Bro,

It depends on how you calculate the return on investment, which for me, can be in certain several formula.

I prefer to use COCR ( Cash on Capital Return ) on buy / sell purpose as my ROI. Btw, how you use ur ROI? By using the profit / Purchase Price as the flow?

Say, if I buy a RM 500k house and appreciated to RM 750k in 5 years time.
Scenario 1
If I buy cash, my initial capital is RM 500k and upon selling, my cost is 2% agent fee @ RM 15k + miscel cost like S&P at RM 15k.
Net profit after 5 years is RM 250k - RM 30k = RM 220k
Average ROI, 220k / 5 years = RM 44k per year

Scenario 2
If I pay RM 50k downpayment ( my capital ) and get RM 450k loan, my cost is bank interest for 5 years, say estimated RM 50k, and upon selling, my cost is 2% agent fee @ RM 15k + miscel cost like S&P at RM 15k.
Net profit after 5 years is RM 250k - RM 80k = RM 170k
Average ROI, 170k / 5 years = RM 34k per year

If you see the above situation, RM 220k profit is surely more handsome than the RM 170k profit, both is manner of 5 years. But let's see another assumption below based on Cash on Cash Return ;
Scenario 1 : 220k / 500k capital = 44% COCR or 8.88% per annum
Scenario 2 : 220k / 50k ( capital ) + RM 50k ( interest in 60 months )  = 169% COCR or 33.80% per annum

I prefer to to take out RM 50k downpayment and ready another RM 50k which is going to pay slowly over the 5 years course to gain more pretty profit at 169%, rather than not only put in the RM 500k but locked it for 5 years before I get back with just 44% return.

Btw, we shouldn't include a matured township at different location with different demand like Setia Alam as the comparison with under construction likle SEH and EM.
Setia Alam - Entry is high compare to SEH and EM due to matured township and matured price, but steady and less risk due to ready market.
SEH / EM - Entry is lower than Setia Alam and based on pricing, it has the potential to go up further.
If Setia Alam's 20x70 has the buyers of RM 780k - 800k now, I see no reason why SEH and EM can't repeat the same thing of RM 780k - RM 800k in few years later on.

My advise, the risk is there, to buy into very huge township like SEH, EM or Bdr Rimbayu, the potential is surely there but timing and holding is the key. Don't expect 169% COCR upon completion especially for Phase 1.

This is not The Zest, The Treez or KR1.

One small observation, boss.
For cocr calculation on scenario 2, it should be rm50k initial outlay + approx rm2k/mth x 60 months. This is because you are actually paying both interest and principal.
You are forking out approx rm2k per month for your installments rather than pure interest over the 5 years period. Hence irrespective whatever you are paying for, it is still money out and you should take this as part of your cocr calculation, no? With this, you can theoretically increase your profit margin slightly because after 5 years, there are further reduction from your loan amount.
Of course, one can always counter dispute about rental income.
And another smart Alec may point out assessment fees lah, insurances lah, utilities bills lah, etc.

Bro,

It depends on how you calculate the return on investment, which for me, can be in certain several formula.

I prefer to use COCR ( Cash on Capital Return ) on buy / sell purpose as my ROI. Btw, how you use ur ROI? By using the profit / Purchase Price as the flow?

Say, if I buy a RM 500k house and appreciated to RM 750k in 5 years time.
Scenario 1
If I buy cash, my initial capital is RM 500k and upon selling, my cost is 2% agent fee @ RM 15k + miscel cost like S&P at RM 15k.
Net profit after 5 years is RM 250k - RM 30k = RM 220k
Average ROI, 220k / 5 years = RM 44k per year

Scenario 2
If I pay RM 50k downpayment ( my capital ) and get RM 450k loan, my cost is bank interest for 5 years, say estimated RM 50k, and upon selling, my cost is 2% agent fee @ RM 15k + miscel cost like S&P at RM 15k.
Net profit after 5 years is RM 250k - RM 80k = RM 170k
Average ROI, 170k / 5 years = RM 34k per year

If you see the above situation, RM 220k profit is surely more handsome than the RM 170k profit, both is manner of 5 years. But let's see another assumption below based on Cash on Cash Return ;
Scenario 1 : 220k / 500k capital = 44% COCR or 8.88% per annum
Scenario 2 : 220k / 50k ( capital ) + RM 50k ( interest in 60 months )  = 169% COCR or 33.80% per annum

I prefer to to take out RM 50k downpayment and ready another RM 50k which is going to pay slowly over the 5 years course to gain more pretty profit at 169%, rather than not only put in the RM 500k but locked it for 5 years before I get back with just 44% return.

