QUOTE(juicyliana @ Aug 5 2013, 10:43 AM)
I totally agree on this.
generally malaysian salaries does not go up in tandem with the house prices. You can see house prices rise as much as 30% or more at prime areas but our salaries don't rise as fast as that.
secondly, renting is an opportunity cost. For example, Mr. A has can afford RM3000 a month to pay for house rental or loan repayment. If he put in RM2500 a month for rental, he can only save RM500. The RM2,500 is use to pay his landlord's loan and with a mere RM500 a month, he can only save RM6000 a year. to buy a RM600K house, he need to save 10 years. it's better for him to put his RM3K into his own house than into someone else's.
for fresh grads, it is better to borrow money from parents, combine income with wife or worst case senario, rent a room first and drive an economy car.
Or if he/she has the capital, buy a house and rent the rooms out to cushion the loan repayment.
Actually MR.A savegenerally malaysian salaries does not go up in tandem with the house prices. You can see house prices rise as much as 30% or more at prime areas but our salaries don't rise as fast as that.
secondly, renting is an opportunity cost. For example, Mr. A has can afford RM3000 a month to pay for house rental or loan repayment. If he put in RM2500 a month for rental, he can only save RM500. The RM2,500 is use to pay his landlord's loan and with a mere RM500 a month, he can only save RM6000 a year. to buy a RM600K house, he need to save 10 years. it's better for him to put his RM3K into his own house than into someone else's.
for fresh grads, it is better to borrow money from parents, combine income with wife or worst case senario, rent a room first and drive an economy car.
Or if he/she has the capital, buy a house and rent the rooms out to cushion the loan repayment.
1. RM500
2. Renovation fee (that easily cost 50-100K nowadays) because new house generally is not "liveable", you need to spend on renovation.
While at Rm2500, mostly is fully furnished and at this rate can mean for a property that worth at least 700~800K already. While Rm3000 monthly is enough for RM 700K property?
2. Maintenance fee that easily cost about RM300 per month + sinking fund (10%)
3. Repairing cost (if).
4. Miscellaneous fee like quit rent, assessment, fire insurance, MLTA etc.
5. Don't expose to risk of hike in interest rate.
6. Don't expose to the housing market risk
7. Don't need to pay lawyer fee, stamp duty, which cost several thousand as well.
8. Can move anytime once tenant contract expired, if the property condition, environment is not good.
The money saved by A may enable A to do other thing, investment, doing business etc.
So it is not solely Rm500 gain by MR A.
Renting has its own merit as well, doesn't means 100% is bad.
Aug 5 2013, 03:55 PM
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