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Rent first before you buy
02 August 2013| last updated at 09:38PM
http://www.nst.com.my/red/rent-first-before-you-buy-1.331006

BUY LATER: Khairul gives a compelling argument why it’s better for first-time home buyers to rent first before buying
You have just graduated and you have just snagged your dream job. You bought your first car and you found a life partner whom you want to settle down with. All these happened within a space of five years after you graduated. With all these milestones lined up in your life, you think you are ready for that next big step. After all, all those books said you should do it. You have saved enough and you know the pitfalls and of course, you have heard about the success stories. This is it.

You are going to buy a house!
Stop.

Why don‘t you consider some of these facts first before you buy a house? Houses are expensive. Even authors who say you should buy a house as an investment said a house is one of the most expensive purchases you will ever spend on in your lifetime. If that is true, you should really think hard before immediately buying one. Here is an idea every young person thinking of buying a house should contemplate when you are starting a family - rent first before you buy a house.

Similar returns

There is evidence that investing in a house will bring you the same return if you invest in various other instruments such as Amanah Saham Bumiputra or in the share market. These investments have cheaper costs than the purchase of property. Property investments are more sophisticated than other investments but people still line up at property sales to buy houses even if they cannot afford to buy or understand the complexity of buying a house. They do it because they were told by family and friends that you need to buy a house when you have reached a certain stage in life. You will be losing the next big wave if you don’t buy now, they warn.

When you decide to buy a house just because you want a starter home, you buy it for the wrong reason. A starter home should be purchased if you can afford it. If not, why don‘t you just rent? You can postpone the purchase of your starter home until you find the right house. Have you considered the neighbourhood? Have you gotten to know the neighbours? Have you seen the infrastructure within your would-be house (for those buying under-construction properties)? The community halls, prayer places, and the need for pest control. As a former property owner of a new neighbourhood in Shah Alam, half of my former neighbours have moved elsewhere (including me) as we found out the neighbourhood was too far from our workplace and the promised infrastructure was never built.

People are always buying houses near where they work. Why don‘t you live for a few years first at a location which you think is the most likely place that you will be settling down? Rent a house and experience the neighbourhood there.

The argument that the price of property will never come down is not a good argument. The argument that you will need a house during your old age is also not the best argument around. These should not be the only reasons why you buy a house. Understand the cost, the need and the requirements of maintaining a house as you are just starting out in life. As a property lawyer, I found house buyers nowadays tend not to know enough about buying a house or the liabilities that come with it.

Discipline of monthly payments

By renting first, especially in an area where you have decided you want to settle later in life, you can gauge whether the neighbourhood is good for you. You can also learn to discipline yourself to reserve some money every month for rent. If you are able to pay rent, you can then manage to pay your installments when you buy a house later. You will also learn how to manage the maintenance of a house.

Maintaining a house is not as easy as it sounds as any house owner can attest. In the interim, you can save money to buy that house in some interest-bearing investment schemes.

With rental, you can also manage your utilities payment and if you choose to live in a strata development, you will need to budget for payment of service charges and understand why your water bill is never zero even when you are not at home. When you live in a landed property, you need to maintain your garden and ensure the garbage collection is regular, your assessment rate bill and quit rent are up to date (although this is usually paid by the landlord, understand their functions) and the repair of fittings and fixtures are kept in check. When you can appreciate the rental home you are living in as much as if it’s your own, you will then be ready to buy a house.

One final note why renting first before you buy is better, you can always move somewhere else if you have bad neighbours, if your school-going children do not like their friends, or if you have barking dogs terrorising your cats. You will even get your deposit back when you move out from your rented house. On the other hand, if you have already purchased the property, it will be costly for you to sell it. Heck, in certain cases, you can even lose money.

So, the next time you are thinking about buying a house to live in, think hard about the responsibility of owning a home and plan well.

Khairul Anuar bin Shaharudin is a lawyer and author of ‘40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia’.You can contact him at: khairulsuhailahazlina@yahoo.com.

U youngsters too, but u BBB...


This post has been edited by xyyap: Aug 2 2013, 01:47 PM

Buy more please... i want to see more bankrupcy...

Can rent first, but have to buy < 5 years after work, OR < 30 years old.

