Many people have over a rm1 mil cash in bank, even  more so greater in number for rm1 mil in debt or more. Better to leverage on bank money to make money works for you rather than keeping in bank.

No discussion can cover all aspects, neither do one simple being can declare his own networth while evaluation is done by 3rd party like bank has its own networth calculation criteria. If you know, why dont u share what is networth to you.

Is it also true that if you're ong pigeons will want to live in the eaves of your roof? The Chinese and Indians believe in pigeons. The Chinese say this type of bird know how to tai suay/despise/look people no up LOL. True?

These are not real investors. They are flippers. But I know of very young real investors with 5 or 6 properties already.

DDD is waiting. UUU also waiting. I afraid too many people waiting for dead chicken until cannot find. We need a economic crisis let everyone lose job only then got dead chicken everywhere

Hope you are right. Then nobody will compete for the dead chicken    How do you calculate the extra interest when the rate return to pre QE level ? What was the interest before QE level in malaysia ?

When ever I see people rushing to buy 500sf service apartments with 400K price tag in non business district,  I just shake my head & wish them good luck.

Does this people ever calculate rental yield & secondary market demand for such property in non business district ? ...sigh

But as usual all u need is some obasan gossip & social media, plus ask your staff to become actors/actresses to line up long dragon...lol

1% increase is RM200 pm increase ? or RM1000 pm increase ? How you calculate ? You must have a figure to conclude the flipper will suffer right ? How you calculate one ?

BNM rate is not coorelated to Fed fund rate.
From 1998 to 2013, basically BNM rate was always in the range of 3.x% (apart from a year or 2 during 2008 crisis, that we saw OPR at 2%), while Fed fund rate was roller coaster from 1% to 4% then to now 0.25%.

So the chance of increase 3% is remote for time being condition.
In fact with GST is on the pipeline 2015, that could dampen the economy growth, it is not the interest for BNM to hike rate so significantly.

Jokes aside, with the current market and economy condition. I doubt that there will be any booms anymore on the property market. I feel that property prices will just become stagnant as transactions are lesser by day. Properties in established areas won't be affected much as it is well sought after and owners have most probably got it off at a very low price before. Those harping on getting some "dead chicken" are like those who are preying on property owners who couldn't service their loans anymore and have to dispose off their properties to minimize their losses. But imho for that to happen, it would require the economy to crash like 1996-1997 and that would be very damaging to our countries' economy as well as our Ringgit which in turn affects all of us as we are holding on the Ringgit. Also remember that even though there may be desperate owners willing to let go of their properties then, it would be hard to get a loan then as Banks would have tighten their hire purchase requirements and not to mention the crazily high interests like back then in 1997.

Malaysia economy no longer like prior before 97.
Situation is totally different.

Prior before, you have low base, aka from agriculture to industrialisation, a lot of sector booming, good profit margin, corporate can withstand high funding rate (BLR) to sustain and grow the business.

Now Malaysia economy is on middle of the road, aka in the middle income range.
A lot of SME is on razor thin profit margin, no thanks to globalisation.
Higher interest rate can easily kill off them.

Gov expenditure no longer can go more due to persistent budget deficit over the last decade.
In fact, even with many subsidy cut recently, gov budget is still a deficit situation.

You need strong SME sector to propel the economy in a more healthy way. Cannot always rely on gov, unless the gov is cash rich, then different story.

Since after 97, certain capital control is still there, not as free as last time. Some capital control is indeed needed to have a more stablise environment.

As said before, Fed has repeatedly saying Fed fund rate is going to be low for extended time period.
So Fed may also repeat what Japan has been doing for the last 2 decades, low interest rate throughout.
Unless US economy become red hot.

So whether there is link between cost of fund of bank in Malaysia and Fed fund rate, it doesn't matter. Rate is going to stay low for some considerable time.

No link, there is no reason for BNM to raise rate unless economy growing strongly, which is unlikely with squeeze of disposal income for middle income people.

Link, Fed fund rate is highly to stay low for extended period of time.

Even there is need a move on upside, it won't be drastic as 3%, a 0.5 to 1% is considered a quite big and bald  move as well.

You cannot have 8 to 10% interest rate while most countries on the world is on 0% interest rate.
Unless the economy situation of the country is not strong or healthy enough, whereby you need high rate to fence off inflation and capital outflow.
If not, you may attract too much liquidity (if there is no capital control), that fuel the bubbles in the economy.

