Welcome Guest ( Log In | Register )

Outline · [ Standard ] · Linear+

Investment YOUNGSTERS, PLEASE RENT FIRST BEFORE BUYING..., Dont rush accumulating unaffordable debt

views
     
cherroy
post Aug 5 2013, 03:55 PM

20k VIP Club
Group Icon
Staff
25,802 posts

Joined: Jan 2003
From: Penang


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 save

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. smile.gif



cherroy
post Aug 5 2013, 04:36 PM

20k VIP Club
Group Icon
Staff
25,802 posts

Joined: Jan 2003
From: Penang


QUOTE(juicyliana @ Aug 5 2013, 04:09 PM)
Agree with your point but the thing is the RM2500 rental is not fix. it can be increase after some time by the landlord too. Eventually it will exceed the repayment.

Also, if Mr A decides to buy, the initial repayment is high but in the end the house belongs to him after 30 years of repayment with capital appreciation but after 30 years of rental, the house still belongs to the landlord. In fact, the landlord would've got his/her money back from renting it out.
*
Generally, rental market is weak, despite generally property price has soared so much.
There are a lot of vacant unit at mid to high end property.
Some even manage to rent out for years.

The merit of renting is free up a lot of commitment that many do not forsee.

Renovation cost (cost 50~100K), this is not recoverable generally)
Maintenance fee, a year a few thousand
lawyer fee for S&P, strata title lawyer fee, also cost a few thousand.
And housing loan monthly repayment, you can drag your landlord for a few month, but you can't drag payment for bank as bank will blacklist once miss out payment.

You take for granted house must appreciate in price, without taking into account of interest charges incurred from the loan, as well as risk of interest rate.
There are house that appreciate little in value, there are house that in abandoned project, there are shoplots that after obtained OC, that growing grass only.
Not every year house price must up like previous few year.

Despite with recent year of property price escalating, there are still houses that being left vacant, nobody want to rent, nobody want to buy, due to location issue.
Not every house situation is the same.

Only prime and strategic location property that are can enjoy both good rental income as well as capital appreciation.
But those property are not cheap and mostly out of affordable for most middle income earners.

Also collecting rent sometimes is not as easy as taught, rent it out, next month go to collect money.
Some tenant defaulted, runaway, refusing to move despite not paying rent, house being vandalised after tenant move out...

Yes, the best scenario is just like above mentioned, after 30 years repayment with capital appreciation, or landloard get it money back from renting it out.
But provided everything goes smoothly across.
While the one renting is not baring any risk to it, while free up a lot of commitment, that may enable one to do other thing else.

It is not about saying rent is better or buy is better.
Just rent has its own merit and serve its purpose which may suit to one situation, and do not need to take any risk in between.
While buy has its own merit, if everything goes smoothly, the the risk taken become a "gain" for the landlord.

One is with risk taken with lot of commitment.
One is without risk taken, while free up of cash.

So we can't say which is better, actually, it depends on situation and individual preference.

cherroy
post Aug 6 2013, 09:57 AM

20k VIP Club
Group Icon
Staff
25,802 posts

Joined: Jan 2003
From: Penang


QUOTE(brother love @ Aug 6 2013, 01:02 AM)
If U rent, u will probably end up never buy, or when u want to buy, the price already out of range..tats my opinion, i personally know some frens who missed out owning poperty when they can afford but inzteas they rent becoz they want closest to workplace, end up still renting and the property rented doubled price
*
Closest to workplace, save time, which is sometime invaluable and precious.

Time is irreplaceable. Tiredness in travelling each day also may not recouped back.

Money cannot buy time, nor buy family time that has gone past. Seeing your kids grow up, nurture them etc. Spend time with family members etc.
Money cannot buy health (tiredness is travelling each day).

But money can be earned again, but not time, memory.




 

Change to:
| Lo-Fi Version
0.0161sec    0.53    7 queries    GZIP Disabled
Time is now: 11th December 2025 - 12:26 PM