I would like to know from all your opinion is the right time to get a property now as the economy is bad?

If yes then will it be landed property or condo type better? lease hold or freehold?

Looking for new development around Petaling Jaya. Most probably for own staying or investment. Any suggestion? Price range around 300-400k

Thanks.

Regarding your first question; there's a long debate in this pinned topic: http://forum.lowyat.net/topic/741185

Landed vs condo depends on individual preference.
Leased or Freehold obviously lots would tell you freehold is the better choice. Here is the discussion: http://forum.lowyat.net/index.php?showtopic=439484&hl=

Don't buy, you can rent from me.

Seriously TS, you need to be sure what you really want.
Invest or own use. Without a clear mind, not much I can give you opinion on.

i want to ask the similar question, more on the 'where'
I have a child for primary, so neighborhood with chinese school and convenient for elders to move around without car is a big plus. Please comment as much as u can!!!

Thanks.

I want for own use.

I am in JB, still want my comments?

why not?

If you ask me, i pick condo for investment. Let me give u an example.

Subang jaya link house (SS17/SS19/USJ 3/USJ11)
Unit cost: RM300k-350k
Rent for partly furnished: RM900 only average

Sunway Condo (Leasehold)
Empty unit cost: RM190k-210k
Rental for empty/bare unit: RM 1300 average.

Cyberjaya Condo (Freehold)
Empty unit cost: RM200k-220k
Rental for empty/bare unit: RM 1300 average.
Rental furnished unit: RM1800-RM2000

But for staying, i prefer landed. Hehe.

@secretsquirrel
What is your budget range? If youre starting a family, you better get landed from most people i talk to. A 1000sf unit will start to cramp in no time.

Location: Tampoi

This area has it's value drop after it's first built 10 years back.
About 2007, when the Singapore dollar is all time high.
Chinese from all around Malaysia came to JB and comute everyday to work, which it's in Singapore.

The current exchange rate is 2.40, which make staying in JB a very lucrative offer.

Now with low supply of rental units, the rents in some units actually went up. In addition to the lower interest rate, a low cost unit selling for 42k, can easily achieve cashflow of RM100 a month.
The rent of this unit just went up from RM380 to RM450.

own stay or investment?!?

that's 2 very different ballgame altogether..
do remember this, "profits are made when you buy, not when you sell"

profits are made when u buy? meaning? I thought buy low sell high?
but for now it's own use but in the future might be selling off.

Just found the area that I am investing just posted in one of the blogs.
I have the same apartment as the blogger.

How to increase the return of an investment property to more than 20%?

I was looking at the Casa Indah 2, it's 430k + with 1 car park, is it worth to get it now?

Woh casa indah 2 is already at 430k? When i was surveying casa indah 1 is only 3xx k. IMO that area has too many condo/apartment, although the location is good, just beside the main road.

hmm ya main road but any effect if in main road? but I went to the show unit not bad too even it's facing main road.

if not u have any other suggestion?

the quote is hidden in a book i once read.. ponder about it and it makes perfect sense.
but the tough part is.. you have to read more.. way more than what you're doing today.

otherwise, you only know what's "buy low, sell high"...

go for klang valley..you never go wrong...

And would probably "buy high, hold and pray it would go up".

+1
musical chair syndrome..

but one thing bothering me is you borrow 200k+- but if pay loan it will be 400k+- for 30years let's say. it's almost double up?

lwb,

<<the quote is hidden in a book i once read.>>

It is from "Rich Dad, Poor Dad" by Robert Kiyosaki

Dreamer

It doesn't bother me if I can find a tenant that pays RM2k per month.
30 years later, you own the house without paying and get paid every month.

that's why a house, particularly.. own residence(home) is not an asset... it's a liability!!

the double up (200k loan, pays back 400k to bank) only happens if the maximum leverage is taken.. MOF 90% onwards.

i thought about paying huge amount of money for own home.. perhaps MOF of less than 30% (or the minimum available loan amount allowed, e.g 100k)

doing so, should i eventually sell the house at 400k many years later, i'll pocket the rest because of huge equity put into the house.. but then again, i think about opportunity cost.. of forgoing this amount of money set aside for the equity and accrued over the years.. will that gain be marginally larger than would i have place it onto another investment (for the risk that i assumed)?

how ever i put it.. own residence(aka home) is such an expensive/costly acquisition..

