for those who had PM me regarding what i have shared in LYN n the software /excel file tht i have, it's OK, u can tell ur friends about my own formula. i have no reason to hide . i will make sure u fully understand my dumb formula n calculation.

p/s : tht's really disappointing to see some ppl keep things personal over conversation in other topics.

Good sharing to Pai.

If there is anything you do not want to disclose in your sharing in open forum, just put a note " PM me if you need further detail ". I guess that will eliminate some misunderstanding.

Its 10.05am, 8/10/2007 now, whatever happen before is history. Lets keep the ball rolling again, don't waste time over non productive conversation.

regards

U r right , leave things behind n get the balls rolling .

Your welcome.

I didnt put a note there as no one asked openly apart from yewhuay. Didnt bother answering him as he made some "smart" comments about me before. Did receive few PMs though by ppl who are proactive enough to ask, and replied all of 'em.




Btw Kent bro, you never share the details of your property purchase to us. The one you shared is the one you are trying to sell. So kindly share ya

Hi Pai, those conversation are history lar, please don't keep it any more. The longer you keep it become more smelly..

Who knows one day you are cooking a good deal and the person who make decision is yewkhuay or vice versa...

, you will never know lar.. one more friend is always better than one more enemy mah..

shake shake hand lar.. for a better tomorrow.

Everyone has different defination, high for me might be low for you, its just depends on individual.

My property investment is just normal, nothing special. Like everyone else, my priortity is return, as long as 10 months rental / purchase price above 6% i will consider and make sure installment cover by rental ( that is my formula, you may not like it but no harm share your fomula here as well ).

No matter how low you buy and how high your asking rental, if you cannot rent out means nothing to you, so as long as you have pool of tenant ready to rent, you are save and will harvest in due time.

Best deal is hard to come by, so I don't wait for the best deal, as long as it meet my criteria then that is a good investment for me.

Please share with everyone if you have any specify method or system to look for good investment property.

regards

Kent, Im just merely standing up for myself, as some ppl made false acquisation that I dont share with everyone, thats all.



Anyway, while your calculation appears to be simple, its actually not. Got 2 questions for you regarding your statement make sure installment cover by rental :

1. What margin of financing you are referring too? 90%?

2. What loan tenure? 15 yrs or 30 yrs?




Btw, your my 2 main rule when looking for rental properties for NOW, apart from the location :

1. COC return must be at least 7% p/a.

2. Must be positive cashflow at 90% financing for 25 years.

got one very noob question....

when somebody said he/she own a number of properties, does that mean all the properties are fully paid up? or they still owe the bank but they claimed(or consider) they already owned the properties. I do aware if you haven't fully paid up the bank the property is still not belong to you but I guess some people are like that(to boost ego).

and bro pai...if you don't mind to pm me the answer too...curious la, thanks.

and I do agree with your point that it doesn't really need to make positive cash flow to make a property a good investment, as long as you don't pay anything to sustain the property. When it's all paid up, it's like somebody just give you a property for FREE. some people are just too concern about the percentage of return in investment that they tend to higher up the rent above market rental price thus make it hard to find tenants.

a very simple example of mine, I use to rent this house, one day my landlord say he wanted to increase rent otherwise he will sale the house coz can't keep up with the increase interest rate, I said I can't afford it, so I moved out, 6 month later when I passed through that house the "to sale" sign board still there, if he willing to stay the current rent price I might still live there lol.

sorry I am noob please correct me if I am wrong.

This post has been edited by ah_suknat: Oct 9 2007, 05:51 AM

ah_suknat,

<<you don't pay anything to sustain the property. >>

Don't pay anything to sustain the property is the definition of break even cash flow. If the property pays you, that is positive cash flow.

<<when somebody said he/she own a number of properties, does that mean all the properties are fully paid up? or they still owe the bank but they claimed(or consider) they already owned the properties. I do aware if you haven't fully paid up the bank the property is still not belong to you but I guess some people are like that(to boost ego).>>

Bank always make money. That is why I like owning bank.

You want answer. You can pm him. But, the answer is so obvious that you should have figure this one out.

Dreamer

btw, I don't view as don't pay anything to sustain the property as being "break even", ok let say you don't pay anything for and earn nothing extra from the property aka "break even" to sustain the property because the rental is just right to cover everything, 30 years later the property is paid up just by renting alone, and what you get? a FREE HOUSE that worth 100k++ of value!even you sell it under market price you still have hefty amount of money extra! is that a break even?!

but again if your explanation is based on cash flow then yes.

