see this basic calculation for loan repayment for an investment for KEN 2. Property Price estimated at RM 360K.
Loan = Rm 330K.

Complete the fields below to determine your monthly payments for your home loan.

How Much You Wish To Borrow? : RM 330K

What Is The Interest Rate On Your Loan? (% p.a.) * : 5.99 %
How Many Years You Wish To Borrow? : 30
Amount You Have To Pay Monthly (Monthly Repayment) : RM 1,976.40
Monthly Repayment to Combined Income Ratio Available. (%) ** : 33
Your Minimum Monthly Income Required : RM 5,989.00

Current Rental for fully furnished: Rm 2K estimated.
cost not added in yet such as quit rent, assesment rate, rental tax, maintenance fee + Sinking fund, legal fees , furniture cost for fully furnished condo, renovation cost, repairing cost (annual) etc.

30 years of burden.

This post has been edited by hackwire: Jul 17 2007, 10:44 PM

that is for KEN 2 ma. there is always property out there where you can gain profit. you just have to look for it.

investment in property for rental purpose , it is better to go for property below 200K , 150K even better, rental can be good, burfen oso not tht high, rent 1st one out then only move on to second.

if go for property appreciation investment, target those hot cake projects...hold the property for 2-5yrs then let go for profit , less burden.

just my 2cents..

if property appreciation,hold for at least 6 years to gain exemption from property tax.

TAX? 6yrs? dude, pls read more, sometimes read more is better than ask many questions.

The Real Property Gain Tax had been abolished lah.

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Added on July 18, 2007, 12:20 amHackwire, if one need to loan a big sum of money to invest in property & hoping the rental would be enough to cover the instalment etc. 8 out of 10 in not successful.

In fact, the abovementioned is one of the reason there're so many properties for auction nowadays. The investor couldn't afford the instalment cos the property was left vacant for sometime. Common scenario.

To gain from property. One need to have some spare cash - so that you're able to HOLD when times are rough.

It's the same theory, buy low & sell high. But how one can buy low? It takes effort in research & scouting.




This post has been edited by scorgio: Jul 18 2007, 12:20 AM

scorgio is absolutely right. Unless one's purchasing the property in CASH, the loan financing to the bank is something that cannot be defaulted. Come rain or shine, it still needs to be paid and the bank's not gonna care if ur out of a job or not - they just want to see the monthly repayment and that better come in.

Also, if ur looking at a condo, take into consideration the monthly maintenance due to the developers too!

When is it abolished? Sorry la. Busy with study and business. So don really have that much time to read. That's y ask a lot. So abolish already mean can sell anytime without tax right?

I never really agree that property investment is a real good investment if it's buy and sell transactions.
We have to remember only if we sell than we'll get the profit. You have to remember the "IF".
Renting, yes; but profit would only come after you've sell it off. Rental income only helps you cover the maintenance of the property. Hardly theres cases whereby rental income can really cover everything and generates net profit.
That's only my POV.
Usually it's only speculations that a property that's being bought would appreciate by so much; but before that speculation is being fulfilled, it's a liability.

@b00n,
You've a point. Anything on PAPER merely remains as on paper. Take for example, if i'd paid RM100k for a house, and it's market value today is RM500k, the RM400k gain [for easy calculation, let's not take into account of interest, etc.] can only be realised IF u SELL the house to someone who's willing to pay RM500k for the house. If I don't sell the house, it makes no difference whether the property is RM1m today or not - because there's no intention of liquidating the asset.

@jcvstlys,
If u can't find the time and commitment to pick up the papers (or whatever other means available) to flip through to keep yourself abreast with current trends and news, how then are u going to find the time and commitment to take up something as big as purchasing a property?

This post has been edited by tinkerbel: Jul 18 2007, 08:23 PM

if ur so busy with ur study ( which u shud do) and ur business (which u shud focus more to earn more money ), then may be property investment is not a good field for u yet...and no matter how busy a person, newspaper is the shortest way of getting latest information around the world , apart from the restricted news tht u need to attend politic party's meetings.

Property is the best vehicle investment of all time.

I'm accumulating as much properties as I could and then I could retire comfortably....

Just imagine yourself buying a property a year... can u figure out how wealthy you are when you 50 years old, or even 35 years old?

best vehicle of investment of all time ?

tht is if u r wealthy enuf to buy a property a yr or u managed to buy 1 property , rent out n finance another property to rent out every yr.

seems like u r hav accumulated many properties...mind share ur success story here?