This post has been edited by lwb: Apr 30 2009, 12:24 PM

hi dreamer,

what ways to entice people to read than a one-liner catch phrase?

i found out that the particular lack of reading that is one of the major contributor of such low financial intelligence amongst the mass crowd today.. the resources are there (cheaper too, if one gets pre-owned paperbacks copies, like me).

if one studied carefully both of these phrases; "profits are made.." & "buy low.." they share similar philosophical structure.. the subtle difference would probably lies in the mindset at executing it.. and the level of certainties one conjured.

i'm not equally well versed to debate them(the nuances between the 2 phrases).. but benjamin graham, warren buffet or kiyosaki all profit from it..

This post has been edited by lwb: Apr 30 2009, 12:26 PM

i think to wait further to buy a house.. would be to miss the boat lah.

i just bought a house somewhere in my dream location.

previously the house around that area is put on offer for RM420k.. , but now i got it at RM380k.

i would say it's a good deal then.., since the buyer also bought it at 400k.

don't wait lah.., if you got money, and you plan for own use and long-term stay there .. go and grab the bargain now.



psst.. you can wait more if you're hoping few millions of human will be wipe of from the world due to this Swine-flu pandemic..! maybe there's panic selling?

where's the location if you do not mind telling.

Dear sir,

Debating whether a condo or landed is better is a falacy. It depends on one's personal investment philosophy.

Your arguement presents a very simplistic view and is not wholistic in nature.

Personally, I prefer a multi-pronged approached of having both landed and non-landed properties. Both are complementary and synergistic in nature. Let me give u one of many examples of how they are complementary.

Please note that the numbers below are just for illustration purposes only, and I'm not bragging about my own portfolio. Nothing much to brag about anyway.

1. Have 3 condo's which produce positive cash flow. In the meantime - buy a landed property 20% below market. Rent out the house for a slightly negative cash flow (if u get a positive cash flow on a landed prop with 10% down in the KV - it's the deal of the century). Overall, your condo's will still offset your negative carry. Depending on how you structure your deals - you may still be in an overall net positive cash flow position. You then hold on to the landed property for 5 years, and build your equity. Sell your landed prop for a nice tidy profit. Your holding cost during the 5 years is zero.

That's just ONE variation. Don't nitpick. There are plenty of other combo's even better than the one above.

good luck.

P/S - who says your own house is a liability? Pls give some thought on what u can do with your own home. Don't read Kiyosaki at face value. There are other more learned authors out there that present other paradigms of thought.

You are half correct, ie on the opportunity cost part. When cost of borrowing is low, BORROW! If compounding is the eighth wonder, then leveraging is the ninth!

There is only ONE reason people invest, that is to make money. That means positive cashflow, AND/OR positive equity build-up. Apply this to your investment, and you can see why it CAN be a liability if one is not willing to learn. You don't get 9 of 10 millionaires become rich from properties by them thinking it's a liability!

Im gonna make this as my sig

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Added on May 1, 2009, 10:52 amBro, I think he meant that own stay properties have to be regarded as a liability, as its not income generating asset.

This post has been edited by Pai: May 1 2009, 10:52 AM

hi,

am really lost as to what you're trying to harp on here.. reading from what you've elaborated, i guess that's an over simplified assumption.. amplifying "ceteris paribus".. this is the greatest fallacy and achilles heel in modern economics today.

a case in point.. selling a property in 5 years' time doesn't absolutely guarantee a profit (an assumption right?)..

am old enough to read critically on a given subject, thus i don't read blindly as far as any author is concerned.. i've read over 50 books to date to help me better understand financial intelligence.. and it's by the basis of accounting that i'm assuage to see the difference between asset and liability..

i agree with you regarding variations.. my variations do not rest in properties, the bulk of my assets are invested in papers.. it'll be an area that i'm more comfortable with.. i spent alot of time learning about properties, from various angle.. even to the behavioral nuances of a buyer.

so, i hope it's not about your words against mine.. just refer to the accounting aspect of it.. i believe if you're able to interpret your own numbers accurately.. a shrew investor is born you nailed one correctly; "cashflow".


p/s - who knows, your 3 condos may have to sell at a deep & biased discount, 5 years down the road, right?

