QUOTE(Chris Chew @ Apr 11 2014, 10:22 PM)
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.
Precisely bro Chris.. Property investment always a risk, that's why need to analyze carefully and try to mitigate it. For me, property investment generally can yield 3 scenarios based on property appreciation portfolio.
Scenario 1
Property appreciate fast, the pace much higher than the interest rate charge by the bank or the property can be rented out easily with a rate at least 70% from the monthly installment. Eg, EM appreciate more than 250k 5 years from now.
"Down payment" type buyers (including flipper): Supreme COCR and the cash dump in value for every single cent
"Cash" type buyers: Moderate COCR with attractive profit yield
Scenario 2
Property appreciate in slightly slower pace, appreciation is about the same or maybe lower than the interest rate charge by the bank or the property can be rented out with a rate ~ 40-50% from the monthly installment. Eg, EM appreciate about 150k 5 years from now.
"Down payment" type buyers (including flipper): Slightly positive/negative COCR as the appreciation value is being offset by the interest charged by the bank.
"Cash" type buyers: Most likely still with positive COCR and reasonable profit, most likely still higher than the FD rate.
Scenario 3
Property appreciation is zero or perhaps depreciation or can't find any rental for the said property, let say during economy crisis / stumbling. Eg, EM appreciate less than 50k 5 years from now or perhaps depreciating due to aging.
"Down payment" type buyers (including flipper): Negative COCR, bank still charging the interest, in-debt or serious case can lead to the house being auction or bankruptcy. If willing to let go 100 - 150k lower than entry price, most likely still can find the buyer, need to bear the lost of this 100 - 150k, plus the interest charge for the loan period.
"Cash" type buyers: 0% COCR, cash being locked without return, but no need to owe the bank, no interest charge, still can wait till economy bumps back or stay inside the house to cut rent etc.. If willing to let go 100 - 150k lower than entry price, most likely still can find the buyer, just lost that 100 - 150k.
I presume that's the risk that need to bear in property investment, and we need to choose the property based on our risk appetite...
Anyhow, I presume EM property is in scenario 1. However, our BBW bomoh will totally disagree with me, he will say SEH + EM will be ghost town after VP and serves as the biggest failure township development in Malaysia history....
This post has been edited by samkps: Apr 13 2014, 06:22 PM 
Apr 13 2014, 05:24 PM
Quote
0.0207sec
0.92
6 queries
GZIP Disabled