2.meh just asking, coz one property is like 200k plus now a days and several units of them is like nearly a million, if all paid up they must be very rich. hence my assumption of people claiming they owned several units of house are actually not fully paid up aka ego boosting.

3.other than so and so pay for the d/p than I don't know what else, sorry pai for the assumption.

This post has been edited by ah_suknat: Oct 9 2007, 06:53 AM

ah_suknat,

I am engineer. I always use very precise words. I said "break even cash flow".

<<ok let say you don't pay anything for and earn nothing extra from the property aka "break even" to sustain the property because the rental is just right to cover everything, 30 years later the property is paid up just by renting alone, and what you get? a FREE HOUSE that worth 100k++ of value!even you sell it under market price you still have hefty amount of money extra! is that a break even?!>>

One of the way to achieve break even cash flow is to put a HUGE down payment. Let's take your example and I have break even cash flow by putting down payment of 200K. If I sell the house after 30 years for 100K without putting additional money in, I lose money.

You can make money or lose money with positive or break even cash flow too. It all depends on how big is the down payment.

Know how to calculate.

Dreamer

one question, why do you want to put very huge down payment in property that's for investment/rental purpose? that's suicidal. your not buying a car.

Dear all,

I'm new to property investment too. Would like to ask for your opinion about budget 2008.

Govt had given a lot of incentives to push property market this year, among others, abolishment of RPGT and withdrawal of EPF to pay housing loan.

Chances are many will utilize their EPF to pay their housing loan monthly, which indirectly makes property looks more affordable, coz there are extra hundred bucks that they can use to pay the loan. If this is true, I think that appreciation of property will increase (compare to before) but it will be bad for property investor?

Appreciattion will be higher because more buyers/potential buyers in the market. It will be bad for property investor because ppl would rather purchase the house directly (since they can use the EPF money to pay housing loan), so less ppl will rent, hence the rental will decrease.

So, most of the profits come from capital appreciation which may take a few years. In the future, to make money in property, you will need a strong holding power?

Just a thought, please correct me if I'm wrong.

thanks

ah_suknat,

The bottom line is know how to calculate. You give an example how break even cash flow make money. I show you how it can lose money. It is dependent on a lot of calculation and you need to factor in all the numbers.

<<one question, why do you want to put very huge down payment in property that's for investment/rental purpose? >>

On the other hand, why not?? The goal of investment is to make money. If you have 100K and the BLR is 10%, the best deal might be to pay off the loan since you may not find any use for the money that has better risk free return better than 10%.

Best use for the money. Utilize the money for the best return at any moment.

I am NOT trying to spoon feed you with answer. I am trying to teach you to think and calculate.

Dreamer

How much of EPF withdrawal is the portion of your mortgage payment?
I earn above RM5k but monthly withdrawal of this new EPF scheme for me is less than RM150 per month whereas my loan repayment is RM1450; which translate to only 10% of my loan repayment. Doesn't help ease my loan repayment much I see.
So basically your justification on "ppl would rather purchase house directly" doesn't hold water.

Again, on capital appreciation is just a speculation. Trust me. If everyone is thinking like I do now; the property market would soon slump. Look at the surrounding properties and new development. To me, it's over supplying the market and also only the well to do guys can afford. Thus property had been snub up by "these" property investor who can afford and also those house owner.

If you are to follow this property thread closely, you'll understand that property is a liability to house owner. However, if one is a smart investor, he/she would snub up the best deal and usually priced below market value; example given by pai and lwb. If you are solely basing on capital appreciation, yes; holding power you need....but you have to remember you are always leveraging by loaning mortgage loans from the banks. So if one doesn't calculate the effect of the raising interest rate (lucky if the interest rate shall fall but speculation is not); after all the years you might sell off the property at a loss while you happily thought that you've gained profit from the sales.

It's just my opinion that property investment of sort i.e. flipping of properties might not be that profitable unless you learn the proper techniques. Look at the previous example by ah_suknat on his landlord. Thought the property is at a good price to sell, not necessary it would be bought.

But rental income more than often can help you generate income. Later in life if you decided to sell off the said property, you can even parcel it with the current rent tenant to have a higher price tag if the buyer is also an investor.

This post has been edited by b00n: Oct 9 2007, 09:26 AM

Everyone has their own defination, risk apetite and criteria, So no right or wrong, its just individual way of doing things.

