May I ask, if this "daring part" referring purely to financial risk, or more referring to other implication from say none financial-related risk??

How often one can do this? assuming one know how to..

thanks.

I normally use 4% to get COCR, but if you wanna play safe use 5%. BLR is not the main variable to that impacts COCR, its something else...........

But interest rate will affect the COCR and also the Cashflow leh...

Will you go into a deal that doesn't require any down, but the cash flow is a bit low? which means the COCR is infinity lah, since there is no money down...

Max risk is the tolerance point at which we can still sleep soundly at night, so i doesn't have to be financial, but it usually is if not always.

This can be repeated again and again, but I don't suggest a part timer to do this. COCR can be >100%. Sounds impossible? Not really.

COCR is not everything, it is only an indication. For example, you can buy a house with only RM10, and loan up to RM150,000 from the Bank. This can be done by buying a below market value house.

And if you rent it out for only a RM1 cashflow every month, your COCR will be 120%, which looks very attractive, but in fact, you have only RM1 to spare every month. When the interest rate goes up by 0.01%, you will be in negative cashflow.

So, is COCR really so important? If not, then how can we judge a good investment??

I think it depends on how much is the monthly installment, if it is much higher than the rental, then the chances that you should not consider. the other thing is that who will bear the maintenance fees?? But if RM1K is totally the return after minus the monthly installment, i do not see any problem, especially if the occupancy rate there is high. go for it, you will not regret

well, since you're the one who said COCR is not definitive, and you're the one asking how to judge, why not spare us the suspense and tell us?

meejawa,

Because a lot of people are talking about COCR, and put lots of effort in increasing the COCR, but i find that it should not be the only indicator. But i don't really know how to judge a good investment, as i'm still very new to the property market, that is why i posted the question, and hoping someone "SENIOR" could give us a hint

do yo uknow, the example that you just gave, can be an investor's dream "problem"?

Ya, that is why i'm posting it here, and seeking guidance from all the guru in this forum. I feel that it doesn't make sense to focus too much on the COCR. It only can show the ratio of the money u put in, and take out from the property, but it doesn't shows the actual risk tolerance of that property.

So, for all the gurus, please share your opinion

I echo your statement of 'dream "problem" ', ie. example given by Rosemount, especially first para, I likey.

It takes skills and experience to troubleshoot the 'dream "problem" ' given, and make it a managable risk.
But personally, I believe it takes a lot more than that, especially on the luck side, to be able to find this kinda 'dream "problem" '.

Having said that, COCR is not the only measure to decide on an investment, nor is yield alone.

IMHO, 1) LOCATION, LOCATION, LOCATION, 2) look at the financials (yield, COCR), 3) Conduct due diligence,

1) location not hot, even current sale with tenancy giving 15% yield, no one guarantees the fella going to stay forever, no room for future cap gains etc
2) location ngam, but numbers make no sense to put money in, bye bye.
3) location ngam, price ngam, but the unit got rape case, flood case, murder case, loan shark case, etc... bye bye.

Rosemount - No offense - but from the example u gave, I already know how much "practical" experience u have.

But, don't get me wrong - your theory is sound.

I concur with MeeJawa that it is a "dream problem". However, on base case scenarios - your COCR is still a good main measure - as it determines your efficiency in managing cash. COCR is my main metric. Yields, Cap Rates, NOI and Free Cash Flows are then used to support my COCR metric.

I also can flip your equation around. What's the point if I have a gross yield > 10%, but my COCR is less than the FD rate? And bear in mind - these incidents happen more frequently in base case scenarios.

You should also stress test your COCR findings. Personally, the interest rate I use must be at least 1.5% above the current board rate. Only then will I consider it as a viable investment if it meets my desired COCR return. By the way, this is one of many "risk tolerance" measures that u can employ in your COCR analysis. There are other "risk tolerance" measures too. e.g. potential vacancy loss, expected wear & tear etc.

Noed 18 - location is certainly a main factor. However, to me - it's always PEOPLE, PEOPLE, PEOPLE first. Then only zoom in to location. Think about it? Cheers.

dear gurus, which one better to buy and rent out?

studio, 2 bedroom or 3 bedroom.
studio for sure untung, if buy earlier.

what about 2 bedroom or 3 bedroom

Phoeni_142,

Thank you for sharing.

This is how I interpret what you mean, with the right PEOPLE (tenant(s)), any location can be a good location.

That would be, good tenant profile, willing to pay good rental, able to pay rent on time, take good care of your property, give you very little/ no hassle, and willing to stay on and on in your property, securing it as a long term tenancy with little friction cost (agent fees, refurbish cost, and vacancy period). Even with a change in tenants, hope the people attracted to that area will behave the same way.

Have I interpreted your statement on the right direction? Any more good pointers for newbie here

TS, there is an alternative should you worry about the hassle like liquidity, maintenance, S&P & etc; for a layman like me would park my money in REIT with average of 10% annum return is achieveable

COCR (also known as ROI) is the main calculation.
The next would be IRR, Internal Rate of Return, which can easily exceeds 100% and increases every year.

jasonhanjk,

as shown in my earlier example, u can easily get a ROI of 120% with only a RM1 cashflow. Is there any other criteria to look at to support the ROI?

The yield.
A 100k property should produce 1k rent, FF.

mutiara damansara - price RM130K. rental RM850

zzzxtreme, how much is the money down initially?