Else, many here will be happy with the huge tenant pool.

What I feel is too many people like me who are barely afford "luxury" properties are BBB.... just like those cars (thanks to PaulTan).

We need to RENT first and TAKE public transport first. Priority is that if it is convenient enough.

(Don't udstand why ppl die-die BBB property so far away from their workplace and expensive at record prices. It would have been better if they rent near their office first.)

This post has been edited by accetera: Aug 2 2013, 01:57 PM

If you are targeting for living quality, rent. Some prime location landed properties valued at 2 mil in the market are only asking for slightly above 5k rental. I don't really need an option B

coz if dont BBB, then future even more exp and unaffordable...

Now this is where the fault lies.

Many people who think like this is natural and correct... but let me ask them: ARE YOU BUYING FOR YOUR OWN STAY? OR INVESTING FOR LONG TERM RENTAL? If both yes, please go ahead BUY.

Problem is many people are taking time opportunity to PLAY in the property market. They are not wanting to stay at the location where they buy and they are buying beyond the average rentals against their instalment. Now this will become a big problem for the country...

Or buy with a long term view. Property today and 10 years time will certainly not be the same by virtue of inflation

No worry youngster, mahsing did it again, try this https://forum.lowyat.net/topic/2909773

better than PR1MA shet

Disagree on the article above on these grounds:

1) If I rent, I'm paying the same about or slightly lower than the amount that I'll pay if I purchase a house. And also, I'm paying for someone's purchase of the house.

2) If I don't buy a house (asset), I'll most probably be buying a car (liability in disguise as an asset). I take buying a home as forced savings

3) If I rent a place for a few years, and decides to buy the place, the price may have ballooned up and capital appreciation stagnated.

4) Work place may change every now and then. Lawyers are pretty fixed, open up a firm, stay there for life or move to the shop lot next door or a lot down the street.

5) I pay RM1.8k this day is e.g. 60% of the salary, maxed out DSR. It will most probably be 30% of the salary 5 years down the line.

My opinion is that our dear lawyer should write about "Take public transport or car pool first before you buy a goddamned car"

Article is nonsense. Buy a cheap house first. Renting is only for expatriates or students.

DIARY TALK :::

What I feel is too many people like me who barely able to afford "luxury" properties are on denial mode. They BBB.... just like those luxury cars.

We need to RENT first and TAKE public transport first. Priority is that IF it is convenient enough and serve the same purpose as long as you have good time management.

Don't udstand why ppl die-die BBB property so far away from their workplace and expensive at record prices. It would have been better if they rent near their office first in the first few years.

Property is getting unaffordable, I need to buy now?

Many people who think like this is natural and correct... but let me ask them: ARE YOU BUYING FOR YOUR OWN STAY? OR INVESTING FOR LONG TERM RENTAL? If both yes, please go ahead BUY.

Problem is many people are ignorantly taking this "time opportunity" to participate in the booming property market without knowing the main fundamentals.

They are not wanting to stay at the location where they buy and they are buying beyond the average rentals against their instalment.

Now this will become a big problem for the country...

i'm sorry to say, but if you rent then buy, you will regret

Can even buy earlier, buy the cheaper one, still have RM 300k+ apartment type.

Slowly upgrade like Singaporean.

If youngsters cannot afford, they should rent.

In general, everyone cannot be asset owners or wanting to be asset owners. At the same time, asset owners need people who can rent too, if everyone buy, who want rent?

post # 16, why replying your own post? looks weird. Like self interacting. Take some time off to relax

This post has been edited by peri peri: Aug 2 2013, 02:23 PM

Rent = Expenses (Loss)

Buy = Investment (Gain)

investment doesn't promise gain

lol

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Added on
+1

actually just out of curiousity, anybody regretted their first property purchase here?

and those who are renting, any regrets with your decision for the past few years of renting?

better than "Loss" which is considered expenses.

Paying monthly RM2000 rental / Paying monthly RM2500 installment.

which would you choose?

if 2500 for a mid cost condo and 2000 for a gated landed terrace. I might go for rent

different people have different kind of mindset.

some people prefer to pay off their money which is labeled as "Expenses" rather than "Investment"

and some don't.

stupid idiot barking,
if say now house is expensive, buy later, you wont get house later cause the house price will increase, unless your salary can catch up with the appreciation house price.

alternative investement are maybe for bumi

Never regret for the first property, regret WTF not sapu more units!!!