If everyone do thing similary, where got fun leh , must have different style then only fun mah

I go for 80% loan and 15 years and some 10 years.

For 10 years loan, I am short of something like RM100.00 a month which I treat it as force saving lor.

As for someone said they own a number of properties, I personally will not care if they still owe bank or fully paid off ? Because it has got nothing to do with me. why spend my time finding out the answer, do other things benefit me better.

Budget 2008 remove RPGT, I personally thing it will create a lot of interest in new project, just buy and sell when its completed.

regards

ah suknat, we are similar in a way whereby we want to use as minimal cash possible yet still wants positive cashflow from properties. Knowin what you want will make u better at sniffing good deals in the future.

U r right, I dont own any properties, just bought a few only. My properties are all owned by the bank.

---

Added on October 9, 2007, 1:01 pmaeron, abolishment of RPGT and the intro of EPF withdrawal IMO will most likely spur low-med range (<250k) property's price further. Even now you can see significantly higher asking price by sellers, taking into account that there would be more ppl will be able to afford to buy their properties. Bottomline, unless the property is less than 250k, and I dont think we'll see any significant appreciation.

In terms of rental, for low-med end properties, I'd expect to actualy rise due to the fact :

1. Monthly EPF withdrawal will only helps alleviate current and future monthly installments. The big hurdle in any house purchase IMO, is always the capital cost(DP, legal, refurbishment, etc). One needs to save approx 40k before they can comfortably afford to buy a 200k house @ 90% financing.

2. There are practically very limited supplies of new low-med properties, and even these properties dont come cheap. They'll command higher rental, and this will usually push other similar property's rental up as well. Its that overlapping effect. Hence why im convinced that even if the demand remains constant, rental will be on the rise.

---

Added on October 9, 2007, 1:08 pmwah dude, to get positive cashflow for 80% financing@ 15 years is not an easy feet.

I think you need a gross yield of minimum 9% to achieve this. I think the original price if this aprtment of your is circa 100k only, hence expalains why you can get positve cashflow when u just take 15 years financing. Did i guess correctly?

This post has been edited by Pai: Oct 9 2007, 01:09 PM

if blr is high, just adjust your rental price so that you meet the breakeven point. by that time, due to increase in interest rate, all landlords are affected and will be forced to increase their rental rate as well, but since
you are offering rental rate lower than your competitor, you will always have tenants. but if you put a huge down payment, you used up your cash reserve, that's why when blr increase you are forced to increase your rental higher than market rate to cover your installment. which will turn away your potential tenants. unlike if you save up your cash reserve by not putting in huge down payment, you can use the money to pay the increased blr rate if you are forced to pay, or you can use the extra money to invest in other investment vehicle which give you good return. so it's like hitting 2 birds in one stone. in one time you have a property that you don't need to pay money and the other hand you have cash to do other investment. thus my point in not encouraging in putting in large down payment if the property is solely for investment purpose. businessman don't use his own money, he borrow. if the property is for own use then yes it's ok to put in huge down payment to minimize the interest rate as much as possible because it doesn't bring any income to offset the installment.

calculation on paper is just good on the surface, i didn't say it's not necessary but it serve as a good basic idea on your investment path. it's not always accurate. flexibility and strategy is the key word.

I don't know because I never bought a house yet but I have tried to do business and on paper calculation is not always seems to be accurate.

just my 2 cents, please do correct if I am wrong.

This post has been edited by ah_suknat: Oct 9 2007, 08:53 PM

[quote=b00n,Oct 9 2007, 09:23 AM]How much of EPF withdrawal is the portion of your mortgage payment?
I earn above RM5k but monthly withdrawal of this new EPF scheme for me is less than RM150 per month whereas my loan repayment is RM1450; which translate to only 10% of my loan repayment. Doesn't help ease my loan repayment much I see.
So basically your justification on "ppl would rather purchase house directly" doesn't hold water.
Again, on capital appreciation is just a speculation. Trust me. If everyone is thinking like I do now; the property market would soon slump. Look at the surrounding properties and new development. To me, it's over supplying the market and also only the well to do guys can afford. Thus property had been snub up by "these" property investor who can afford and also those house owner.

