Correct, normally banks will automatic prolong the tenure and inform the borrower by writing.
However, this make thing worst as borrowers are paying more interest end of the day.

What borrower actually should do is to maintain the tenure, so that don;t pay extra interest.
Of course, provided your cash flow is allowed.

that is why when BLR increase, bank stock counter also shot up, more profits earns.

Originally I assume 100% loan for quick calculations. If down payment is made, the following one applies:

5 yrs holding, 100% Price Appreciation, 20% Crash
Original Price $1,000,000
Downpayment $100,000
Loan Amount $900,000
Highest Price $2,000,000
Crash Price $1,600,000
Interest Paid $197,705
Principal Paid $45,059
Monthly Payment $4,046
Total Instalment $242,764
Other Fees $64,000
Total Outlay $406,764
Principal Remain $854,941
Rent Collected $150,000
Total Profit/Loss $633,354
%profit with rent/outlay 156%
%profit w/o rent/outlay 119%

forever1979,

<< However, this make thing worst as borrowers are paying more interest end of the day. >>

Yes. But, most people do not have the cash flow to handle the increase in monthly installment.

<< that is why when BLR increase, bank stock counter also shot up, more profits earns.>>

Assuming the NPL does not increase tremendously...

Based on how much Malaysians borrowed to sustain their life styles, it should not take much to increase NPL.

Dreamer

Wah, average price appreciation >10% pa, only idiot don't invest in property in malaysia.

This post has been edited by Nikmon: Dec 23 2013, 10:10 PM

COCR ? If COCR how come I got 290% ?

Sorry, forgot to take out 100k downpayment:

5 yrs holding, 100% Price Appreciation, 20% Crash
Original Price $1,000,000
Downpayment $100,000
Loan Amount $900,000
Highest Price $2,000,000
Crash Price $1,600,000
Interest Paid $197,705
Principal Paid $45,059
Monthly Payment $4,046
Total Instalment $242,764
Other Fees $64,000
Total Outlay $406,764
Principal Remain $854,941
Rent Collected $150,000
Total Profit/Loss $533,354
profit with rent/outlay 131%
profit w/o rent/outlay 94%

What is COCR ?

This is for last few years. Future = ?

Now u understand y it was so hot!!

This post has been edited by gspirit01: Dec 23 2013, 10:36 PM

Cash on cash return. That means I calculate how much total cash I fork out during the period, and how much cash I receive at the end of the investment. And I divide the cash inflow over the cash outflow, that is my COCR. In other words, how many time/% I can made over my capital

In your example, your initial investment is RM100k only. Then you pay the installment every month totaled RM243k + RM64k for cost. But you collect RM150k rental. So the net total you paid out is RM257k.

When you sell, you receive RM1.6m less outstanding bank loans RM855k = RM745k cash inflow

So, all in all in cash term, you invested RM257k and at the end of the day you have RM745k cash in hand. You have made RM745k / RM257k = 290% over your capital.

It is another way of viewing how you grow your money. Disregarding the amount borrowed and value of the property. In other words, it will also show the power of leveraging (ie use other people's money to make more money) which we cannot use with other investment like FDs, share market, bonds, UT etc

That's the beauty of property investment

This post has been edited by Showtime747: Dec 23 2013, 11:16 PM

Your calculations on COCR is correct. I didn't take out 150K from cash outlay.

it appears that we must buy.. but if no one is buying your crashed 1.6 million property, then how hold another 5 years?

once property in which you hold more than 5 years.. your new property still looks new and price the same? how about new properties coming up? because if you are planning to have 100% appreciation say 2 million from 1 million originally, the new projects will definitely be lower say start selling at RM1.3 million and your crashed property with 5 years in old cost 1.6 million.. how to buy?

which one will you buy then? Lets use bandar mahkota cheras (BMC),

section 5 BMC is selling at RM780K for a brand new double investors.. originally RM450K only by CHoontian,
Section 2 or 3 of BMC desa vista OLD HOUSING is selling up to RM760K

now u may see proximity in both prices, but as a buyer which one will you buy? the brand new DS or the old DS which is 20X 65 as compared to 24X 75. the expected profit that investors is seeking is the price 5 years from now or maybe 10 years from now. the property price may reach that expected height but then again if you carefully lookat section 1 or 2 of BMC some failed investors hold the property too long till the whole house become so bad in condition with missing gates, windows long grass.. more like bukit beruntung.

the style and trend of the said house is far slacking behind as good as holding it for 5 years..

