Read and do research and do not be fooled by this general assumption!
Even the most avid property investor would tell you this is not the truth!

The current sub prime crisis in US is partly because of this wrong perception!
The property market burst....!

on the perspective of cost.. USA is the most painful country to be in for new comers.. or new migrants..

depending on which state you'll end up.. your cost can make/break your stretched budget..

pending to the departure.. i think it's wise to beef up you capital, meanwhile, travel as light as possible.. meaning, don't bog yourself down with lots of iliquid assets/liabilities..

i've done this sort of drill before.. i once thought of moving to the states for good.. my criteria was simple.. a decision trigger point of US$100K.

i was familiar with new york.. thus alot of my calculation was based upon it. i've spent +3 years there and thus had a little idea what it takes to survive..

if you're unprepared.. life can be very depressing when the honeymoon phase is over.. the honeymoon cycle refers to the tourist-like-feeling in the culture shock cycle..

so.. if going there is imminent.. remember to 'travel light' in the meantime.

property goes up "every year"?

gee... go tell that to the poor developer about it..
he was forced to sell me a condo unit 30% of his listed price..

in history, nothing is often in "linear" form.. spikes and variations has shaped the model of how we evaluate tangible/intangible goods/services.

Even though properties price generally goes up over long term partly due to inflation, if you calculated carefully, sometimes the return rate may just almost as same as putting money in FD after deducting the cost of ownership of a house (like paying legal fee, assessment, repairing, maintenance fee for apartment type etc)

Bare in mind, putting money in FD, the total amount of FD also going up every year.

Don't get me wrong, I didn't say putting moeny in FD is wise or not. Just you need to make the return rate comparison and the risk you are taking. Even the house price can increase over long term but if the price appreciation can't even match others alternative that are lower risk, it is not worth to buy the property.

Property price can go down one, typically and best example recently would be US real estate market currently.

A lot of people look at the property price at initial buying price then look at the sold price afterwards to make comparison eg. one bought a property Rm100K, 20 years later sold the property at 200K. On paper, it looks very good a 100% gain but if you annualise it with compund interest, it might just giving out 3%+ compound interest rate.

So for above case, does this property make profit, yes, no doubt but it is poor compared to others.

Buying property doesn't mean it is good or not good for investment. Property price is about location and timing of your buy which if in favour then you pobably can make handsome profit from it but it is not necessity to be so, all are depend several factors, property location, economy situation etc.

This post has been edited by cherroy: Sep 26 2007, 08:29 PM

Angel,

To make your life simple, I would do simple calculation. Than you decide to choose option A, option B or option C.

Option A (Rent a apartment)

Just say you are renting a middle cost apartment which cost 145k (decent area) at RM 800 for 15 years.

RM 800 X 12 months = RM 9600
RM 9600 X 15 years = RM 144,000. (the cost may increase if the rent incease in 15 years).

Conclusion, you pay RM 144k to stay and help the owner to pay his/her home loan.

Option B (Rent a room)

Just say you are renting a room in a middle cost apartment which cost at 145k at RM 350 for 15 years.

RM 350 X 12months = RM4200
RM 4200 X 15 years = Rm 63,000 (the cost may increase if the rent incease in 15 years).

Conclusion, you pay RM 63k to stay and help the owner to pay his/her home loan partially.

Option C (Buy a Apartment/Condo)

Just say you bought a apartment/condo which cost 150k (nice view/good location).

1) Home Loan Monthly for 15 years = RM 1,200

Conclusion, Stay for 15 years and own a unit. Rent it out when u are back to US and when u are back again stay back.

2) Home Loan Monthly for 30 years = RM 861.

Conclusion, You pay RM 861 for 15 years and I am sure you can afford to pay the balance 15 years once both of secured a job in US.

Choice is always yours and pick one which is suit for you and your bf.

Regards
dr luv

This post has been edited by dr_luv: Sep 27 2007, 01:17 AM

if u know u leaving to US n u stay in US for the next half of ur life, i don't think there is a need for u to own a house , renting for 15yrs will cost u less than owning a small pathetic apartment. for RM1000 u can get to rent a very nice double story house for the next 15yrs, extra cash can go for some investments. the most important thing is save as much money as u can b4 u leave malaysia, don bother whether u r paying for owner's instalment. don't forget owning a property means u r paying interest to the bank while the money could saved could hav rolled in investement n u might hav some hustle to sell it off 15yrs later even though the value might appreciate...unless u r talking about passing the property over to ur parents or siblings inmalaysia to take care for u..

just my 2cents...

angelbabe,

Rent. The immigration law in USA will change between now and 15 years. There is no guarantee that you will wait 15 years. In fact, it unlikely that you can time perfectly.

Dreamer

a lot of things have been ommitted in the equations.. to make property ownership sounds cheaper/effective.
am not sure if the ommission is deliberate or simply an oversight.

instead of saying tht tenant paying instalment for owner ( if the rental enuf to cover instalment n all other charges incurred...) , i would say the tenant is enjoying staying in a house without even need to hav any lump sum downpayment just by servicing the bank interest which risk is bourn by the owner....

Angelbabe,

looking at your scenario, I must say there are just too many uncertainties. Im not comfortable with the fact that :

1. Are u 100% SURE you will get married to your BF in 2010? You and your BF are only 24. 3 years is a long time to go, u'll meet somebody else, and anything can happen. You both will be in big trouble later if you've committed into buying a property together then end up getting married to someone else.

