my philosophy in prop investment is simple. i always assume rental gain are people helping me with the installment. so therotically if property prices drop, it actually doesn't affect me. the only thing that does affect me is the rentability of the area.
and speaking about rent, during bad times, of course need to correct to market condition. and even if rental is less than installment, no big deal, at the most then i would top up the difference. let's say the unit installment is rm2k/mth. even if i lease it at rm1.2k/mth, i need to top up rm800/mth. not a big deal bcos the tenant already HELP to pay rm1.2k/mth. and eventually over a long period of time, the unit is mine. but of course, we obviously do not wish this to happen. of course the biggest concern is not getting any installment at all from rental income but this is unlikely as if you have selected a unit in a fairly decent location and when you start to leasing it cheaper than market value, am sure you will definitely manage to secure tenant. remember, beggars can't be choosers when bad time comes.
and back to property up versus down topic. for those who bought approximately 3 years ago or earlier, they are virtually safe by the amount of appreciation that has occurred. so in terms of both rental and market value, these property are virtually save from any depreciation even if there's a drop of say 30% from current pricing. so it should not affect them at all again. and again, if someone who can come up with a statistic on property already fully paid off, am sure the numbers would be staggering. so we are talking about millions of property which are debt free to a whole lot of people.
when you strike off all those in the above list, how many property do you think is vulnerable to a property correction?
even MK for example, with the average gain of more than 10% per annum previously, do you think the owner who have previously enjoyed such handsome gains are worrying about the current dip there or the decrease in rental? the only person trap will be those entering at a much higher price recently. and when the property does depreciate, no prizes for guessing who will be buying off from them at discounted prices, it's gonna be the previous owners.
anyway, that's just my views.
and lastly, i always reserve 1 full year of full installment in my account for all my properties. and i usually use interest rates @ 8% as calculation for monthly installment. so give or take, i still have a cushion of blr to move until 10.5% before i gets 'stuck'..... theorectically.
be safe man!

Yes....absolutely agreed on "Own Stay" theory. I always told my friend if "kaki zhu"....nothing to worry...price drop or up just paper game....u not going to realize the profit/lost right, but 1 think i told him....jz buy within ur affordability after calculate ur Expense Vs Income.....small house doesn't matter...more important can invite us to your house to play mahjong...  

Many ppl always said i buy overprice property now doesn't matter, because next 3 year i have how many % increment of salary.......should be more than enough to cover all this expense.....yes, the life should be like that, but sometime Chinese said  "bad lucky coming, only one road"....

How about if boss told u no increment for next 2 year....company lost money? while everything around us up like the hell.
How about unexpected thing happen to you/family member?
The worst thing if you lost the job, please dun forget to inform me when ur house going to auction...

soly...talk too much oledi...back to property...

I not familiar in PJ area......but i know that the subsale of USJ & Puchong drop a lot compare wt 2010. It not oni Bank loan stringent, the main reason the price jack up too high...and bank valuation can't catch to value.

perfecto! 

The bubble gonna burst, take dubai case for example.

i don't understand why many people still thinks that once installment is higher than rent collectible, it's all doom.
and of course i can't speak for others especially investors if their school of thoughts are the same but consider this:
assuming the loan to be rm3k per month. how much goes to interest and how much goes to interest. this is going to be tricky because interest are initially high and taperring to low nearing the end of the tenure of the loan, right? so let's just say it's a 50/50 since by the time you finish the loan, it's like borrow rm720k, pay rm1.44mil. and so, again assuming the property does not appreciate in price and NEITHER does the property experience any drop in price (and for discussion's sake, please leave out the inflation factor for this illustration).
and the unit is rented out for say rm2.5k per month. now, the owner might be paying the additional rm500 to the bank and rm500 for maintenance. and so the big question is, is the owner losing money? is the owner at a disadvantage because he has got no positive cashflow?
i like to think that he is still making money albeit less. think of it differently, every month, he is forking out rm1k to foot a rm3.5k bill. in which, out of the rm3.5k bill, rm1.5k is his actual fixed gain (payment for principal). over the entire tenure period of the loan and when he succeed in paying off the loan, he would start to gain rm2k every month then + a fully paid property.
i know some will argue the above case with inflation, misc charges, etc.
but look at the macro aspect of it. and i believe that is why, most if not all speculators and investors are able to hold negative cashflow properties. problems only arises when rentals are lower than payment to banks that can't even cover the interest. but on hindsight, he is still paying less to own the property than a normal buyer on his own without rent.
but the above is just merely my own 2 yen...

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