I know what he said.

I just think the saying your house is a liability is so cliched and overdone.. Is it? Never mind, no point debating on semantics. When u bankroll your landed prop........the classic definition of a liability does not hold water anymore. I think u know what I mean.

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Added on May 1, 2009, 11:54 amHi,

time to apply what u have learned then. Sometimes, strategy and talk is cheap. It's execution that matters, ain't it? OK, have to run now, and won't talk so much. Good luck.

p/s - I'm glad you brought that statement about the condo's selling at a steep discount in 5years. Yes, anything could happen. And I'm glad u think that way. It's not arrogance by the way. But I do admit that I take advantage of people that have your mentality. I hope there's more like you. Makes life easier for me.

This post has been edited by Phoeni_142: May 1 2009, 12:14 PM

spot on.. i guessed it's easy to get carried away thinking that one is nearly invincible when it comes to investment.. as though leverage is an entitlement.. as though profits are perpetual.. that'd make a complacent and arrogance investor wannabe.

i hope you don't fall into that mentality trap yourself as well..

yeah, talk is cheap.. however, what is revealed here is only the tip of the iceberg.. the bulk is on the execution.. i'd rather not say much on how i build the pieces..

a point well taken from your postscript.. i do like to test, even my own assumptions when it comes to plausible and profitable ideas.. and the best yardstick is to refer it with something measurable.. thus i refer to numbers and hence, accounting.. it's a financial map (or report-card to some) showing one's heading/bearing in his/her financial well being.

on the other hand, i have debunked my very own assumptions on many occasions.. and have eversince set my perspective straight as far as properties are concerned.. it's not easy to charmed me into believing that quantity supercede (e.g how many condos one have, how many rentals one have.. i doubt today azizi ali earns more in property than his seminars, books and other ventures.. same goes with kiyosaki)

This post has been edited by lwb: May 1 2009, 12:17 PM

Ahh, finally something I totally disagree with you.

A house can be an asset or liability, determine by how the cash flow.
Rich dad definition of asset and liabilities:

Assets put money in your pocket, liabilities take money out of your pocket.
Asset feeds you when you're not working and liability eats you when you're not working.



So who is really right?
Actually there is no right or wrong, just the different point of view people put on it.
I uses solely on Rich Dad definition in my investments analysis.

If I want to get a loan, all the property I own is an asset.
The bank allows me to declare my house I stay in as an asset.

This post has been edited by jasonhanjk: May 1 2009, 12:27 PM

I beg to differ :

1. Leverage is an entitlement, when one qualifies and knows how to utilise it.

2. Profits are not perpetual? Dunno about you or others, but Im getting >25% returns on my investment in properties EVERY YEAR for the past 4 years. I suspect I could get more in 2009, and bare in mind we r in bad times

3. Its not arrogance. It actually confidence, built from few successful n not so successful experiences, learning one has got from others and own mistakes.

Confidence is not something you can get purely by reading lots,lots of books .............

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Added on May 1, 2009, 1:20 pm

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Added on May 1, 2009, 1:22 pmchief, that is not wrong...........its just conventional wisdom. However, there r other who do things beyond what books can tell you, and that doesnt mean that these unconventional guys are wrong.

but having to know Phoeni, he has succesfully creates a cash-cow from his own-stay home, so by definition his own house is no longer a liability. Explains why you both cant understand what he was trying to convey. I've always say this --> A blind man cant see a beautiful girls even if she's standing right infront of you.

So both you and lwb, isnt exactly wrong, but the difference in experience levels confines your thoughts to what it is today.

This post has been edited by Pai: May 1 2009, 01:23 PM

Yes, my experience is still not up to par.

When the times come.
My answer will change again.

At first I disagree why phoeni re-finance his own house, after a few months later. I agree with him.

There are good assets, bad assets, good debt, bad debt, good income, bad income, good liability and bad liability.
A house you pay every month is a liability. Good or bad, depends.