2. You r not sure when will you migrate for good to US. No point committing to a 15 yr mortgage if you are gonna migrate in 2010.

3. Your BF is already looking for a oversea job NOW. I presume u will be joining him. Again, whats the point of committing yourself now?

Therefore, I'd say dont buy a property now, especially if u r thinking of joint purchase, until you sort the above fact straigt.

---

Added on September 27, 2007, 12:12 pmDevelopers can manipulate pricing as their wish, as they are the seller. Most likely they've jacked up the price and then give discounts. 2 things that matter most IMO are :

1. Is the below 30% of this listed price is below ACTUAL market rate?

2. What is the capital gains u've got to date?

Dunno about you guys, but 30% discount by developer price is unheard of (at least for me), unless there is something seriously wrong with the condo or unit. Heck, even bad developers like Mayland only give 15% discount below listed price, and that is after they've jack-up the selling price by 25%.



This post has been edited by Pai: Sep 27 2007, 12:12 PM

you think with a retail mind.. that's how you see it.. i'm not even talking about retail discount here.
the listed price was what the developer sold to itself.. and transaction over an official S&P.. (it's like the left hand selling to the right hand) however, the price of the units were similar to the price i saw in the S&P (1st owner)

to see how much the developer take a hit.. i feel humbled by it.. it was a calculated-risk gone awry..

i doubt you'd understand what i've said here.. maybe you're so used to seeing large discount on shopping malls..
but i rather spend time, sweat, effort to comb for large discount on my purchases differently..

if the unit(or entire building) has problem.. i wouldn't be enjoying a good rental income for the past 2 years (how many people can i fool, and for how long, right?)

it's the same kind of planning and deliberations that i got to purchase my unit trust at 7% discount.. and the same thing happened.. which was.. you guys think this was some sort of a baloney!!

so the question is.. how can a retail mind understand an investor's mind? tough.. but possible.
all in all, a good deal is planned way before hand.. and meticulously..

by the way.. mutual gold office will be moving to mon't kiara by next year..

actually it's more that than, yewkhuay.. (you own a rental unit right? you ought to know this better..)

downpayment
closing cost
sinking fund
maintainance fee
local taxes (assesment and land)
insurance
repairs due to wear & tear
vacancy opportunity cost (when your unit is idle without income)
and yeah, don't forget about the guzzling bank interest!! (noticed that almost 95% of your installment goes into that blackhole at the first 1-3 years?)

.. these are what the humble landlord gotta deal with while balancing the pro and cons of making a living with rental income.

yea, i know all these charges , tht's y my opinion for angelbabe is to rent a place for 15yrs rather than to buy a cheap apartment which will not do her n the bf any extra good...let the owner bear the charges while they can enjoy staying in the house tht owner locked his downpayment n instalment, n yet they r just paying less....

fyi, ara damansara double storey terrace rental is only about 1K+, the price of an intermediate unit ? 400K+++....
yes, i m just renting a room there, paying so little to enjoy staying in this area...

Perhaps I lack the intelligence to understand how a super investor like you create deals. Afterall, u didnt disclose any real information whatsoever + this a internet forum, where anyone can say anything they like.

But 1 thing I know for sure is that anyone, whether they are developer, companies or normal individual can manipulate the S&P price. This process can be done easily especially when you transfer a property from your left hand to your right hand, which obviously is the case based on your previous statement. Therefore, whatever price you see on the official S&P may not be the actual price. Whether the "poor developer" did the price manipulation behind your back, I dont know.

Hence why I insisit on looking at market value INSTEAD of developer's price. IMO, the only way to find out whether you actually bought that property at REAL 30% off, is to look at the property's current capital gains. IF your property was completed less than 3 years ago AND has appreciated by +-50%, then kudos to you super investor, u got yourself a gem in your hands.

If the said property has less than 30% cap gains, then u r just one the victims of a cunning developer.

perhaps you don't really know what is an S&P.. (you talked as though its some brochures from pcfair or something)
fyi.. the last transacted price(not a bid price.. understand the difference?) of this unit is inching closer back to it's developer's price again.
that 30% discount will soon become a 30% profit.. this is something that i'm pondering.. to liquidate or to go with the rental income.

i'm greatful/thankful of the real-estate agent that bridge this deal for me.. almost 3 years ago. i still deal with this agent and we're friends. it's not easy to meet good agents.. if you do, cherish it.

i do have a feeling that you know what you're doing..
you've been through ups and downs.. and our downs can be a great lessons/teacher should we heed to it.

I see............... so u really have no clue what I'm talking about. I expect that a self-proclaim investor should at least know this. Nvm then.

In general, any decent condo would enjoy 20% cap gains upon completion. If last transacted price is inching back to the so called "your developer's price", that simply means that you never got the 30% "investor discount" in the 1st place.

Anyway, due to lack of details such as your purchase price and current selling price, we wont know whether you've been duped by your agent fren & developer. But judging solely from your posts, I can firmly said u never did get that 30% off, and u have been led to believe u got it somehow.

Having said that, u getting 30% capital gains in 3 years, while its nothing extraordinary, its still a decent return for a new city center condo, so kudo's to you on that

hahaa.. you're getting way silly on your assumptions.. it's flawed by the way. you think like a retail consumer.. that's why you write the way you do.

then again.. why waste time on you?

if you can prove that my facts(not assumptions) are flawed, I'll personally apologize publicly here and buy you a nice lunch.

but then again, I dont think you can, "big shot investor"