another clear example would be saujana villa kajang.. those prop been there for years still occupancy was less that 50%.my mother's friend bought a unit there the owner planning to sell it at 1.3 million, he was then counter offered 900k and finally settled at 1M. the original price was 780k. he hold for 4 years.. still many was abandoned

there are similar projects like TTDI groove kajang u name it(lavenia, lily and etc) too.. keys already handed out but no occupancy at all zero.. all are investors who wanted to sell off their property with the price 5 years from now...
too many kajang 2, puncak saujana kajang, jade hills and many more many many more.. setia ecohill semenyih, seri pajam, nilai, kota warisan sepang all will end up the same.. look at the occupancy rates really disturbing

once you plan to rent it out.. your property still as good as 1.6 million.
how much are you planning to rent it our? 4k of loan repayment monthly...means you going to rent the property around 4 k?


This post has been edited by bearbearwong: Dec 24 2013, 12:08 AM

Yalor, all those hedge funds, investment banks employing actuarist, economists, accountants, mba are idiots

A financial wizard Higher profit margin than typical illicit drug dealer profit margin of 100%; Can't think of any other business could be better than property flipping. Investment bankers, hedge funds, illicit drug dealers are in the wrong business and should learn from sifu here


This post has been edited by icemanfx: Dec 24 2013, 04:25 AM

in Kl region however, i noticed connought avenue the premier which is adjacent to the new cheras central, amanya residence maluri cheras, new condo nearby bintang mas condo (cheras lrt station) and you vista also suffering to sell their remaining units and of course kl south.. southville haizz.. even in major cities like Kl these units are of low occupancy... thus many investors dont even pay their management fees, sinking funds and etc.. causing the services in a condo or service apartment lack and eventually no management..

the vacant units owner say they will pay the whole sum once they sold the property...

same situation to invested properties.. if occupancy is low.. irregardless of the new project or wat not not.. will you be dare enough to stay there with these insufficient facilities?

my 2 cents of observation

yes, the occupancy rate is very annoying.
My fren who stays in a landed in Kota Kemuning, I think he bought the house 4 yrs ago about RM400k plus, move in 1 year ago, i just when there recently, looks like < 50% occupy. and I believe many places is like that.
But the price has just shoot up to RM700K.

It shows that either the seller cannot sell due to higher asking price or some really means for own stay.
but surprisingly there is no auction for all these houses or condo and it show those property owners are really cash flow strong.

This all sounds nice and good, but the problem is that buyers don't have unlimited resources.

8k monthly, maybe can rent out at 3-4k if you do it up nicely.

I'm planning to rent landed and one of my criteria is how many houses are occupied inside the development.

Or it means that there is an oversupply in the market.

When you say price has gone up to 700K are you refering to word of mouth, asking prices, sale prices or valuation prices? Because all 4 are different.

More properties to be auctioned next year[SIZE=7]

Dec 23, 2013 - PropertyGuru.com.my

Next year’s hike in real property gains tax (RPGT) rates and the ban on Developer Interest Bearing Scheme (DIBS) will likely see more property being auctioned in 2014, according to National House Buyers Association (HBA) secretary-general Chang Kim Loong.

“I will not be surprised if there will be a lot of properties for auction next year. I won't be surprised because a lot of people who bought into properties for investment, they are now caught out with RPGT and DIBS,” he said in a SunBiz interview.

He noted that in case the property market slows down and buyers who acquired properties with DIBS are not able to pay their loans, ending up with their property being foreclosed; these buyers will not be able to repay their debts even after their properties have been auctioned while banks will not be able to recover the loan’s full amount.

“Assuming there is a slow down in the market, do you think the bank will finance 100 percent of DIBS at RM600,000 for a unit that is actually priced at RM500,000 without DIBS? The banks will also not be able to recover the RM600,000 (after the property is auctioned off) because they hiked it up in such a way for interest purpose,” explained Chang.

Notably, the banning of DIBS including any of its permutation is expected to stabilise the property market as well as bring speculation to a more realistic level since property prices will now be more reflective of the market value.

“From the last discussion I had with the Valuation and Property Services Department, they said the market has slowed down to a more moderate level and they expect that there will be a saturation point next year,” he said.

“I hope it becomes a reality and to a certain extent, first time house buyers will be able to buy into properties.”

Read all about it here:-
http://www.propertyguru.com.my/en/property...m_content=links

No one selling, no one buying & no one occupying - is that a good market?