Btw, we shouldn't include a matured township at different location with different demand like Setia Alam as the comparison with under construction likle SEH and EM.
Setia Alam - Entry is high compare to SEH and EM due to matured township and matured price, but steady and less risk due to ready market.
SEH / EM - Entry is lower than Setia Alam and based on pricing, it has the potential to go up further.
If Setia Alam's 20x70 has the buyers of RM 780k - 800k now, I see no reason why SEH and EM can't repeat the same thing of RM 780k - RM 800k in few years later on.

My advise, the risk is there, to buy into very huge township like SEH, EM or Bdr Rimbayu, the potential is surely there but timing and holding is the key. Don't expect 169% COCR upon completion especially for Phase 1.

This is not The Zest, The Treez or KR1.

Definitely can boss. Bcz principal is paid but capital is back after 5 years and inline with Scenario 1 bcz the capital was paid upfront by cash.

But dont confuse him too much eh and I just use a very simple calculations without other minor costs involved.

The RM 450k at B - 2.40% for 35 years. The monthly installment is RM 2200 per month with approx RM 700 average principal a month and RM 1500 interest a month. But SEH is 2 years construction and EM is 3 years construction, so quite difficult for me to input the rough amount.

If i use EM, I guesstimate the progressive interest is 5% of RM 450k which is RM 22,500 and plus 24 months installments, RM 2200 x 24, RM 52,800. Total RM 75,300

So, RM 250k - RM 75k - RM 30k = RM 145k
Average ROI = 145k / 5 = RM 29k per year
COCR = RM 250k / 125k = 50%, average 10% A year.

I still see getting loan borrowing is one of the best way to leverage our cash flow with better COCR n ROI. Lol.

Definitely can boss. Bcz principal is paid but capital is back after 5 years and inline with Scenario 1 bcz the capital was paid upfront by cash.

But dont confuse him too much eh and I just use a very simple calculations without other minor costs involved.

The RM 450k at B - 2.40% for 35 years. The monthly installment is RM 2200 per month with approx RM 700 average principal a month and RM 1500 interest a month. But SEH is 2 years construction and EM is 3 years construction, so quite difficult for me to input the rough amount.

If i use EM, I guesstimate the progressive interest is 5% of RM 450k which is RM 22,500 and plus 24 months installments, RM 2200 x 24, RM 52,800. Total RM 75,300

So, RM 250k - RM 75k - RM 30k = RM 145k
Average ROI = 145k / 5 = RM 29k per year
COCR = RM 250k / 125k = 50%, average 10% A year.

I still see getting loan borrowing is one of the best way to leverage our cash flow with better COCR n ROI. Lol.

hehehe.
question:
is it true that for rm2,200/mth installment, rm700 goes to principal and rm1,500 goes to interest?
i find that in the first 5 years, i'll be lucky if i can even reduce my principal by RM10k off a RM500k loan. hehehe.

but basically i agree that leverage is best ONLY if the deal makes money.
else it's double whammy if deals goes wrong. loss + interest.

well written analysis boss! 

Definitely can boss. Bcz principal is paid but capital is back after 5 years and inline with Scenario 1 bcz the capital was paid upfront by cash.

But dont confuse him too much eh and I just use a very simple calculations without other minor costs involved.

The RM 450k at B - 2.40% for 35 years. The monthly installment is RM 2200 per month with approx RM 700 average principal a month and RM 1500 interest a month. But SEH is 2 years construction and EM is 3 years construction, so quite difficult for me to input the rough amount.

If i use EM, I guesstimate the progressive interest is 5% of RM 450k which is RM 22,500 and plus 24 months installments, RM 2200 x 24, RM 52,800. Total RM 75,300

So, RM 250k - RM 75k - RM 30k = RM 145k
Average ROI = 145k / 5 = RM 29k per year
COCR = RM 250k / 125k = 50%, average 10% A year.

I still see getting loan borrowing is one of the best way to leverage our cash flow with better COCR n ROI. Lol.

Sam boss. Thanks for clarify.

Let me check back the map to comment further bcz I cant remember clearly.

I suppose that the EM has two new interchanged which is entry and exit from Lekas ( just near to Jalan Bangi ) directly.

I unsure about the Jalan Semenyih path.

While, if entry to SEH is noticeable then EM current phases also more or less not big issues for me bcz both separated by less than a km ( if not mistaken bcz I not familiar with SEH master plan ). EM main entrance to SEH is just separated by 300mtr linked bridge.

As a huge townships for me, I see both could be a success with each other bcz both SPS and EW are not trying to outrival each other but to enhance each other eco series township.

