Watch Out Before Buying Property

This Monday morning, Sothie and Samnang rushed to grab a cup of coffee earlier than usual to avoid being stuck for too long in traffic. They keep discussing real-estate as the topic remains valid and is trending.

Sothie: How is the real-estate market? Does it have value?

Samnang: The “For Sale” and “For Rent” placards at the front of many houses seem to be getting old and dusty. Values are heading down. There are no buyers for the sellers.

Sothie: However, many advertisements have been made by land investors who sell plots upon plots of land. A giant project here, a giant project there. How is that?

Samnang: Well, if it is a giant project, sell it to giants. Humans might get scared. I am joking. As far as I can know, land projects are always going to be out there. Also, there will always be people who take a risk on investments. The real question is what will you do with the far-flung land or houses you have bought?

Sothie: So, do those buyers simply lack understanding?

Samnang: Some people buy because advertisements convince them that the land price will skyrocket in the future. Like it or not, some buyers simply go in believing the landowners’ words. After purchasing, the right infrastructure is nowhere to be seen and the land is left undeveloped for many years. At the same time, the price just climbs slowly. In short, the sellers already get the money from selling their land. The buyers simply cannot get the most out of their new land. The latter lose time and money.

Sothie: I heard that some people purchase houses on the street corners or houses in potential areas as a way to wait until the price goes up high in the future. Does this technique still work?

Samnang: This technique worked so well recently in the past. However, as of now, they find it much harder to liquidate their investments. Again, there are simply no buyers.

Sothie: How about holiday homes?

Samnang: People with holiday homes also face the challenge in selling those houses. Those houses are generally too far from the city or urban areas. Those holiday home owners just visit their home a few times and somehow feel tired travelling long distances. Furthermore, holiday homes need proper care and quite a number of people to maintain. This human workforce can be a headache to manage if you are already a busy person at work somewhere else. The desire to own a holiday home can be temporary sometimes.

Sothie: It seems that all real-estate is a challenge to you. So, where should I buy it?

Samnang: Sothie! If you have enough money, you can do what you feel like doing. Buy anywhere you like. The development and price will proceed at its own pace. People increase, but usable land does not. Wealthy people can buy holiday homes, holiday farms or even resorts. They can buy pretty much any real-estate since it does not affect their finances much. They buy those things with their surplus money. That is different from buying those things with the use of loans from banks.

Sothie: If we lack the money and we borrow from banks, how should we invest so that we might be safe?

Samnang: I cannot offer you a fail-proof idea. From what I think, one has to consider three aspects before deciding to buy real-estate. First, is the real-estate situated near a good number of schools, hospitals, markets, government buildings or private buildings? Do you think you can live easily in those places? Second, how much value will that property gain in the next 5 or 10 years? Third, if you want to rent out your property, will there be renters? These three aspects are important to analyse.

Sothie: So, one should not fall easily when being persuaded.

Samnang: That is correct. Do not purchase properties solely based on their sly persuasion. Even when you have purchased the property, obtaining the hard title from the land administration can also be another huge headache. Again, these ideas which are mentioned above do not apply to all cases in the country. I know some land sellers who are very responsible and trustworthy about their land project as well.

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