This post has been edited by jasonhanjk: May 1 2009, 09:17 PM

wow that's a lot more things to know before getting a hse... but I could only get 50% of what you all discussing here. pai seh.

How can one get 25% return on property like what Pai said? Maybe it's from the capital invested? And for such high yield, maybe 7-10% unleveraged, is it almost ALL from studios/serviced apartments like Maytower?

Thats simply means that you've grown and learnt something new

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Added on May 2, 2009, 1:36 amYou'll be surprised to find out that the more you know about something, the more you realised that there's so much more to learn. But whats more important is action, as knowldege alone wont make you any richer. Action does.

Act once you've learnt the basics, then pray that things will fall in place

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Added on May 2, 2009, 1:40 amU r right, its based on capital invested. To know more, google COCR -> Cash On Cash Returns.

And yes you r also right that these returns r generated mainly from my studios.






This post has been edited by Pai: May 2 2009, 01:40 AM

Hi Pai,

From your experience, how long normally does the tenant stay in a studio? If the turnover rate is high, then might have some vacancy period and drive down the yield. Not to mention higher agent fees. After factoring vacancy, renovation and upkeep, agent fees, maintenance, what is the yield based on the market price of , say Maytower? That is assuming one buys cash, what is the rough attainable yield? My estimate is maybe 5 - 6%. is that correct?

Hi Pai,

Thanks for your valuable info here.

Many things have been said by the sifus.

But there is none so far relates to Tax Plannings when one is considering to buy an investment property ( or am I the one who miss out ? )

Maybe some standalone discussions ( touching on tax ) here and there. Can one investment tool apply effectively on its own without touching the others ? If let say the tax law taxes 50% on your rental incomes, does it make any diff to your investment decisions ?

Secondly, no one compares property investments to REits ( any tax advantage ) ?

I agree, like what you say, more discussions are based on theories, less on actions.

Just my personal opinion only.

Mind to share more ?

This post has been edited by SKY 1809: May 2 2009, 12:06 PM

Hi Constant, you r asking all the right questions here :

typically a tenure of rent for studio's ranges anything from 6 month to 2 years, as basically my studio's r being rented to expats with short to medium term work assignment in Malaysia. These guys usually comes here to work alone and wont be getting a car, so studio's with LRT connectivity is exactly what they need.

Turnover rate is higher VS normal condo's, but demand or tenant liquidity is also very high. I've been doing studio rentals for 2 years now, and my units has never been vacant for more than 2 weeks. Most of the time my vacancy period is only 3 day The main reason for this excellent demand is due to the sheer fact that we r undersupplied when it comes to studios.

Lack of supply + high demand pool ---> Higher returns for the landlord

As for agent fee's, due to high demand, u dont need to engage agents to rent out your studios. I have yet to pay agent fee's for any of my rental properties todate (close to 4 years now). Advertisement in Star is more than sufficient.

Lastly, why buy cash when you can leverage?

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Added on May 2, 2009, 5:09 pmNo one discussed about tax probably bcoz there's no way evading it unless you dont declare.........hence no point discussing unless you plan to buy assets under a company.


as for REITs, just my 2 sens on why I wont consider REITs today :

1. One have no control if the funds bought over "turkey" assets to be paked under REITs.

2. No leverage.

3. Returns r mediocre compared to the realproperty investments.

4. While its more liquid VS buying actual props, but your dividend payout stops once you cash out your holdings. Properties today allows you cashout gains and still keep the property for recurring income.

Will start considering REITs once I have few million quids in the tank and wealth creation is no longer a priority.






This post has been edited by Pai: May 2 2009, 05:09 PM

Thanks Koopa ~ Can I get condo/apt for 1000sf and above? It is just a small family of 2 or 3 of us, but elders might be visiting from hometown from time to time. Space isnt an issue, but preferred 3-bedrooms and above...

While I agree with you that direct property investment is better than REITs, I'm not sure studios are the way to go. Short term tenancy translates into increased the wear and tear on the property as well as lots of active management effort.

There is a cost (in terms of time and effort) each time you have to advertise the property, screen prospective tenants, switch tenants, sign a new tenancy agreement, etc.

