dr_luv,

<<So I decided to look for alternative place within Kepong and same time there was launch of Laman Rimbunan gated/guarded community with 3 storey (22x75) cost at 500k. >>

<<Both me and my wife late twenties and our income is close 10k.>>

So, how much is your monthly payment?? 4K per month??

<<We put our leg in now and thinking optimistic cause landed price property in Kepong will never go down and 10 years down the road loan amount remain same but income may increase. >>

You sounded exactly like those people in USA housing bubble. And, you are probably ion a variable housing loan based on BLR.

Dreamer

dr_luv,

<<To answer your question and to be exact, in 2 years time we will be paying 2.5k monthly.>>

How much is the loan?? 400K??

Is it a 30 years loan??

<<We are jus taking the risk by getting a bigger home with heavy loan. If in 2 years we face any financial hiccup than we may sell the unit and opt for condo/apartment.>>

In USA, there are many people that face the upside down mortgage. Their house worth less than the housing loan. They have to pay the bank additional money in order to sell the house.

I wish you best of luck.

<<If in 2 years we face any financial hiccup than we may sell the unit and opt for condo/apartment.>>

Normally, people face financial difficulty in the middle of recession and that is the worse time to sell a house.


Dreamer

Pai,

1) The house that you live in is NOT an asset. It is a liability. It takes money away from you every month.

2) At around 6% annual interest and assuming that you take a loan of 400K, you are paying 24K in interest aka 2K per month in interest to stay in this house. This is a HUGE expenditure for a couple earning 10K per month. 20% of monthly income goes to paying interest.

3) This is a young couple (20+) and unless they come from rich family, they have minimum amount of asset at this moment. Is it wise to commit all if not most of their cash flow into a single house?

I wish them best of luck.

Dreamer

---

Added on September 22, 2007, 3:51 amyewkhuay,

I been through a few recessions in USA and one recession in Malaysia. Every time, the house price at the high end crashes. And,usually is the people that has more than 33% of their monthly salary tied up in loan payment that got killed in the process.

Dreamer


P.S.: Maybe, Kepong is a better place than Klang. Klang's house price has been going down for the past 2 to 3 years. And, we are not in a recession yet.

This post has been edited by dreamer101: Sep 22 2007, 03:54 AM

Pai,

<<IMO, paying that amount of interest for your own house still beats renting and helping someone else to pay THEIR mortgage interest. >>

1) Who say if you rent, you should rent a house at $2.5K or $2K per month?? Who say you must spend that much on housing?

<<with monthly repayment is about 25% of Luv's & wifey's gross slary, IMO its highly managable. Its still a lot lower than the 33% rule. >>

2) You are assuming they do not have any other loan repayment such as car, PTPTN and so on. House alone is 25%. It is highly likely that they have other loan repayment that push beyond 33%.

<<This is before counting their potential salary increment over the next 3 years, and being late 20's, they are not even at the peak of their career. >>

3) So what?? It does not change a simple fact that they commit a large part of their income to housing.

4) They may have a baby and the wife may decide to stay home. This option will be out of consideration due to commitment on the house.

5) IMHO, time with family is MORE IMPORTANT than a fancy house.

<<Dunno if Kepong is better than Klang, or current property market is overpriced, but here's the reason why I think Luv made a good buy :

1. DPC 3 storey now selling from 730k & above and their new launches are priced even higher.
2. Sunway SPK 2 1/2 storey now selling minimum 700k.
3. And our fren here bought a 3 storey in the same Kepong area at only 500k. Should there will be a major recession, and property market bubble, DPC and SPK will be the first one to kena, not Luv's prop >>

5) When you buy a house to live, besides whether it is a good deal, you need to ask yourself a simple question. Do you really want to spend that much on a house?

Dreamer

dr_luv,

My rule is very simple. If your TOTAL monthly loan repayment is less than 33% of your gross income, you can afford it. Then, it is your personal choice whether you want to buy it.

Dreamerr

dzi921,

1) Don't buy a property.

2) Re-visit that decision when you have children.

3) Perhaps buy a property near your in-law when (2) happened. But, remember if you move away, child care is big problem.

4) But, you may not like how your in-laws raise your child. Grandparent tend to spoil grand kids. But, are you willing to let your wife stay home??

5) In summary, do nothing until (2) happen.

Dreamer

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

dr_luv,

1) You do not need it.

2) It is going to be hell maintaining such a large house. Who is going to clean the house?? Are you going to need 2 maids?? How much is the expenses for 2 maids??

Dreamer

lwb,

You know this. So, this is probably nothing new for you.

Question: When should I sell the investment??

Answer: Whenever you can find a better return for the money that you tied up in an existing investment.

Now, rental =- RM150 per month. Sell and earn 90K. Assuming 1 year FD @ 3.7% = earn RM3330 per year > RM150 per month.

So, you are probably not selling because you think the rent and price will appreciate a lot faster to compensate for teh FD return.

Dreamer