Outline ·
[ Standard ] ·
Linear+
Property holding period calculations
|
TStrainmaster
|
 Nov 21 2019, 08:24 PM, updated 7y ago
|
Getting Started
|
I have a landed house of SPA 800k, renovation 50k, loan size around 720k.
I am renting it out with rental covering the installment at approx (RM3.5k).
Assuming selling price is at 850k (SPA+reno) at the point of selling, roughly how long would I need to hold to achieve a profit of 20% (as the mortgage’s principal is reducing when tenant rental is covering the installment).
Calculation steps would be much appreciated.
Thanks.
This post has been edited by trainmaster: Nov 21 2019, 08:26 PM
|
|
|
|
|
|
TStrainmaster
|
Nov 21 2019, 09:53 PM
|
Getting Started
|
Installment is approx 3.3k
Loan tenure: 35 years
|
|
|
|
|
|
TStrainmaster
|
Nov 22 2019, 12:07 PM
|
Getting Started
|
What rental do you expect for a landed property?
|
|
|
|
|
|
TStrainmaster
|
Nov 22 2019, 12:16 PM
|
Getting Started
|
QUOTE(mini orchard @ Nov 22 2019, 12:00 AM) 20% x 850,000 = 170,000 (Profit) Assuming 3,300 instalment per month ... 2,000 interest 1,300 principal 170,000 ÷ 1,300 = approximate 131 months. Any correction is welcome. Thanks but the ratio of interest:principal is decreasing right? (Armotisation curve) |
|
|
|
|
|
TStrainmaster
|
Nov 22 2019, 12:47 PM
|
Getting Started
|
QUOTE(LoTek @ Nov 21 2019, 08:46 PM) Unrelated: please let me congratulate you on achieving such a high Roi for landed. 20% over 10 years consider high ROI? 1 year only 2% ROI only leh |
|
|
|
|
|
TStrainmaster
|
Nov 22 2019, 03:12 PM
|
Getting Started
|
QUOTE(LoTek @ Nov 22 2019, 02:09 PM) roi rental should be 3.5k x 12 months ÷ 850k = 4.9% roi Who can validate that calculation? You don’t need to calculate the interest you pay in the mortgage? U have to consider how much you will be able to sell your property 10 years down the road also, in this case I assume conservative ie house maintains at its price. Tenant is covering the interest portion for you This post has been edited by trainmaster: Nov 22 2019, 03:12 PM |
|
|
|
|
|
TStrainmaster
|
Nov 23 2019, 11:03 PM
|
Getting Started
|
QUOTE(mini orchard @ Nov 22 2019, 08:39 PM) Return on investment is a ratio between net profit and cost of investment.define net profit |
|
|
|
|
|
TStrainmaster
|
Nov 24 2019, 11:32 PM
|
Getting Started
|
QUOTE(apalexar @ Nov 23 2019, 11:56 PM) 4~5 years, assuming you're able to sell it at min 850k price that time. I'm assuming your loan interest is 4.2% and 35 years loan tenure. May I see how you calculate? |
|
|
|
|
|
TStrainmaster
|
Nov 25 2019, 09:35 AM
|
Getting Started
|
QUOTE(apalexar @ Nov 25 2019, 07:29 AM) Sorry my bad, miscalculation as I use 850k in my calculation but actually should be 720k since 130k is your own money. Now it should be on 12th or 13th year in order to generate profit of 20%. My calculation is simple, your loan is 720k and assuming that you are getting rental income every months which is able to cover up the monthly installment, on year 12th your loan balance is RM578,964.48 (calculation using loan calculator) and if you're able to sell it on price min 850k, it will be like 850k - 130k (self money) - loan balance Very good, you have by far the best answer (most accurate) in this thread. See, buying property will only give you 20%/13=1.53% of return per annum (Conservative approach, rental covers installment case. Price hardly appreciates in ~10 years time which is quite realistic in today’s expensive property market). Awake!! This post has been edited by trainmaster: Nov 25 2019, 09:45 AM |
|
|
|
|
|
TStrainmaster
|
Nov 26 2019, 11:48 PM
|
Getting Started
|
QUOTE(cherroy @ Nov 26 2019, 12:23 PM) Sorry for mistake in calculation 3.5K x 12 / 850K = 4.9% yield Rental yield indeed superb for current market, as a lot of residential yield below 2 to 3% only. But loan interest also 4.xx%. Property is about capital appreciation, and where the big money is. U can’t treat 3.5k/850k as rental yield, as you are paying interest on top of the principal (850k). Anyways the idea I asked is not about rental yield but more on demonstrating it is a tenant market nowadays as there are not much incentives in owning a property, unless you really love the place |
|
|
|
|
Quote
0.0162sec
0.42
6 queries
GZIP Disabled