Rent cheap = small expenses + investment (stocks...etc)
Rent expensive = big expenses + lifestyle without risk, just ended up no savings

Buy cheap = small expenses + long term investment
Buy expensive = big expenses + waiting to die (with huge risk)

So I would choose the "buy cheap". Buy within your means.

However, youngster today want the best of everything, so they either go for rent expensive, or buy expensive. Thus the overcommit.

buy cheap or buy expensive also got risk.. investment not equal to profit .. just must get the mindset right

I think 99% of people will be regretting if they were to follow TS's advice 8 years ago.

not really... many people stuck during 2009 crisis

Globally we have just come out of a long recession, so demand will catch up and prices will increase.

I think my post has been misinterpreted. I'm talking about those who CANNOT AFFORD, if you can afford then is ok.

Many people at my age group Cannot Afford even if work as accountant with fixed salaries cannot afford a home, yet taking risk to obtain a mortgage. All these will suffer when BLR moves up.

I would rather buy than rent. Stick to the concept of investment vs expenses. Some of you would say not all investment are profitable, but at least they worth more than expenses~ lol

IMHO, ppl who say Firmly I'd rather buy than rent statement (but many youngsters want to buy out of their affordability):

It's normal, it could be due to,
1. never experienced/never tried to know 1998 economic crisis, back then the rental vs installment vs interest rate all were at different mathematic outcome
2. been influenced by recent years seeing the price UP UP UP .. yahoo!
3. etc

A real case:
Recently with my fren I've seen a lady very happily viewed a 650K house, really I can't put it into words how excited she was from her words & gestures.
She seriously wanted to place deposit already, want 90% loan.

When it comes to profile checking, she said she is earning RM2300 a month gross pay, on-hand commitment is RM600 per month.
Then my fren tried to help her further by asking if she considers joint name with her husband, she+husband is earning RM5000 per month gross pay, Commitment: current apartment paying RM800 per month & just bought a new Branded car monthly installment RM1500.
Currently on-hand Commitment altogether: RM2900.

What do you think about this case? This case of course can't pass.
The above is just to share some youngsters they're just never consider about consequences.

This post has been edited by ecin: Aug 2 2013, 04:08 PM

buy within mean.. if those 4-5k income earner should buy prop at what range of price? with standard commitment..

just curious bro...are u within the 25-30 age group?

This is always the main prob of many ppl: spend too much on car before getting themselves their dream house. I personally think dat buying things shud hav sequence:
1st- buy a cheap car if own transport is really needed
2nd-buy a cheap property near workplace. Stay until get enough bullet for other property
3rd- buy ur dream house
4th- dream car shud always b the last
2nd

IMHO, 50% - 60% of the net income go to all the loan then i guess one can live without worrying much. :

roughly RM400k property and RM50k car...

This post has been edited by SpeechLess11: Aug 2 2013, 04:39 PM

To accurately put it, they cannot afford the home they dream of or desire. A young professional thinks that because they are professionals, they must buy a property that fits their lifestyle, instead of buying a property to suit their income.

Fact is, if someone is earning RM3,000, there are properties for them such as Low Cost Flats since they fall under the category where they qualify. My first property was such and it cost me RM310 monthly installment over 10 years loan.
But instead, they want a bachelor pad. There are old houses that they can buy for under RM200k. Liveable with touch ups and renovations. But instead, they want a brand new G&G landed.

Yes, people want the best, but they should buy within affordability. I want a BMW now, but I can't afford it with my income when I have other commitments. Some people, die die also must find a way to buy one even if it means little money left at the end of the day. Enough for instant noodles.

There are properties for most people. It's their expectation that must drop.

Speaking about low cost flats, TBH, I would not choose to stay there neither would I encourage someone to stay there.

With all due respect, I'm not saying that it's lowly in terms of status and what not. But, with the crime rates on the up side through the recent years, I really doubt that it's a wise choice to do so.

