JB Property: God Tier vs Tier 1 - Where to Invest Now?

Analyzing the Johor Bahru Property Market: God Tier vs. Tier 1

This article summarizes a podcast episode analyzing the current state of the Johor Bahru (JB) property market, specifically focusing on "God Tier" and "Tier 1" properties. The analysis is based on the speaker's personal observations and aims to provide insights for potential investors. It is crucial to refer to previous episodes for a complete understanding of the terminology used.

Reminder to Watch Previous Episode

• Listeners are encouraged to watch the previous YouTube video on Johor region ranking to fully understand the context and terminology used in this podcast. Skipping the previous episode might lead to confusion regarding the "God Tier" and "Tier 1" classifications.

Disclaimer: Personal Observation

• The analysis presented is primarily based on personal observations and experiences. It is essential to consider individual risk tolerance and investment goals before making any decisions based on this information.

Book Advertisement: Zero to Hero Real Estate Investment

• The speaker advertises his new book, "Zero to Hero Real Estate Investment," designed for first-time homebuyers and investors. The book aims to provide a systematic understanding of real estate investment.

Key Topics Covered in the Book:

1. Basic Preparation: Steps to take before buying a property.
2. Real Estate Loans: Information on securing financing.
3. Basic Real Estate Knowledge: Understanding property types and related concepts (e.g., freehold vs. leasehold).

4. Property Investment: Tips and advice for investing in real estate.

5. The book takes a neutral stance when explaining the various tools and knowledge for property investment.

6. The ebook is available for free download via a link in the video description.

God Tier Properties: High Entry Price, Potential Rental Challenges

• Definition: "God Tier" properties are defined as those within a 10-15 minute walking distance of the CIQ (Customs, Immigration, and Quarantine Complex) and the future RTS (Rapid Transit System) station.

• Observation: Entry prices for God Tier properties have reached historical highs in the last 1-2 years, potentially reaching a ceiling.

• Concern: Current rental yields in the God Tier area may not cover bank interest payments, making it a riskier investment at present.

Example Scenario:

• A three-room apartment in the God Tier area costs approximately RM1,000,000 with monthly bank interest of around RM3,500 (based on an estimated RM5,000 monthly salary).

• However, current rental rates are only around RM3,000, leaving a shortfall in covering the monthly interest.

Comparison to KLCC Properties:

• Some investors view God Tier properties similar to KLCC properties, prioritizing long-term capital appreciation over immediate rental income. These investors may be willing to accept lower rental yields, viewing the properties as a reward house or weekend home.

Tier 1 Properties: A More Balanced Investment?

• Definition: "Tier 1" properties are located within a 10-15 minute drive or shuttle service ride to the CIQ and RTS area. Strict adherence to this standard is important.

• Misconception: Some investors believe only walking-distance properties are profitable.

• Observation: Market data suggests Tier 1 properties offer a more balanced ROI.

• Rental Yield: While rents in Tier 1 might be slightly lower than in God Tier, the lower entry prices make the overall investment return more competitive.

Example Scenario:

• Rent can cover approximately 90% of your monthly repayment.

Key Considerations for Tier 1 Investments:

1. Avoid Overpaying: Do not pay God Tier prices for a Tier 1 property.
2. Realistic Rental Expectations: Do not expect Tier 1 rents to match or exceed those in the God Tier area.

Prioritizing Tier 1: A Matter of Risk Tolerance

• The speaker explains his preference for Tier 1 properties due to his personal risk tolerance.

• RTS Impact on God Tier: A significant question is how much more the RTS will impact God Tier properties, considering prices already reflect the anticipated infrastructure. The price of God Tier may not increase much more after RTS completion.

• Singapore Market Influence: The Johor Bahru housing market is heavily influenced by Singapore. If JB rental prices exceed those in Singapore, more people might prefer moving back to Singapore.

• Overall Attraction: Tier 1 properties are seen as more attractive due to a better combination of price and rent, and potentially more room for future development.

Disclaimer: Tier 1 is Not Universally Good

• It is important to note that not all properties in Tier 1 are worth buying. Individual buildings and locations need separate analysis. A future video will provide guidance on how to individually analyze each Tier 1 building.

• In general, the current risk associated with Tier 1 investments is lower than that of God Tier properties.

Final Reminder and Call to Action

• The speaker emphasizes that the information shared is based on personal opinion and should not be taken as investment advice.

• Viewers are encouraged to like, share, and comment on the video.

• Listeners are asked to leave a 5-star rating and review on Spotify and Apple Podcasts.

• Viewers are encouraged to follow the speaker on YouTube, Spotify, Apple Podcasts, and Instagram for updates and bonus content.