Also frequent investments is probably required to replace/refurbish furniture and appliances.

With short term expats, I suspect there is also an increased risk of them absconding with unpaid rental and utilities... which translates into more effort monitoring them.

With 1 or 2 units its probably manageable...once you have more units it becomes a near full time job!

I think shophouses are the best... you get capital appreciation as well as good cashflow (if you pick the right areas). You can enter into long term tenancies that require minimal management.

This post has been edited by gilabola: May 3 2009, 12:38 PM

My thoughts :

Studio's are not necessarily meant for short term. I know for a fact that 1 unit in Casa Mutiara was rented for Rm1.9k p/m and Maytower for 1.7k p/m, both on 2 years tenancy. One can always choose either way



Higher cost PROVIDED one goes for short term tenancy. Not a problem at all if you sign a 2 year lease.

Also pls note that studio's returns are generally significantly higher VS other bigger units. So even if you do short term tenancies, your cost could be easily covered by higher returns.

I beg to differ. You are talking about ppl who can afford to rent a studio for above 1.5k -2k p/m, and living by themselves. Its a diff standard, and tenants r usually very decent.

The odds of refubishment etc will be much higher when you rent to families with kids o students.

Agree, which is why I dont advocate short term rentals.

I have more than 2, and so does taikors like Phoeni, so far I have no complaints, especially when I look back at my returns (not my intention to brag, just to tell you guys that the 4-5 days spent on managing studio's in a year is well worth it)

This is absolutely right, and its my long term plan as well to get into commercials. Unfortunately all the commercials that Im eyeing today cost min 200k capital for d/p alone, and yields are at best around 7% only.

On the contrary, studio's min investment required is 20k only. For poor chap like me, its the only thing I could afford

My favorite author has a total of 1440 small rental units this year.
Not counting other big properties.


So, how can you do more with less?


Once you lean more, you would agree to start rental units first, not shop houses.

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Added on May 3, 2009, 10:06 pmDid I see wrongly?

This post has been edited by jasonhanjk: May 3 2009, 10:07 PM

Unlike gilabola who can afford to invest in commercials, I have no 200k to invest in commercials. So yes..........im poor

for those who think that leveraging is an entitlement.. don't really know what that entitlement really encapsulate.. below is the quote from the star[4-may-09].. no doubt you can leverage, but never have this entitlement mentality towards it. thus, if you think you're wiser than the guy who said it.. i'll let you be.

"I think the most important lesson is the world needs a whole lot less leverage," said Buffett, who is Berkshire's 78-year-old chief executive and chairman.

agree on that.. especially if you get a bank or a strong franchise on the lease.. the cashflow is akin to cash cows

semantics, semantics.

well - i didn't say that leverage was an entitlement......but I believe the guy who posted it said it was an entitlement - provided u know what the heck it is you're doing.

Let me quote u some spiderman...."With great power, comes great responsibility".....I'm sorry....i'm not so eloquent or learned to quote Buffett.

By the way, you shouldn't take the quote from Mr. Buffett at face value. Maybe your posting could intimidate some newbies....But I suspect u made some eyes roll.

1. Mr. Buffett was referring to leverage that was used in a very speculative manner, which fueled the sub-prime bubble. Here, we are advocating for leverage to be used in a responsible manner to increase our investment holdings and net worth. In that sense, one shouldn't fear leverage, but use it as an ally. Personally, I do not discourage ridiculous speculation in properties or unhealthy levels of overgearing.

2. Secondly, if u study Mr. Buffett's work - do u dare tell us that he only invests in companies with LESS debt? Hello???? Again, u r taking our Star newspaper quote at face value. A company with 100% cash and 0% debt - is an inefficient balance sheet which implies a more expensive cost of capital. He values efficiency in margins and does not advocate a reckless adoption of leverage. That's his implication. Look at Wells Fargo & Coca Cola - his 2 biggest holdings - I assure u that their gearing ratio is more than mine.