I think people are spending money to buy security nowadays. Well, not to say it's crime proof, but a lower chance of getting mugged or unwanted stuffs to happen to us, or our partners and also eventually, our children.

yes. why buy. rent first la. scared youngsters get screwed on first buy. please pm me if you wanna rent in kl, setia alam, alam impian, kajang or puchong.

Thats how the kiasu diaseas spreading in our country now. Everyone seem there wont be another tommorow. Thats why is overheat now. PPL buy houses like buying vegetables in market.

Not good i think

Yes...

Boss Amint, yours one all landed. Only rich guy can rent from you. haha

Back then appreciation speed of properties were not that fast and it is now.

Let me ask you 2 questions:
For a person of RM3000 monthly earnings, how long he has to save money for RM50K renovation cost?

How much can RM50K did for renovation in year 2009 and year 2013?

Landed is cheaper

Agreed with all that you said - this post and the previous post in this thread.

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Added on
+1

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Added on
bro, I do not disagree you, but you must never been / not even know / not even seen poverty

i'll rent since so many choice available
save the money
and for sure market will burst one that
then that time i'll buy with cash lol
many choice available as wel

nice strategy u have...

there is another strategy: buy now, rent upon completion with positive cash flow, sell become market boom, keep cash or change to gold, buy when burst...

conclusion: most important is you urself happy and satisfy with the situation. Cheer~

WOW

Good article u have there bro.. Nowadays youngster including me dream of luxury life.. When people get Iphone Ipad etc they tend to follow the trend.. Yes of course they can follow because this kind of gadget doesn't cost u few thousand k.. Just take a look around when u go shopping or dinner, most of the youngster have luxury life... The problem start when their friends start buying houses and talking about it in the office.. When their friend earning 3k buying a 500k property they will think that they can afford too but they never think ahead.. For example, what happen if BLR increase? So please buy a property within what u can afford.. It is even better if u can buy property price/installment lesser then what u can afford... At least u still have gaps to take some air...

Buy a cheap one to start off. Step by step move up as pay m savings increase.

In this case they wont get the banker approval from loan.
Unless more down payment.

salary 3k will never be albe to get a 500k house loan, they either get guarentor or join name.

dunno wat u guy worry about, bank will filter the borrower.

Neh.. I heard u buy a vege in setapak too..

rent house = save money?

The market will never burst when we got many renting demand.
U r part of it.

Bear in mind our rental of average condos are still very much affordable in good locations. For example, Palm Spring Damansara is only about RM900 to RM1,200 per month. Otherwise you will have to pay RM3,000 loan instalment to buy a new half-past six serviced suites in Empire City Damansara Perdana.

To those that have bought one or more the last few years, congratulations! (including me)

If can afford then can buy. But if ngam ngam cover better dont buy expensive property. When BLR increase or any problem happen then they will know what happen. Buying property not like buying car. Property loan will hold you 35 years car just hold 9 years only. Hope those youngster will think 1st can afford or not b4 purchase property.

This post has been edited by petlu28: Aug 2 2013, 09:56 PM

Just my humble opinion....Go rent first n observe + survey at least 1 year. It very important to get yourself to experience it. Get a room. not whole unit. Rental around rm500-650 Can get u a small room at a nice place. Stay there 1 year. Slowly you will find out what good or bad points for the condo you stay. When u ready to get 1. U will be well prepare n more clear what u need. N what need to avoid....

Personally have very bad experience staying in 1 of the condo at dutamas area. Good location but bad condo planing n layout, bad door entrance layout, lousy facility, lousy management and Etc. After a year, When I start search for a property for myself + invest. I used that as a guideline.

This post has been edited by HELLO HELLO: Aug 2 2013, 10:08 PM

shhh..haha..i m not buying vege..done alot of homework de la..not speculating...

Property price and salary increase unbalance. If youngster not force his/ her to pay housing loan. They will spend the money in buying desire need

Yes, my friend's bf parent. When her bf want to stay at kl. Bf parent bought him 700k+ property at bukit jalil 2 years ago. Fully paid off by cash. + additional Renovation cost 150 to 200k all paid off by cash too. My eye popping. Her bf parent so cash rich. + her bf just 24 this year.... Just finish his study and start to come out to work recently. His parent so Geng! Nowaday youngster's parent don't play play. Just want their son stay there fast fast make baby.

