Lol, calling for superhero to rescue! Really made me laugh.

Tapering started. Wait to see the effect.

+1

Is this the one ?

http://www.chinapress.com.my/node/484756

I think a lot of people dun realise that flipping game is already over. Unless flipper is buying with 100% cash, flipper is paying majorities interest for the 1st few years. If u take 100k loan, after a few yrs of monthly payments, u still owe the bank majorities of the original 100k loan as u are paying majorities interest only. So prop investment is a long term process.

Rental yield is easy to calculate, principal/interest cals is more difficult.

+1

If 1% increase in interest rate (4.5% to 5.5%):

Monthly Instalment: From RM5,066.9 to RM5,677.9
One yr: from RM60,802 to RM68,135
Additional Interest Paid in Year 1: RM9,994

House price to adjust up RM9,994 just breakeven

%interest--Tenure-- yr installement-- mo Installments-- Interest Paid Yr 1
4.50%-- 40 yrs-- $53,947.54-- $4,495.63-- $44,813.13
5.50%-- 40 yrs-- $61,892.43-- $5,157.70-- $54,823.57
Difference-- $7,944.89-- $662.07-- $10,010.44

%interest--Tenure-- yr installement-- mo Installments-- Interest Paid Yr 1
4.50%-- 40 yrs-- $53,947.54-- $4,495.63-- $44,813.13
7.50%-- 40 yrs-- $78,968.49-- $6,580.71-- $74,860.70
Difference-- $25,020.95-- $2,085.08 -- $30,047.57

Actually, it is not just cash flow that an experienced investor would consider. By having to increase the sale prices due to interest payment increase, the risks to profit, and loan commitment just went up. Considering the affordability of potential house buyers for own use, investor will just have to go for cheaper units. House buyers have to pay loan just like investors.

This post has been edited by gspirit01: Dec 23 2013, 04:14 PM

U r very welcome!

There is an increasing holding cost for house investment. Investors are forced to increase their sell price every year, if they ever plan to sell.

At 4.5% interest rate and 1 mil loan, they hv to increase their sell price by: interest paid ($44,813.13) + legal fees +management fee (if any) + sell commission ($20,000 to $30,000) + etc. = roughly $100,000 after Year 1. So, the selling price has to be adjusted to $1.1 mil

At 5.5%, the figure goes up to $110,000 After Year 1. The sell price has to be up to $1.11 mil.

At 7.5%, the sell price has to be up to $1.17 mils.

I did a quick one for subsale (4.5% interest, 40 yrs, Other fee 4% of sales price), enjoy!:

5 yrs holding, 100% Price Appreciation, 20% Crash
Original Price $1,000,000
Highest Price $2,000,000
Crash Price $1,600,000
Interest Paid $219,672
Principal Paid $50,066
Monthly Payment $4,496
Total Payment $269,738
Other Fees $64,000
Principal Remain $949,934
Rent Collected $150,000
Total Profit/Loss $516,394
%profit with rent 52%
%profit w/o rent 37%



5yrs holding, 80% Price Appreciation, 20% Crash
Original Price $1,000,000
Highest Price $1,800,000
Crash Price $1,440,000
Interest Paid $219,672
Principal Paid $50,066
Monthly Payment $4,496
Total Payment $269,738
Other Fees $57,600
Principal Remain $949,934
Rent Collected $150,000
Total Profit/Loss $362,794
%profit with rent 36%
%profit w/o rent 21%

5yrs holding, 60% Price Appreciation, 20% Crash
Original Price $1,000,000
Highest Price $1,600,000
Crash Price $1,280,000
Interest Paid $219,672
Principal Paid $50,066
Monthly Payment $4,496
Total Payment $269,738
Other Fees $51,200
Principal Remain $949,934
Rent Collected $150,000
Total Profit/Loss $209,194
%profit with rent 21%
%profit w/o rent 6%

5yrs holding, 40% Price Appreciation, 20% Crash
Original Price $1,000,000
Highest Price $1,400,000
Crash Price $1,120,000
Interest Paid $219,672
Principal Paid $50,066
Monthly Payment $4,496
Total Payment $269,738
Other Fees $44,800
Principal Remain $949,934
Rent Collected $150,000
Total Profit/Loss $55,594
%profit with rent 6%
%profit w/o rent -9%

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%

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

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

Thanks for sharing. That is what I thought as well. Removal of DIBS really kills!

If dead chicken is coming, would you pick it up ?

Assuming there is a crash of price by 25%, and the price stop falling and maintaining for the next 3 yrs (Optimistic assumption, in reality, the price will keep falling!):

1st yr, 0% up
Original Price = MYR 1,000,000
Downpayment = MYR 100,000
Loan Amount = MYR 900,000
Sell Price = MYR 1,000,000
Interest Paid = MYR 40,203
Principal Paid = MYR 14,519
Monthly Payment = MYR 4,560
Total Instalment = MYR 54,722
Other Fees = MYR 40,000
Total Outlay = MYR 194,722
Principal Remain = MYR 885,481
Rent Collected = MYR 30,000
Total Profit/Loss = -MYR 65,684
%profit with rent/outlay = -34%
%profit w/o rent/outlay = -49%
COCR (w/rent) = -40%

2nd yr, 0% up
Original Price = MYR 1,000,000
Downpayment = MYR 100,000
Loan Amount = MYR 900,000
Sell Price = MYR 1,000,000
Interest Paid = MYR 79,739
Principal Paid = MYR 29,705
Monthly Payment = MYR 4,560
Total Instalment = MYR 109,444
Other Fees = MYR 40,000
Total Outlay = MYR 249,444
Principal Remain = MYR 870,295
Rent Collected = MYR 60,000
Total Profit/Loss = -MYR 90,034
%profit with rent/outlay = -36%
%profit w/o rent/outlay = -60%
COCR (w/rent) = -48%


3rd yr, 0% up
Original Price = MYR 1,000,000
Downpayment = MYR 100,000
Loan Amount = MYR 900,000
Sell Price = MYR 1,000,000
Interest Paid = MYR 118,577
Principal Paid = MYR 45,589
Monthly Payment = MYR 4,560
Total Instalment = MYR 164,166
Other Fees = MYR 40,000
Total Outlay = MYR 304,166
Principal Remain = MYR 854,411
Rent Collected = MYR 60,000
Total Profit/Loss = -MYR 112,989
%profit with rent/outlay = -37%
%profit w/o rent/outlay = -57%
COCR (w/rent) = -46%

Haha, I think I belong to that dreamer group as well. I have tried to work out the math, starting from salary -> getting loan -> VP -> loan paying. Can't see how these people can afford to buy. Maybe rich parents can help out ?

Sry, made an error in 3rd rent total:

3rd yr, 0% up
Original Price = MYR 1,000,000
Downpayment = MYR 100,000
Loan Amount = MYR 900,000
Sell Price = MYR 1,000,000
Interest Paid = MYR 118,577
Principal Paid = MYR 45,589
Monthly Payment = MYR 4,560
Total Instalment = MYR 164,166
Other Fees = MYR 40,000
Total Outlay = MYR 304,166
Principal Remain = MYR 854,411
Rent Collected = MYR 90,000
Total Profit/Loss = -MYR 112,989
%profit with rent/outlay = -37%
%profit w/o rent/outlay = -67%
COCR (w/rent) = -53%

This is exactly what was happening before DIBS Ban. Many are still doing this today as they just follow the old model without realizing the effects of new games rules.