If you are to follow this property thread closely, you'll understand that property is a liability to house owner. However, if one is a smart investor, he/she would snub up the best deal and usually priced below market value; example given by pai and lwb. If you are solely basing on capital appreciation, yes; holding power you need....but you have to remember you are always leveraging by loaning mortgage loans from the banks. So if one doesn't calculate the effect of the raising interest rate (lucky if the interest rate shall fall but speculation is not); after all the years you might sell off the property at a loss while you happily thought that you've gained profit from the sales.

It's just my opinion that property investment of sort i.e. flipping of properties might not be that profitable unless you learn the proper techniques. Look at the previous example by ah_suknat on his landlord. Thought the property is at a good price to sell, not necessary it would be bought.

But rental income more than often can help you generate income. Later in life if you decided to sell off the said property, you can even parcel it with the current rent tenant to have a higher price tag if the buyer is also an investor.

[/quote]

Boon,

If i'm not mistaken, money from account 2 can be withdraw to pay the housing loan. Take your salary as example,

Salary = RM 5k
EPF contribution = employee + emplyer = 11% + 12 % = 23 % (some employer even pay up to 17%!)
Account 2 = 30% of EPF conttribution
So, the money that can be used to pay off housing loan should be
= RM 5000 * 0.23 * 0.3
= RM 345

So compare to your monthly installament,
345/1450 = 23.8%

I think this quite high a percentage and definitely will help to ease the borrower's burden.

... or am I missing something?

Also, very interested to know what are the flipping technique that one should know to make more profit?

Thanks for your reply ya

---

Added on October 9, 2007, 7:35 pm

---

Added on October 9, 2007, 1:01 pm
aeron, abolishment of RPGT and the intro of EPF withdrawal IMO will most likely spur low-med range (<250k) property's price further. Even now you can see significantly higher asking price by sellers, taking into account that there would be more ppl will be able to afford to buy their properties. Bottomline, unless the property is less than 250k, and I dont think we'll see any significant appreciation.

In terms of rental, for low-med end properties, I'd expect to actualy rise due to the fact :

1. Monthly EPF withdrawal will only helps alleviate current and future monthly installments. The big hurdle in any house purchase IMO, is always the capital cost(DP, legal, refurbishment, etc). One needs to save approx 40k before they can comfortably afford to buy a 200k house @ 90% financing.

2. There are practically very limited supplies of new low-med properties, and even these properties dont come cheap. They'll command higher rental, and this will usually push other similar property's rental up as well. Its that overlapping effect. Hence why im convinced that even if the demand remains constant, rental will be on the rise.

---

Added on October 9, 2007, 1:08 pm
wah dude, to get positive cashflow for 80% financing@ 15 years is not an easy feet.

I think you need a gross yield of minimum 9% to achieve this. I think the original price if this aprtment of your is circa 100k only, hence expalains why you can get positve cashflow when u just take 15 years financing. Did i guess correctly?

[/quote]

hmm... though I agree that the bigger hurdle in purchasing a house is the high initial cost, but I think the impact might not be limited to property RM250k and below. Especially for new purchase, now investor can afford higher monthly installment, like boon's case, if he utilize his EPF money, he can afford RM 1450 + RM 345 = RM 1795 installment. He can either purchase a higher value property now, or finish the currently housing loan earlier.

I think you're very right on the low-med end properties, not much supply on the market now.

thanks for sharing

This post has been edited by aeronyc: Oct 9 2007, 07:39 PM

You got the calculation wrong.
Salary = RM 5k
EPF contribution = employee + emplyer = 11% + 12 % = 23 % (some employer even pay up to 17%!)
Account 2 = 30% of EPF conttribution
Technically till here you are still correct.
With the new scheme, it's basically only 30% of your account 2 which can be withdrawn monthly.
Thus it is RM 5000 * 0.23 * 0.3 * 0.3 = RM103.50

edited: Guessed I got the wrong information. Thanks for the correction.

This post has been edited by b00n: Oct 9 2007, 07:49 PM

ah_suknat,

1) What makes you think that you can adjust the rental rate?? In 97/98 recession, the BLR shoot up. And, during recession, you will be lucky if you have a renter?

2) If I can raise my rental price, I will always do that regardless of BLR.

<<businessman don't use his own money, he borrow. if the property is for own use then yes it's ok to put in huge down payment to minimize the interest rate as much as possible because it doesn't bring any income to offset the installment.>>

3) A businessman ONLY borrow money when he can make MORE money than the interest that he is paying. He will reduce borrowing when it is NOT advantageous.

4) Always calculates.

It is ALL about ROI.

Dreamer