This post has been edited by HELLO HELLO: Aug 2 2013, 10:27 PM

I do agree with you. Especially at the management quality. Management is one of my priorty requirement in buying any condo. If this fail..you might end up with headaches with all the defects and complains from your tenant.

Frenz, dont compare in that manner. If not how about beckham son? prince william newborn? etc etc?? better earn by yourself, the you will enjoy the meaning of value in your life. For those golden key sons, they dont even know the real value of life, coz taking it for granted. Nothing grand to be proud of...to me..I am more proud of my friend who started zero and to build his own empire.

Haha you a right!..those start from nothing 1. Seriously respect them.

Oh, editing my post, just realised that I'm seeing 'poverty' as 'property'.

Well, poverty, honestly, I've not seen poverty. neither am I from a wealthy family. middle class, just like 86% of the population of Malaysia. 4% in poverty and 10% upper class.

I've never despised them who live there for reasons of affordability. But I honestly disagree on some who lives in a low coat flat with a BMW parked downstairs.

I think it's easy to say that youngsters want a good life, wants luxury and status. But let's be fair, who doesn't? And I believe that circumstances just doesn't allow us to get a sub-sale house.

As mentioned earlier, many wouldn't stay in low cost houses (pardon me again) and a medium cost apartment will cost about 250-300k subsale.

I need at least 50k for DP + legals fees + this and that. I find that first 50K the hardest to accumulate.

I don't come from a wealthy family, and I have no family support, and thus... I result to DIBS + developers' discount schemes. and that suggests... higher price.

And the irony is, the middle class gets expensive units and the rich may get the middle range with family support. And when the crap hits the fan, the middle class gen-y gets hit first.

I guess let the gen-ys decide. Some know what they're getting into. Majority don't even bother and drool over cars. Like what mentioned, the banks will be the gatekeeper.

This post has been edited by tyshu: Aug 2 2013, 11:12 PM

Do you expect someone who just started work at 21 to straight away be able to afford a house? I move out on my own at the age of 32. Yes, it is harder now. But people have to work around the circumstances. They keep hoping that circumstances will change for their benefit. My friend relocated to Malacca with his family when cost of living became significantly higher here in Klang Valley. Why? It wasn't only because of rise in food and general expenses. But nursery for children also went up. Was he suppose to keep praying that things will change in KV? He made the decision. Now he lives in a similar sized home in Tengkera but with more savings at the end of the month. People adapt.

Ask any young people these days who recently bought a home. Likelihood is due to family assistance for the down payment or renovation, unless at 25, he already has RM50k for 10% of RM500k home + another RM30-50k for basic renovation and furniture. Some of course made their success on their own. But it won't be many.

The point is, if 5 years ago, you dream of owning a 22x75 home for example, you need to down grade your choice to maybe 20x70 or 18x60 home in the same location. Or go further from KV. But no, people still want 22x75 and went to buy it. Then they ask why they have so little money left after paying installment. It is because people are spending/buying above their means. They gave the reason that a 18x60 home is small for a family of 4. Or is it because they want luxury above necessity? And before you say it, yes, to the poor who stays in Low Cost Flat, a 18x60 is considered a luxury. If you have resources, you have choices. If you have limitations, work around it. But to say that one can't afford a home with RM3k is simply false. Start small. Some don't even start and yet, they whine everywhere they go. Life isn't fair in case you're wondering. The sooner people realise that, the faster they will get off their butt and do something about it.

This post has been edited by matthewctj: Aug 2 2013, 10:52 PM

Lolz...

I found the topic with this thread somehow become show off channel for someone on their properties.

No offense - perhaps it helps to educate youngster..

Why not like me ---- Please be low profile

+1

Some said HK youngster did just that, why branded handbags are selling like hotcake. Cannot buy property, buy other luxuries.

We must know some categories of purchaser. If youngster can afford buy property RM500 per sf above they might have ppl support at behind. Just want remind some really ngam ngam afford don't buy over your monthly expenses. Some problem might will happen like insurance or medical expenses.

I agree with this "if everyone buy, who want rent" and that is my thought.

