LIAP #07-BUYING A HOUSE

LIAP #07- BUYING HOUSE
(Life Is A Project)



Buying a house is often the most significant financial decision in a person's lifetime, and it can have profound implications for both personal satisfaction and long-term financial health. When considering the resale value after 25 years, the importance of location cannot be overstated. For instance, while my house appreciated to 2.5 times its original purchase price, my friend's house soared to 10 times its initial cost, solely due to its prime location. This stark difference underscores the critical role that location plays in property investment.
Personal vs. Business Project
Purchasing a house to live in is a deeply personal endeavor, but if the intent is to rent it out or sell it later, it transforms into a business project—property investment. In 1984, I made a pivotal decision to leave government service and join the private sector. As a senior officer (Super Scale G), I was entitled to a government housing loan of about RM200,000 at a favorable interest rate of 4%. This was an excellent deal for me at the time.
Initial Considerations
As a young father with a wife and two children, my primary concerns were affordability, proximity to work, schools, and health facilities. My first job in the private sector was at Bena Tower on Jalan Ampang, Kuala Lumpur. After extensive research, my wife and I decided to purchase a link house in Taman Maluri, KL, which was just 5km from my office. The location was ideal, with easy access to Ampang Park, GE Mall, Kampung Pandan, and Pudu Market. It ticked all the boxes: schools, health clinics, markets, mosques, and shopping centers were all within reach.
Affordability and Decision-Making
The first constraint in buying a house is affordability. Based on this, one must decide what type of house to buy and where to live. These decisions are monumental as they significantly impact our lives in both the short and long term. In project management terms, I had covered the Project Initiation phase, resulting in a Project Brief and partially completed project planning.
The Process in the 1980s
In the 1980s, the absence of the internet and social media meant that searching for houses required more legwork. I relied on newspaper advertisements and property agents, spending about three months gathering information and visiting several houses for sale. One aspect we couldn't research beforehand was our future neighbors, which I only discovered after living there for five years. One neighbor was from Heaven, while the other had three dogs that occasionally drove me crazy.
Inspection and Purchase
Once I decided on a particular house, my wife and I arranged to meet the owner for an inspection. As a civil engineer, building inspection was within my expertise, but thorough inspection is a must for anyone. I ended up living in this house for 25 years, and fortunately, the building was in good condition, being only five years old at the time of purchase. After negotiating the price, we engaged a lawyer to handle the Sale and Purchase Agreement (S&P). The owner preferred his lawyer, and I had no objections. My government loan application was approved within two months.
Project Completion
The entire house-buying project was completed in three months when the seller received full payment, and I obtained the house's grant (title/deed).
Risks of Buying Under Development
Purchasing a house that is still under development can be cheaper, but it carries risks such as delays or, in some cases, the project never reaching completion.
Lessons Learned:
1. Location is Paramount: The resale value of a property is heavily influenced by its location. Prime locations tend to appreciate significantly more over time.
2. Affordability and Budgeting: Ensure that the house you buy is within your financial means, considering not just the purchase price but also ongoing costs like maintenance and utilities.
3. Thorough Inspection: Always conduct a comprehensive inspection of the property before purchase to avoid future regrets.
4. Neighborhood Research: While it may be challenging, try to gather as much information as possible about the neighborhood and potential neighbors.
5. Legal and Financial Preparedness: Engage competent legal and financial advisors to navigate the complexities of property transactions.
6. Long-term Perspective: Consider the long-term implications of your purchase, including potential resale value and the impact on your lifestyle.
In summary, buying a house is a multifaceted decision that requires careful consideration of various factors. By paying attention to location, affordability, and thorough research, you can make a well-informed decision that benefits you both personally and financially in the long run.

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