My story:

I've read dozens of property investment books for years. 4 years ago, the idea of venturing into property investment sparks me after I've attended a property investment seminar by our very local property investor, Renesial Leong (u may read her success at www.upia33.com). I do invest in stocks too, quite heavily at one time Anyway, my story continues below...

Year 2005 (Salary: RM2500)
I jumped start by buying my first property, a condo, without any downpayment for RM150k. I signed a 15 years contract with the developer, with the criteria having the rental paid to me RM900 monthly for 15 years. Then, I secured my financing with a local bank. Managed to work out installment of only RM850 for 30 years. Positive cashflow of RM50 per month. Dun forget, my salary is still untouch

2nd and 3rd property are rather unique.

Year 2006 (Salary: RM2800)
I bought my 2nd property together with my brother who has the same earning power as mine. Together we bought a RM250k worth of property. Secured a local bank loan and work out the installment to be only RM750/month/person. Ok wat.....

Year 2007 (Salary: RM3000)
Recently, I've just bought into RM380k worth of property together with my wife who has the same earning power as mine. It's for own stay. Secured my company's loan (interest rate a slightly lower than local bank) and work out the installment of only RM1000++/month/person. Ok wat...

Year 2008 (Salary: hope it rises)
Rent out some of the rooms from the 2nd and 3rd property to help service the installments. Hence, boost my monthly income enabling me to secure another bank loan for my 4th property as an investment...

Year 2009 (Salary: rise rise rise)
Buy my 5th property, by manipulating my 1st, 2nd or even the 4th property. How? Read 'em up... it's all in the books. Attend seminars! Learn from the successful people.

Hope I did shed some lights to some of you out there.

Nothing is impossible

Cheers
Roger
wcwroger@yahoo.com

everything sounds so perfect ..
1st property : how do u consider a positive cash flow if ur rental income is rm900, instalment rm850 ? wat happen to other charges like legal fees, MRTA, maintainence fees, fire insurance, quit rent, sinking fund....?

2nd property : buying a property with siblings sounds good, but don forget when things get dirty in future ( which we may or may not know if it happens ), there is gonna be alot of trouble. anyway, rm750 taken from ur salary now..

3rd property : i assume u haven't got the property yet since u just bought it , i also assume u can get loan with salary of rm3000 coz it is a company loan, if not , total loan instalment of rm750+rm1000 is more than ur salary can afford to get loan.

2008 & 2009 : i understand ur wish of getting as many properties as u can by repeating the buying-renting process, according to the book/seminar, but pls do not forget getting urself into multiple loans ( although serviced by tenants ) is putting urself into potential risk of losing all of them in chain reaction. a few risks i assume u have taken precautions of : BLR increases, Zero tenants period ,bad tenants,maintaince of property, losing job, unable to work, needing immediate cash, . ...

many has attended seminars n read books from successful ppl, how many has actually made it successful ? i m not saying tht u can't make it, in fact i would love to see this theory works practically! All i can say is, wish u all the best and pls do update us on ur progress/...

All,

This sounds like a train that about to fall off of a cliff. And, for people that CANNOT do the calculation and the common sense to figure this one out, they SHOULD NEVER do investment in property.

<<Renesial Leong (u may read her success at www.upia33.com).>>

BTW, I read her book and went through all the calculation. And, one of her basic rule is you only buy property if 10 months worth of rent can pay off everything in the house for a year. You need reserve and safety margin in case that the house cannot rent out for a few months. This person had violated that rule in the very first property by only having positive cash flow of RM50.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 06:02 AM

Dear Dreamer,

FYI, My 1st property is referred. Remember I mentioned that I've signed the 15 years contract with the developer. That actually taken into consideration for the margin of safety that I need, and I don't have to worry about not being able to rent out the unit. The only downside here is the rental will be stagnant at RM900 for 15 years. I don't have to worry about it coz my rental is enuf to cover my installment, and still have RM50/mth cashflow. I've managed to work out the installment fixed at RM850/mth for a period of 30 yrs. After 15 years, I'll raise the rental and could soon repay my loan in 5-10 years or so.

yewkhuay,
My contract waived the maintenance fees for 15 years. MRTA is included in my bank loan. Other fees are covered nicely with the extra of the RM50/mth. So, no big deals.

Dreamer,
I admit that I've actually violated the rule of 10mths but I'm still stick with the rule no. 1, rental must always be greater than installment. There are time you'll have to be flexible in order to achieve things you want.