I didn't buy a property until now because my old man said to me " If you don't have such a big head, don't wear such a big hat ".

When time to buy, buy within my means.

You are right. Property investment not easy to play have risk too. Since youngster why not take learn more from others before purchase. Don't regret later if any happen later. Market not very good now. You can ask those ppl doing business now.

Wat a stupid advice..people who believe him will surely regret

I am 30 years old now and in the past I hit the wood many times. Like Lampa Burger and etc.

I save hard and do part time business invest kao kao stock market. Example No regret buying MYEG stock when it is 30 sen +++ long ago and in the long run accumulate.

End up sold it near peak and 90sen.

Lampa Burgers, Mway, MYway, NOway and most insurance agents, u tink they really rich driving those flashy Jaquars and BMW Mercs?? Their poket kosong...the Chinese kata " good to look not nice to eat"

no sure ...why this old friend/ part time lawyer recently encourage ppl buying stocks ...haha...I not buying stocks but precious metals...

Alot of youngsters play foreign exchange nowadays... super big heart and gamble heart.

My friend say Property is considered an old man's game. The upside is too slow and too little for the amount you put.??

This post has been edited by accetera: Aug 3 2013, 01:23 AM

I was a runner at layer office and saw workmate clicking MYEG button. With simple thinking and not intelligent in real life,I was thinking the future will be internet world, government link some more,cheap, afforable and blue chip.

I take the risk Interest rate vs Appreciation Capital. Long Run so it is not a gamble.

Buy 30 sen++ become sell 90 sen onwards. Appreciation more than tiga kali ganda. (Good Investment for me than investing property)

For own stay property buy what I can afford.

When was this?

hmm, the question is how much u earn? and how much u earn from 2000 - 2013?

2.3k want buy 650k house?

Pity her/ So am pity me

I ve seen many ppl did that especially those go buy soho with a hope of flipping. With disposable income take place I really wonder how they survived monthly. Kota Damansara will be the witness to what it will lead.

Most of people in my age group are now living beyond our means. That is why I say "if you cannot afford based on salary on paper, just forget it.... but die die want to buy Commercial house to flip"

flip flip flip, balakong later will build soho for public to join flip. CHeers.

hmm..my turn to give my opinion also...haha

in every thing in life, we need different ppl with different roles to play...
in a competition, you need a winner and a loser else it's not called a competition...
in a trade agreement you need a seller and a buyer, else no trade can happen...
in nature, there is predator and a prey, then it's a cycle of life...
ying and yang, smart and stupid, the list goes on....

so in this case (property market), we need people who are seller, buyer, tenant, motivated/desperate seller, desperate tenant, etc the list goes on.....
so if young ppl BBB like buy vege, i would say pls go ahead don't stop, if that makes you happy....
if young ppl want to rent, also go ahead, the market also need ppl to rent else no one can find tenant...

my point is there's no should or should not.... right or wrong... is just different people playing their different roles in the same game.

Cheers....

+1

Youngster no BBB --> I got tenant

the market will still burst if renting demand is only in low-medium cost/high density areas.

many factors will lead to market downturn. while decreasing property demand is one of the factor, it doesn't have to be initiated by it.

your argument is way too broad.

renting gives you the option to wait and buy when affordability fits in your budget, i.e. saving your bullets. of course it depends on how much you are renting, and how discipline are you in saving. With more disposable income, the individual will be able to grab opportunities in other financial markets like stocks, commodities, etc. I refuse to buy my first house yet, can't commit much of my income when there's so much opportunities in stocks, and IPO market.

It's all about the game of patience.

This post has been edited by kwh1989: Aug 3 2013, 06:46 PM

Brovo.... Agree... 'there is no should or shouldn't '
Don care about others...
Eventually the 1 who taste the fruit is the 1 who make decision. Right?
Investment or own stay, 3k salary to buy 600k/800k property so wat? If got some1 willing to give financial support (banker or family) and u willing to take the risk just go head. Why not? Young ppl age is your asset take the risk as in young age coz when u go older u will not dare to take the risk. No risk no gain but remember no investment is 100% gain.

A lawyer's advising us about property investment?

if loan can pass base on the salary slip, why not...