QUOTE(Talbac @ Apr 20 2013, 11:25 AM)
The critical arguement lies with 'other better investment choices'.
There are 7 advantages of investing in property:
a) Hedge against inflation (hyper-inflation according to some who predicts a BN win the 13th GE)
b) Allows high amount of leverage, even if it is 'only' 70%
c) An investment choice that allows you to pay by instalment spread over 30years on Interest Rates below inflation rate.
c) Low downpayment + lengthened investment time-frame of 3years under-construction period of which no active management is needed.
d) Total control over the management of investment during owership period (unlike owning shares where you have no control over the Management of listed company continually sucking blood out of the company)
e) property being an 'Investment choice', while being a 'Usable Commodity'. There are no other investment choice which is also a usable commodity. (meaning, say if you buy a property to make money, you can also use it to let out or also for own stay. Shares, FD etc are not 'usable investment)
f) Property Gain Tax of 0% after 5years. (only property investment has this!)
Alternative investment choice availabe are far more limited:
1) Shares, Warrants - Malaysia Bursa not doing a good job protecting the interest of minority shareholder. Even if you make money, it is 'hit-and-run', you can't have it for 30years. Blue chips company are few, and are already fully priced. Limited returns, and no leverage, all cash up front, no tax rebate, no control over investment performance, not usable.
2) Mutual Fund - Same as investing in shares, except you also pay the Fund manager to buy shares for you.
3) FD - providing negative Real Interest Rates. It is your cash, of course no loan provided. No tax gain rebate, no hedging again inflation.
4) Investment linked Insurance Product - remember the big crash in 2008? Many of those products perished. The insurance company probably will use your money to buy Ameera Residence and give you back part of the returns. Allows installment, but no loans, no hedging against inflation, no control over investment, not tangible, no tax gains rebate. Give you returns when you die or severely injured yourself.
5) Lipo suction / cosmetic surgery - At least it is tangible, and a unique investment which may lead you to better mating chance.
I think there are many advantages of investing in property (look at points a-f) due to the weakness of the alternative investment choice. So. even if it is 80K upfront + 70% loan only, property investment is still a good choice. What more for a beautifully designed condo in a strategic location, priced reasonably at 314sq ft+ .
REIT leh?There are 7 advantages of investing in property:
a) Hedge against inflation (hyper-inflation according to some who predicts a BN win the 13th GE)
b) Allows high amount of leverage, even if it is 'only' 70%
c) An investment choice that allows you to pay by instalment spread over 30years on Interest Rates below inflation rate.
c) Low downpayment + lengthened investment time-frame of 3years under-construction period of which no active management is needed.
d) Total control over the management of investment during owership period (unlike owning shares where you have no control over the Management of listed company continually sucking blood out of the company)
e) property being an 'Investment choice', while being a 'Usable Commodity'. There are no other investment choice which is also a usable commodity. (meaning, say if you buy a property to make money, you can also use it to let out or also for own stay. Shares, FD etc are not 'usable investment)
f) Property Gain Tax of 0% after 5years. (only property investment has this!)
Alternative investment choice availabe are far more limited:
1) Shares, Warrants - Malaysia Bursa not doing a good job protecting the interest of minority shareholder. Even if you make money, it is 'hit-and-run', you can't have it for 30years. Blue chips company are few, and are already fully priced. Limited returns, and no leverage, all cash up front, no tax rebate, no control over investment performance, not usable.
2) Mutual Fund - Same as investing in shares, except you also pay the Fund manager to buy shares for you.
3) FD - providing negative Real Interest Rates. It is your cash, of course no loan provided. No tax gain rebate, no hedging again inflation.
4) Investment linked Insurance Product - remember the big crash in 2008? Many of those products perished. The insurance company probably will use your money to buy Ameera Residence and give you back part of the returns. Allows installment, but no loans, no hedging against inflation, no control over investment, not tangible, no tax gains rebate. Give you returns when you die or severely injured yourself.
5) Lipo suction / cosmetic surgery - At least it is tangible, and a unique investment which may lead you to better mating chance.
I think there are many advantages of investing in property (look at points a-f) due to the weakness of the alternative investment choice. So. even if it is 80K upfront + 70% loan only, property investment is still a good choice. What more for a beautifully designed condo in a strategic location, priced reasonably at 314sq ft+ .
For 10000 units of REIT, risk exposure is only that 10000 units -- buying property off plan puts me at risk bearing the loan even for an abandoned project which is many times more than my initial investment amount.
I don't have to worry about letting out my property or tenant problems, the REIT management takes care of it.
For selected REIT, annual return can be >8% which is not easy to get with property investment these days.
REIT is more liquid than property.
REIT appreciates too, sometimes faster than property.
REIT is a cheaper investment to begin with; range from <RM1.00 to >RM3.00 per unit. Minimum purchase is 100 units. Property investment needs 10-30% downpayment of property price.
That RM80k you mentioned, if put in REIT you will get your RM8% return at end of financial year, no need to wait 3 years for construction and the money is not "bricked" for 3 years.
This post has been edited by Malaysian_driver: Apr 21 2013, 12:10 AM