Like I've mentioned previously, it's all drive down to how you organize your personal finance. Saving is very important in the beginning.

Hmm, now mentioning about it, I've gotta do some part time to have more cash.

Oh ya, did I mention that the 2nd property I've bought are 40% below market and the 3rd property I've just bought is 10% below market in a strategic location? Property hunting is important too. Like yewkhuay said, anything could happen in the future, so worst come to worst, I could still sell my properties slightly below the market value and still gets away with a little profits.

Cheers
Roger

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Added on July 19, 2007, 7:41 amAll,

Things could become nasty if you don't know what you're doing. Well, this also happens if you are investing in stocks, units trusts, insurances, land and any other investment vehicles.

Dreamer and yewkhuay are right. Always be prepare of consequences. But let us put it in another way. Take the consequences as a challenges! Trust me, you will see opportunities, success and bright future ahead of you.

Do your homework and have your calculations make sense to you. Lots of investment books out there could assist you in becoming a better stock investor, property investor or even land investor.

Design your personal finance well. Determine your investment risk. Have different investment vehicles. As for me, besides investing in property, I invest in land and stocks too. So far so good

Best regards,
Roger

This post has been edited by wcwroger: Jul 19 2007, 07:41 AM

Again, may I remind you that you're planning to rent out the 2nd and 3rd property that you had joined name with your brother and wife. Also, you mentioned that you knew that in-order to earn; basically you'll need the rental to be enough to cover your installment and other maintenance.
This would be the speculation risk that I talked about.
1st Property that you had is basically quite secured for now.
2nd and 3rd property which had you giving out monthly commitment of RM1700 servicing loans i.e. RM1400 (you and your brother) and RM2000 (you and your wife). Meaning to say for your second property you need a rental income of RM1400 and RM2000 for your 3rd property.

Again on loans for the 4th property, you have to understand that banks doesn't treat rental income as your income. It would only treat the 1st 3 properties as your liability. Take into the accounts of your commitments i.e. RM1700+RM850 (1st property) which leaves you around RM1400 if you're earning RM4000. With joint apps with your wife assuming your wife is also earning RM400 would gives you RM8000 with total commitment of RM3550 altogether. General rule of thumbs is that the loan servicing part should be no more than 1/3 of the income but this is already half. Not sure the bank's going to lend you the money or not.
It would eventually turned into a very risky business when you can't really manage your properties which you've acknowledge Dreamer's comment.

Again, how old are you waiting or how many years are you waiting to dispose off your properties? It's generally not advisable to be holding more than you can manage. I would advice 2 or 3 is good enough whereby 1 is for own stay now and 1 or 2 for rental income that's enough to cover your loan payment and maybe more to cover other maintenance.

Also I would say that properties are not cash. In order to turn properties into cash, you need to sell it off. Selling also includes cash to be paid (not fair right...blood sucking lawyers); and it could oftenly take up to 2-6 months for disposal. Thus when you're in dire strait for cash....good luck!

Better keep some cash for the rainy days instead of just focusing on the future.

<<Hmm, now mentioning about it, I've gotta do some part time to have more cash.>>

Why?? If your calculation is correct and everything is working fine, why do you need MORE CASH?? Isn't it obvious that you are CASH FLOW NEGATIVE?? And, the more property that you buy, the deeper that you are in the hole. You need to put more money into the houses every month.

It only take one of you to lose a job for a few months for this whole house of cards to collapse.

<<the rule no. 1, rental must always be greater than installment. >>

How about the rule that it must be CASH FLOW POSITIVE?? You do not have the safety margin to pay quit rent and so on.

<<Oh ya, did I mention that the 2nd property I've bought are 40% below market and the 3rd property I've just bought is 10% below market in a strategic location? Property hunting is important too. Like yewkhuay said, anything could happen in the future, so worst come to worst, I could still sell my properties slightly below the market value and still gets away with a little profits.>>

When you are CASH FLOW NEGATIVE, you will be FORCED to sell at the WRONG TIME.

You are in a HOLE now. Pray hard every night. I wish you best of lucks.

Dreamer

Basically he is currently playing with fire, it only takes 1997 once again for him to lose everything. No offence, but do you know that during 97 crisis, ppl find it hard to dispose of properties. Any back up plan if you are laid off but with properties loans, increasing BLR, no tenant, unsellable assets & etc.?

Put it simply, his plan is too perfect, not taking into account those so called unexpected & rainy days.

BUT anyway, It's your call, your life, your choice