Property investment goes by the mantra “location, location, location.” Investing in the right location has the potential to yield significant returns. The location has to have sufficient amenities in the vicinity to support the population and have a potential for continuous growth.
It is never truer for real estate agents. The mantra “location, location, location” also applies the same in the real estate career. In this article, we’ll look at it from a different approach. We’ll look at it from a real estate agent’s perspective.
Very often, one of the first few questions a real estate agent gets asked is, “Where do you focus?” The country, Malaysia, itself is already vast with 13 states in total. The state, Selangor, itself is very massive with 9 districts. The district, Petaling, itself is also very huge with 4 district subdivisions.
For me, since I live in Petaling Jaya (PJ), my answer is, “I farm in PJ.” Not that I actually opened a farm in the middle of the city. In real estate, we have a terminology for focus area which is farming.
To farm in a location, agents have to understand and be comfortable with the location. The first point in understanding a location is this: Is the location a hot location? What is a hot location? Were there any transactions in the location? Some locations may have a lot of properties for sale but there were no transactions or only a handful of transactions. If there were a lot of transactions and the transactions were consistent in the past 12 months; the location is a profitable location to farm. Why? It shows that there are supply and demand in the location.
The second point in understanding a location is the layout and the floor plans. There are different types of properties in the neighbourhood from terraced houses to semi-detached houses to bungalows. In a neighbourhood, all the terraced houses – single-storey and double-storey houses – will be clumped together in one section. Then in another section, all the semi-detached houses and bungalows will be clumped together. Its also important to note if the bungalow faces another bungalow or terraced houses.
Houses located on main roads, inner roads, cul-de-sacs, and junctions attract different kinds of buyers and values. The noise pollution and traffic is greater for houses located along main roads and junctions. The front view of the house is also important as to whether its facing a playground or field or sewage. The back view of the house is as important as to whether its behind another house, shop-lots, or river.
For high-rise properties (condominiums), its slightly more complex yet easier at the same time. For condominiums there are different layouts. In addition to the various layouts, there also different blocks. Some blocks only have small-size units, while other blocks only have big-size units. Furthermore, the orientation and view of the unit is also important. Is the unit facing North, South, East, or West? Units facing swimming pool, nature, and the city also have different appeal.
The third point in understanding a location is the amenities and the accessibility. It’s vital to note the schools, hospitals, restaurants, shops, markets, and shopping malls in the neighbourhood. Some prospects may want the property to be near a school because of their children. Some prospects may want the property to be near a hospital because of their own health or their ageing parents.
After getting a better understanding of the location, one has to also be comfortable with the location he or she is going to farm in. Similar to investors, real estate agents have to like the location before investing in it. Is the neighbourhood mostly owner-occupied or tenanted? A healthy neighbourhood is a good mixture of both. A neighbourhood with only home owners may take some time to see active, consistent transactions. A condominium where a majority of the occupants are tenants is good rental business for real estate agents. However, it’ll only attract tenants and investors.
Secondly, is the location a matured and established location, or a new and growing location? If its a mature location, more people would enquire and move into the location. If the location is new and still growing, it’ll take time for it to attract new residents’ attention and population growth.
Nonetheless, the best place for (new) real estate agents to farm is in their own backyard – their own neighbourhood. There is no better place than home. The neighbours and residents in the community already know them. The real estate agents already understand the layout and structure of the development in the community. They already have a strong connection and history with the community.
Therefore, choosing the right location to farm is the first step to success in a real estate career. It is the base for the big launch!
Location, Location, Location