Regarding foreign real estate buyers and business owners, Cambodia is arguably the most open market in Asia. Over the past two decades, approximately 7% per year has been Cambodia’s economic growth rate. Despite the pandemic last year, the World Bank predicts that Cambodia’s economy will grow by 4.5% in 2022, which is higher than many other countries can achieve. Considering this fact and the constant growth of Phnom Penh’s population, you will understand why the city receives a significant amount of direct foreign investment into large-scale private housing. Real estate investment is generally considered safe because the most basic requirement of humans is shelter. A higher risk is associated with other assets, such as stocks and bonds because their prices are often subject to market fluctuations. But investing in real estate, there is no higher risk as property value grows over time. Despite that, this article is not intended to encourage investors’ complacency but to provide them with accurate information about real estate.
Real estate investing requires knowledge and a learning process, so here are some things you should check before investing in Real Estate in Cambodia:
Table of Contents
Understand what Real Estate Investment Is
Investing in real estate involves buying or owning properties such as houses, land, and buildings (which may include air rights and subsurface rights, respectively) to profit. Purchasing property for residence or your occupancy isn’t viewed as an investment in business terms but as ownership. This difference in law can save you lots of money during your investment. You can also look for a reputed company in Cambodia for real estate that can help you understand the local Cambodian law & market before you go for investment.
Educate Yourself
Knowledge can make you a great investor instead of just a “good” one. This statement has always been true. What level of research do you put into your investments, whose help you are taking to research the local market condition, and when will they separate you from the competition? Changing markets, new trends, and reversals of old ones are part of daily life. Investing in areas where economic growth is booming (resulting in job creation and population growth) will produce stable appreciation in real estate if you devote yourself to researching and refining your investment strategies.
Set Investment Goals
To achieve a goal, you must plan and execute specific steps.
Research, knowledge, and planning are required to achieve investment goals. You can become financially independent by setting clear, specific goals (and taking them down!).
A clear, concise investment goal for one (or more) real estate property would look like this:
- Decide how many properties to acquire each year (if desired)
- Set down the type and location of the property you want.
- Set out the annual cash flow your property should generate
- The parameters that will determine your desired rate(s) of return
- You should specify the ideal tenant for the occupation of your properties.
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Invest for Mortgage Paydown & Cash Flow
Your asset should generate cash flow to support your investment without draining additional funds from your monthly income. In addition, it should be able to cover all operating costs and help you pay down your mortgage.
The Mortgage Paydown program does exactly as its name implies – it pays down your mortgage by leveraging your cash-flow assets. No other investment class allows you to utilize the bank’s money to purchase the investment, while a tenant’s money pays back your monthly loan.
Location To Be Considered
Condominiums are generally located in the city’s heart, close to all commercial establishments. There are plenty of shopping malls, theaters, luscious green parks, enticing restaurants, and cultural centers within a few minutes’ walk, whether you are looking for entertainment or business districts. Getting to work or school will be much more convenient and less stressful. During his lifetime, real estate tycoon Lord Harold Samuel often emphasized the importance of “Location, location, location.” Therefore, location is an essential point when investing in real estate. For instance, investing in an urban development plan or infrastructure development can provide a high rate of return.
Investing in fundamentals is important
The prominent step to achieving your desired investment goal is the proper knowledge & selection of markets. Another step is to find the best location for your property. However, choosing the location for your property involves many factors. Take your time for research. There is no whistle-stop for doing this, as this is the most crucial step for the success of your investment. Consult an expert if you’re unsure whether you’re up for this commitment.
The legit factors to consider for selecting the location of your investment
What is the current housing market?
- What’s the unemployment rate?
- Is there projected job growth?
- What’s the population growth?
- Investing in major infrastructure projects (for instance, hospitals, highways, and hydroelectric projects.)
- What are the supply and demand trends?
- What’s the capacity to pay?
- The amenities are available.
- Transit accessibility.
- Schools nearby.
- Crime.
- Rental demand.
Always use Professional Property Management
It is never a good idea to manage your properties unless you own your own management company. Tenant-landlord law, marketing skills, and strong management skills are needed to manage tenants’ constant and varied needs in property management. Your time as an investor is valuable. A good property management team reduces vacancy rates and keeps tenants happy. Furthermore, they can assist you in managing your investment properties in locations you cannot often visit, giving you peace of mind and allowing you to pursue other interests.
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Understand Rules & Regulations of Condo
Condo units are privately owned, but communal spaces are community property. Therefore, rules and regulations are imposed to ensure everyone is well-pleased with housing conditions. It is common to see Covenants, Conditions, and Restrictions (CC&R) address issues such as the maintenance of common areas, the noise policy, the number of pets allowed, and other rules governing what is allowed in common areas. Thus, carefully read the Covenants, Conditions, and Restrictions before buying a condominium. For instance, if you’re a pet lover, you should check if the condo has pet restrictions. When you are properly guided, buying your first house can be an exciting and excellent investment. Don’t forget to consider your ideal lifestyle, the condo’s location and daily routine, your budget plan, CC&Rs, and how much association fees you will be charged when buying your first condominium.
You must know the Association Fees.
As a major difference between condominiums and single-family homes, condominiums can foster a healthier community for everyone. However, every owner must pay the associated fees to maintain the desired quality and standard of living, such as security services, elevators, swimming pools, landscaping, garbage disposal, and sewage control. There is also a variation in the association fees based on the amenities the condominium provides. As a result, higher association fees are associated with adding more amenities, including gyms, outdoor gardens, rooftop decks, artful open spaces, and entertainment units (party rooms).
