Hi everyone,

I live in Australia and this month I'll be travelling to KL, Malaysia with the intention to buy an investment property in Selangor. I'm not Malaysian and this will be my first property purchase. Some international property books say Malaysia is the best emerging economy to invest in. I have read two of Renesial Leong's Property Jewels books.

Initially I was looking at targeting student accommodation in Bandar Sunway, Petaling Jaya or Subang Jaya, but this year the government changed the purchase price for foreigners to a RM500,000 minimum.

I'm looking for positive cash flow properties with:
* a capitalisation rate of 8%
* a return on investment of 15%
* an occupancy rate of 80%

In taking a tenant targeted approach, could anyone please advise me on:
1. Target tenants I should be looking for given the minimum purchase price of RM500,000? E.g. expats, office workers, etc.
2. The type of property those tenants usually rent, e.g. apartment, semi-detached, etc.
3. The areas those tenants are abundant, e.g. Bandar Sunway, Petaling Jaya...

I would really appreciate your input and thank you in advance for your help.
And please explain any abbreviations used, e.g. bbb, cf, etc (I have no idea what they mean)

Hi KoNpHuSeD,

Care to explain (perhaps with formula) how does one derive the following :

1. Capitalisation rate 8%
2. ROI 15%?

Btw, Australia property not good anymore? Plenty of Malaysians now "invest" in Autralia and NZ props...... so your case is a bit diff

If you read Renesial Leong's books, she advised not to buy properties in far away places/ foreign land. She did relate how the agent cheated her rental on her property in Melbourne. If Aussie agent oso so snaky, M'sian want would oso likely do the same.

BTW RM500k property targeting students is not a good idea; most likely target young middle class couples as you need at least RM3.5k rental to cover your installment and maintaince fees.

BBB = Buy,Buy,Buy; cf = certificate of fitness

@Pai: sure thing. Capitalization Rate = Net operating income (NOI) / value of the property
ROI = (Gain from investment - cost of investment) / cost of investment

From what I've heard, most Asians who buy in Australia plan to live here. Property market here is mostly captial appreciation and it is costly.


@rakyat: yes I remember that part of the book. That is one of my concerns as I will rely on a property agent to look after the property so I have to create controls in place to ensure this is unlikely to happen. Luckily I have someone in Singapore who can check on the property.

Yea, the new law change means I can no longer target students. Thanks for the advice about couples. Any ideas on the areas where most couples rent?
Lastly, thanks for the clarification on the abbreviations!

Australia & NZ can be consider overpriced now for an average joe in Australia to get about. Its a real estate that is based on this : Negative Gearing. Its wise if you went in the right time, not at when everything is high & one pay thru the nose just to live well.

Its not just Aussie had such, maybe you can consider Dubai? How about the price fell off after the GFC?
You got to filter the agents well before organise them to do such task for you. some can be trusted & work with you but some are manipulative.
Isnt it?

I do agree with you that Australia property is seriously costly. Average Joe know the real price, once the bubble pop; all go down too.
to invest in Msia is little high, govt ruling set the price you should invest. which mean got to be big bungalow, high end apartment, big land parcel...which the down grade is cost of maintenance, will be pricey too. Not just that;
high end property usually dont appreciate much, its the low cost, medium cost that appreciate much than high cost ones.

high cost will appreciate only when most Msian earning power are the same like Australian & cost of living is low.
right now, I think SG is still the market to be as Asia will be next powerhouse of worlds economy.

This post has been edited by KVReninem: Jul 1 2010, 10:07 PM

I think you have to apply for MM2H also lo...i mean Malaysia My 2nd Home...i'm working with HSBC, mayb can share more on this...

Not so much to live there.... Most M'sian & S'pore buy property in Aus as a EZ way to get PR (via capital investment) since there are already too many chinese restaurants

Look into KL citycentre - Changkat Raja Chulan looks vibrant and price is not too high, new launches in KL Sentral or mayb Mid-Valley area.

Personally I think KLCC & MK areas are expensive and overcrowded.

OTH with the crazy prices these days, RM500k might not be able to get unless studio

RM500k property with 15% ROI ?
That's equivalent to RM6250 of rental monthly AT LEAST.
Is there such a 'kang tao' in M'sia now?

sorry, in Malaysia currently there these sort of properties are very rare, the prices of apartments in the last 3~4 years have been increasing really fast and generally any sort of high yielding property is taken up very quickly or prices rise to match the yield. Your probably only going to get a ROI of maybe 7~8% here, and that would be considered good.


Moreever a lot of the properties right now are out of the reach for the average worker in Malaysia. Even if I found one I would probably put my own money down for it.

If you want, I could get you a Seri Condo Titiwangsa.. 5-10mins to KLCC.
Its a very exclusive condo. 9-storey condo. Thanks

MM2H scheme is a little like daylight robbery isn't it? A scheme prop up to lure back investor to live with us..but living in high end property that doesn't appreciate much at high price.unless govt do clean up their construction, architecture, planning n real estate legislation.

Our legislation & planning still messy, foreigner like planned & well know of their rights
Nt just the beautiful msia all about from food to culture...

Thanks for all the replies. I'd been busy and hadn't been able to check back here until now. MM2H is a great scheme if I wish to live in MY, but I don't, and you need a lot of capital.

Sad to hear that I'll be looking to halve my intended ROI of 15% to 8%. I guess I'll be restricted to look for motivated sellers!

Any more ideas on target tenants and areas for my price range?

I read a MY property article saying that the best areas to buy in are the low end and the high end. The volume traded in the middle range isn't as high. Where does RM500,000 fit in this range?

This post has been edited by KoNpHuSeD: Jul 8 2010, 11:58 AM

Hi Konphused,

please check on my post http://forum.lowyat.net/topic/1483674. Is good for investment. The unit is at kota damansara next to segi university and sri kdu. With estimated 9200 student. Check it out

thanks for that, though I'm looking for completed properties.