3. Lastly - whilst I do not claim to be as wise or intelligent as Mr. Buffett - I think one must always examine principles or quotes from a few angles. "Why does the world need less leverage?" Well - this is the context of the quote - America's consumers were borrowing against their homes to take vacations, go out for meals and to remodel their houses. Families were using debt to INCREASE their spending far faster than their incomes were rising. Hence, the bubble burst and the party ended. Yes, in that sense - the whole world needs less leverage.

Totally diff context. Warren Buffet dont buy/invest in properties. Period

you don't read wide, do you? i'm sorry if you're only good at comics..
you probably have a half-cooked understanding about what an "entitlement mentality" is..
but i guess, you shouldn't try to reply for the sake of replying.. a healthy leveraging is encouraged, but not without an entitlement to it.. i hope you'd allow your humility to see through this. or would your pride be?

do you realized that you're merely paraphrasing the counter intuitive towards an "entitlement mentality"..?

This post has been edited by lwb: May 4 2009, 04:01 PM

investment is investment.. which category of asset is a mere tool..
your respond reflect your lack of understanding of what inherently an investment is all about..

i'm referring to leveraging, and leveraging can applies onto alot of investment tools.. but leveraging is still a leveraging.
perhaps your investment is narrowly confined to properties.. then i'm sorry to diverge out of your limited context..

Pssst.

Again, Buffet doesnt invest in Malaysia properties. You quoting his advice in a property forum tells me how shallow your knowledge levels in prop investment.

Lastly mate, if u still think his advice on leveraging is relevant in the context of Malaysia property investment, give us some actual analysis and examples on how lesser leverage can be beneficial to the investor. For once in LYF, u should try to justify your thoughts thru actual examples instead of giving some general statement by quoting some popular chap

Somehow, knowing your level of understanding on property investments, I doubt u'll be able to come out with an example.................. but PLEASE prove me wrong

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Added on May 4, 2009, 5:34 pmOwning a property related firm is diff than buying a prop. Its a diff business altogether

This post has been edited by Pai: May 4 2009, 05:34 PM

Yes, I'm not as well read as you. I'll improve the quality of my replies by quoting the Star Newspaper tomorrow.

That's funny, chief. I was under the impression YOU were the one replying for the sake of replying. Secondly, your replies are only confined to what others have said at FACE VALUE. You do not present any maturity or analytical thought in your thinking. Even worse, I don't think u even understand this whole subprime crisis and its context.

Oh well - read Pai's post above. I'll be eagerly waiting for your CONCRETE examples on how lesser leverage is of benefit to investors. I'm also keen and eager to learn from your wisdom in property investment. Perhaps you could share your investment strategy, and what metrics of measurement you use.

It's time for you to substantiate your opinions, unless of course - u want to wait till tomorrow's Star Newspaper comes out, before posting your reply.

Let me quote your infamous word this time.. "semantics... Oh, nothing but semantics"

What's good for your pride is bad for your wisdom.

Still waiting for your concrete reply.

Oh wait - great come back I guess we all know what you are made off now....

enuf said.

.. say what? can speak up a little? concrete konon.. i doubt it's of use to reveal to you anything.. i doubt you'd learn a dig about it

hmnn

ok, instead of me posting a smart alec reply, let me use all my will power to reply rationally to you.

1. Why is it that using less leverage is good for an investor? Kindly elaborate and share from you own personal experience.

2. How were u able to secure a property going for "less than developer price"? A few people threw examples of areas which are "less than desirable" which caused the price to drop. I quoted examples on how u could find motivated sellers in the sub-sale market to push the price down further. Why don't you share your own personal experience? Since it's a done deal for you - I'm sure it's not a big issue in telling us the name of the development. I know both Pai and I post ours. Personally, I don't mind sharing where I got some good deals, as it's closed anyway.

3. How do you evaluate your target areas and what's your investment philosophy in term of properties? What metrics do you use? COCR? Payback? Cap rate?

By the way, i'd be willing to debate rationally Point by Point with you. I have no issues at all in answering any counter questions u may have after u posted your replies. I'm sure we'd be willing to learn from your experiences.

your move, chief.

This post has been edited by Phoeni_142: May 7 2009, 12:54 AM

Still waiting, lwb..........

Its been 3 days and u couldnt come out with anything to support your own statement?

This post has been edited by Pai: May 7 2009, 12:54 AM