Nowadays, it is a globalisation world, money can flow in and out with just a press of button.
We cannot use old day method or situation to assess fast moving financial world nowadays.

We need to accept that, a grow of 7~8% is a past, this figure is for low base and starting time. Once grow and develop up to certain scale, the pace will drop. To grow per capital income from RM1000 to RM10000, can be fast and easy, but to per capital income from Rm10,000 to Rm100,000 is more difficult and at slower pace.

Fed has been saying rate will stay low for extended period, so I do not think a 3% of incremental even over the 3-4 years period can be seen.

Fed want to see some inflation at around 2%.

With 10 years treasuries approaching 3% after tapering news, the rate is about on par with Malaysia OPR.
In fact previously due to QE, there is massive flow of money to Asian region, which one of reason property price sky-rocketing, asset price inflated across.

Japan low interest rate is not the culprit of deflation, unrelated.
The deflation suffered by Japan is due to multiple factors.
Previous 80's giant real estate bubble become too big and burst, lack of large scale of revamp of banking sector, aging population etc.
The deflation has nothing to do with low interest rate.

As said before, unless the economy is red hot and growing robustly, there is remote chance for rate to increase as much as 3%.

My view,
0.25% to 1% depended how GDP and unemployment rate.

One may say it is a negative interest rate, but currently Fed and central banks around the world is pro-growth instead hawkish on inflation.
They generally more about deflation than inflation, as long as inflation is not running out of control.

As much as I want dead chicken everywhere on the road, but you need to get the calculation accurate first to arrive at your conclusion. Based on your straight line calculation, the effect on extra interest expense is big. But in fact the home loan calculation is based on reducing balance. The effect is only 50% of straight line calculation. So, your assertion that a 3% interest rise will cause foreclosure will not stand. We may need interest rate rise of 6% to match your expectation. Again, I urge you to calculate first before you arrive at your conclusion

For every 1% increment, every 1m loan cost extra 10k p.a.

RM1m x 1% = RM10k is straight line method. Plain and simple    Just go and use a scientific calculator, or go find some website with home loan calculator to verify. Then you will understand better what is reducing balance method

If you can't find the reducing balance results, let me know. I will post it here for you

As said before, the negative interest rate is not the reason why Japan in deflation.

Low interest rate /= deflation. 

Negative real interest rate only hurt saver.
US is not known for high saving rate.

US population condition and culture of spending is not the same as Japan.
In fact, US economy already show pretty good number across.
Latest Q GDP is 4.1%, which is a very good number.
Stock market all time high.
USD show strength.
US corporate earning is improving.

Ok lah, I take it that you don't bother to verify because it is not to your expected results. I re-quote your original comment above. You are saying that for every 1% interest increment, every RM1m loan will "cost extra" RM10k per year. RM10k divided by 12 months is RM833 per month. So in effect you are saying if interest rate increase by 1%, flippers with RM1m loan will need to fork out extra RM800+ pm

As I have said a few times already, that is straight line method (ie you pay interest on a fixed principal). Your calculation is correct if it is a car loan. However, our property loan is reducing balance method (ie you pay interest on the reduced principal). If you go to a website calculator, you will find that for RM1m loan with tenure 40 years, the increase in installment is not as much as straight line method. If you take your example of RM1m with 3% interest rate increment, the extra interest based on straight line method is RM30k pa or RM2.5k pm. If you use reducing balance method, the extra installment is only RM1.3k, about 50% less.

So to have dead chicken everywhere on the street, your expected 3% interest rate rise will need to double to 6%

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

Ok lah, I take it that you don't bother to verify because it is not to your expected results. I re-quote your original comment above. You are saying that for every 1% interest increment, every RM1m loan will "cost extra" RM10k per year. RM10k divided by 12 months is RM833 per month. So in effect you are saying if interest rate increase by 1%, flippers with RM1m loan will need to fork out extra RM800+ pm

As I have said a few times already, that is straight line method (ie you pay interest on a fixed principal). Your calculation is correct if it is a car loan. However, our property loan is reducing balance method (ie you pay interest on the reduced principal). If you go to a website calculator, you will find that for RM1m loan with tenure 40 years, the increase in installment is not as much as straight line method. If you take your example of RM1m with 3% interest rate increment, the extra interest based on straight line method is RM30k pa or RM2.5k pm. If you use reducing balance method, the extra installment is only RM1.3k, about 50% less.

So to have dead chicken everywhere on the street, your expected 3% interest rate rise will need to double to 6%

%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.

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

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 

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