order to purchase a RMW / RW! But do you know if you inherited a property in Wilayah Persekutuan from your parents, YOU’RE ELIGIBLE TO APPLY FOR A RUMAWIP / RESIDENSI WILAYAH PROJECT LEGALLY!

9) QLASSIC

  • After the rebranding to Residensi Wilayah, Quality Assessment System for Building Construction Works or QLASSIC by CIDB (Construction Industry Development Board) is compulsory for all RUMAWIP / Residensi Wilayah Project. This put a limit on many cost cutting action the property developer can take and guarantee an acceptable standard on the project itself.

10) Only for Government Servant (LPPSA & Bank Islam)

  • Many government servant opt to purchase a RMW/RW due to the attractiveness of the package; by using LPPSA (Lembaga Pembiayaan Perumahan Sektor Awam). Due to the nature of the pricing of this government initiative, RM 300,000 or below ; public servant on the lower side of income can easily get the approval for the housing loan and plus Bank Islam is able to top up the remaining sum if the LPPSA fail to grant the full amount (subject to T&C).

Cons

1) Bare Unit

  • The RUMAWIP / Residensi Wilayah unit need a lot of renovation. Firstly you are provided two A/C supply (Master Bedroom & Living Hall), there you need to add two more into Bedroom 2 & 3. After you have to purchase 4 Air Conditioner. The kitchen sink provided it the basic metal type which most Malaysian would love to replace accompanied with a kitchen cabinet. As for the two toilet, you are provided with one power supply for the water heater which means you need to add on another for the second toilet unless your kids don’t mind to take a cold shower all the time. After this, you will have to purchase two water heater preferably with a pump to make guarantee good water pressure. When all the electrical done, you will need to install a plaster ceiling to cover up all the wiring works. Then we move to purchasing the down lights, furniture and etc. Your move in cost is at least RM 10,000 minimum.

2) Parking Lot

  • You are given one parking lot. You may have two cars and to purchase the second parking lot is subject to availability of the particular RMW/RW project. As most of the project is RM 300,000, and the policy states that this is the ceiling price; you can’t finance this into the housing loan which leave you with two choice. Your own cash reserve or withdraw from EPF account 2 if you have it. The average price is from RM 15,000 to RM 18,000.

3) Road Congestion

  • Most RMW/RW buyer will only have one parking lot. Do imagine the road outside your future residence!

4) Room Rental (Future)

  • Due to the pandemic which will result in probably the biggest recession the world have seen, room rental maybe a popular choice for many due to the financial restrain. If you opt to rent out your unit, firstly you most probably can market to bikers due to the lack of parking space and you are NOT allow to rent out to foreigners.

5) Slow Moving

  • Due to the nature of higher density compared to a normal residential project, when you opt to rent it out; generally it will take a longer time. Especially if the project is a mix development with another higher range condominium which is common. That is one way how the developer gets the land by offering to build an affordable housing project like RUMAWIP / Residensi Wilayah.

6) Size

  • The new regulation states that the size should be 900 sqft to 1000 sqft. Most project available till now was probably approve before this new policy kicks in. The average size for all RMW/RW is 850 sqft which is consider really small.

7) House Flipping

  • You can only sell the property 10 years after your S&P is stamped.

8) Progressive Payment

  • You start paying within months after your purchase. The amount will gradually go up when the construction progress, it may be low but it is still something you have to consider. There is NO DISCOUNT for RUMAWIP / Residensi Wilayah projects as it is always sold below market value.

9) Recession & Divorce

  • This recession will result in rise in divorce cases. If this happen in first ten years after signing S&P, your only option is to rent it out. It will be a real unpleasant experience when you are not able to just sell off the property.

10) THE BUYING EXPERIENCE

  • The prime location for RUMAWIP / Residensi Wilayah project is like a MEGA SALE. Certain location like Bangsar South, Bukit Jalil, Jalan Kelang Lama, Cheras or Kepong can be sold out within weeks, you don’t have the luxury to take your time to think about it. By subscribing to the update HERE you have a better chance to stay ahead. (if there is no pop up to enter your email or contact number, turn on incognito mode)

The Verdict : QLASSIC AND THE PANDEMIC

Due to the pandemic, the margin of profit for a project is reduce significantly. A residential project profit margin is average at 30% and taking in consideration at in 2020 there is only 4.1% our of all new residential property is QLASSIC certified, we can conclude that a RUMAWIP or Residensi Wilayah project will be the best deal in the market as developer WILL NOT HESITATE to cut the cost of construction on all projects mainly on those projects which did not apply for the Quality Assessment System for Building Construction Works or QLASSIC by CIDB (Construction Industry Development Board). The compulsion for all RUMAWIP or Residensi Wilayah to obtain QLASSIC Certification should be the deciding factor over choosing property that is RM 400,000 – RM 500,000 (may not be QLASSIC Certified) which may not guarantee the bang for the bucks! No RUMAWIP / Residensi Wilayah developer would want to have a project scoring low in QLASSIC in their track record.

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