Instead, I can comment that both SEH and EM could be success in shorter than 8-10 years period but not necessary the whole Semenyih could be benefited from it.

History reminded me that, ppl used to claim Setia Alam as Klang border and very far from everywhere. The location maintain the same as border to Shah Alam and Klang as it today but people accepted it is Setia Alam township and do not rank it as Klang.

Anyhow, I could be wrong too.

Lol... Bro Chris, I am not boss lah, just a peanut follower for TKJ of SEH.     
Yes, EM and SEH is just separated by distance less than 1km, thus EM and SEH are growing together, anything good for EM, is good for SEH too. Anything bad affecting EM, mostly likely will affect SEH too. Therefore, from my perception, there are just one big township that going to transform within  5 - 10 years time.

As about the access road, perhaps you can refer to the following map for details, it has been discussed alot in the SEH thread for quite some time ago.

no doubt both townships would complement each other and will prosper given some time... but bringing Setia Alam into the picture imo is more like a comparison between Bdr Bukit Raja vs Setia Alam... they are almost next to each other but the prices are far apart (it hurts if non Klang Valley ppl ask for directions to your house and u have to say next to Setia Alam because they dont know Bdr Bukit Raja for eg)... the question is parking your money in SEH or EM, which will bring better returns or better still which will redefine the brand name of Semenyih?

Boss, do you know the location of KFC chicken farm ?.

Bro, open google map...  search "KFC Broiler Farms Sdn. Bhd."...  I presume the poultry farm is about 800m south to this point.   

Bro chris, decent calculation...    I like calculation too, though I am not a calculative person...   

The COCR looks indeed looks tempting in this context, but  I presume generally it still relies on how much the total capital appreciation of the said property. RM 250k increase within 5 years will generate an attractive COCR if compare between scenario 1 and 2. However, this is fairly risky, esepcially for a flipper. For a conservative assumption, how about the capital appreciation just about RM 150k within 5 years?

If use back your example,

Scenario 1
If I buy cash, my initial capital is RM 500k and upon selling, my cost is 2% agent fee @ RM 15k + miscel cost like S&P at RM 15k.

Net profit after 5 years is RM 150k - RM 30k = RM 120k
Average ROI, 120k / 5 years = RM 24k per year
COCR = RM 120k / 500k = 24%, average 4.8% A year.
Scenario 2
If I pay RM 50k downpayment ( my capital ) and get RM 450k loan.
Progressive interest is 5% of RM 450k which is RM 22,500
24 months installments, RM 2200 x 24, RM 52,800.
2% agent fee @ RM 15k + miscel cost like S&P at RM 15k = 30k

Total cash you have dumped in RM 50,000 + RM 22,500 + RM 52,800 + RM 30,000 = RM 155,300

Net profit after 5 years is RM 150k - RM 155,300 = - RM 5,300
Average ROI = negative ROI
COCR = negative COCR

From the above example, you can clearly see that those have RM 500k cash is still having some ROI, but those with only RM 50k already make a lost! This is not factored in if there is BLR increase within that 5 years.

Thus, regardless how you calculate the ROI, the most crucial rule I always remind myself is - Find more money and dumped into flexi account, every single cent of interest that I save, it will convert to another single cent of my ROI...     

Lol... Bro Chris, I am not boss lah, just a peanut follower for TKJ of SEH.     

As about the access road, perhaps you can refer to the following map for details, it has been discussed alot in the SEH thread for quite some time ago.

Yes boss.

What you said and explained as above is true either. Definitely taking loan or buying properyy with cash, there is a risk itself but once a prop investor enter the market, he or she would definitely able to figure out whether he / she should flip upon 5th or 6th year if making loss in COCR.

Bcz for me, if a landed prop only appreciated by RM 150k in 5 years time, the market shown really slow pace a bit or probably only in the area itself or not matured enough. Thus, the investment could be not a good buy or wrong timing of dispose, whether buying with cash or getting with loan.

Both Scenario A and B above is just an illustration but if based on the fact, certainly it show both have the different cash flow and holding power.

Today i went to ecosky again & the preview of eco majestic is there d..
They willlaunch the terence, cluster semi d & banglow land...
For terece price is 290 psqft for 20x70..total built up is 2k sq ft..
Im quite interested on it..but out if bullet..
Heard will launch in may14..

290 psf. That's almost close to setia alam already (about 310psf) but setia alam more developed. I was hoping the price cheaper so can buy and hold until the whole township goes up

290 psf. That's almost close to setia alam already (about 310psf) but setia alam more developed. I was hoping the price cheaper so can buy and hold until the whole township goes up

Ok tq bro sam