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

Books give lots of information that's non-debatable.
But how you use the knowledge in books is how you excel in life.
I see ppl condemning certain books saying that the strategy doesn't worked or whatsoever. However, they never really understand that one that works for a person might not really work out for the other.

Hi,

All comments are most appreciated. Thank you for the positive feedbacks. Indeed, risks are there when it comes to investment.

I've my way of managing my personal finance and risks. Different people has different ways and opinions of seeing one thing.

Like I said, I look it all as challenge whilst others look it as an obstacle or consequences

Cheers
Roger

---

Added on July 19, 2007, 12:44 pmLet's not talk bout the methods of me buying the properties as my story is rather unique, extreme and a little uncomfortable for others.

The points that I've wanted to send across is "Property could be the choice of investment" (getting back to the forum title). Same like stock investment, you just need to manage your investment and personal finance well. That simple! No tricks.

Cheers
Roger

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Added on July 19, 2007, 12:45 pmI agreed ! It all boils down to the attitude of one!

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Added on July 19, 2007, 12:57 pmI need extra cash to do renovation

As for for my 2nd and 3rd property, I don't treat these two as my investment as it's a social obligation. I'll work my way out for the 4th property to have a +ve cashflow later on.

Already taken into consideration for margin of safety. Check my previous reply.

I don't intend to sell all at the moment as I'm still comfortable with my current financial status.
Even if I am forced to sell, I wont have any problem as 3 of my properties are in prime area and strategically located.

---

Added on July 19, 2007, 1:00 pmI presume you haven't buy into any properties yet?

I've taken into consideration margin of safety when buying properties and I've enough buffer money to last me 6 months if things turn out bad

Like I've said, do your homework, plan your personal finance and manage your investment well.

Cheers
Roger

This post has been edited by wcwroger: Jul 19 2007, 01:00 PM

wcwroger, good if you've planned.
Just that by looking at your comments on your investment, everyone is like worrying for you; thus our comments and advice.
Good luck to you.

Thanks a mil

Appreciate everyone's concerns and feedbacks.

Will try to keep you guys updated on my latest progress when I've the time.

Best wishes,
Roger

My advice to those of you who have just started to earn an income, dont invest in property yet. Save up your money for raining days or to start a business should an opportunity arise. Earnings from rental is erratical and wont make you super rich. Property prices only goes up high in certain hot areas, whilst it remains stagnant in most areas depending on the state of the economy. Your present house may be cheap and increase anually but do you take inflation into account? You can afford to buy a RM100,000 house now but you can sell it for RM500,000. But the RM500k wont buy you an equivalent house then.

Earning a salary and buying several properties just dont make good investment plans. what happen if you lose your job or the property market crashes. Sell? who wants to buy then?

I have lived thru these vicious cycles before and see those property investors regretting.

I read through all the posts. I'll start with the above which is the most insecure IMHO.

1st of all, I salute wcwroger's adventurous & daring mentality, for investing so bravely (for his age & current income). He'll be very rich in the future assuming he faced no rough times & everything go smoothly as how he planned.

Ok, regarding his 1st property that most ppl think is most secured (since got a 15 year tenancy agreement with developer). It's actually the most insecure although it's legally binding at this stage. Anybody heard of Kolej Lagenda at Mantin N.S. ? A developer built a few blocks of apartments there aiming at the students there. The major selling point is, developer will rent the property from the purchaser for 3-5 years. Purchaser are guaranteed a return of 8% p.a. (based on purchase price) which will be used to pay off instalment. Sounds good right? Just need to pay downpayment & no need to pay instalment for the next 3-5 years & thereafter may receive a 8% or higher return.

1 year after the agreement was signed. The purchasers received a letter from the developer notifying them that the plan is cancelled. The developer will no longer rent the units from them. Fast forward to 6 months ago, a total of 60+ units of the said apartment was put up for auction. Venue at Staffield Golf Club just 3 km away.


I assume you bought the property through auction. So have you verified the real market value. Was the valuation done by a qualified independent valuer most recently?
If not, did you ever wonder why the previous owner disposed the said property at below market value. Not being passive here. As I'd mentioned b4 in this thread. To earn from property investment, one must have the power to HOLD.

I knew a couple (both teacher but not doing tuition for side income). They bought 7 properties (link house, flats & aparments) spread across Selangor & N.S. They did it just like how wcwroger did (through rental income). But they also did it through Govt loan as both are Govt servants. So they could secure up to 4 loans (2 fr Banks) at the same time. For bro Wcwroger, would you be able to secure more loans in the future? That's if your income increase steadily cos i don't think u'd want to declare the rental (subject to tax).


It's bad if one is under heavy debt at the toughest moment. But that's also the time where property is cheap & business opportunity opens up. When times are good, all the market share was taken up. At bad times, cash is KING. In other word, gain on other people's lose.

This post has been edited by scorgio: Jul 20 2007, 09:28 AM

wcwroger,
another thing i can think of is, 15yrs of FIXED rental income is oready making a loss coz rental shud hav increased over the years , in 15yrs, probably u shud be getting more by managing the property urself. on top of tht, 15yrs later, wat the developer pass back to u could be an extremely run down property which they / the past tenant would never bother to take care ( few years down the road ,rental is cheap relatively).

just my 2cents...

My respect for putting things into perspective.

WC, TY for sharing. You have a very gutsy approach.

This post has been edited by METALRAGE: Jul 22 2007, 10:52 PM

Ahhhh, but there is a way of realising the capital gain immediately without actually selling the house, should you need money. All you have to do is just go to the bank and get a loan with the house as collateral. Sure, you pay interest on the loan, but remember, the house is still yours! How to use the money, you think yourself.........

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Added on July 23, 2007, 12:41 amActually, banks do treat your rental income as part of your income to calculate loan egilibility! But you must make sure you report it as your extra income in your yearly income tax submission form.............

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Added on July 23, 2007, 1:21 amwcwroger,

I see you're trying to practise what the seminars and books tell you.

Allow me to be a bit critical of your 1st 3 properties. Your return on your 1st property in 7.2%/year. I am not sure what loan package you have, but i think it would be BLR+0.??%, meaning between 6.5-7.5%, no? 15years guaranteed return is good, but it should have been able to negotiate rental every 5years . You end up with a +ve cash flow of RM600/year. But how much do you have to fork out for quit rent, assessment, fire insurance & income tax?. I hope for your sake too, that the agreement with developer states that any repairs if bourne by tenant! Also, if your agreement if 15 years duration fixed, then it would be hard to sell your property as your only target are investors, and how many investors are keen on a property offering only 7.2%/year return?

As for your 2nd and 3rd property, they are not even for complete rental. Renting out rooms are ok....if you can live with strangers in your home, but I'm not sure if that's sustainable. Honestly, I hope there is capital appreciation for you in the end. If I were you, I will save like hell to pay off your non profit generating loans first and forget about buying another property at present.

Sorry for being harsh.
minolta

This post has been edited by Minolta: Jul 23 2007, 01:21 AM

@Minolta,
U've got a point but that wasn't exactly what i meant! *ggrrrrr*

Points taken.

Greatly appreciate everyone's opinions.

Actually, I would go slow from 2008 onwards, taking 2 to 3 years to improve my cashflow first before buying into my 4th property.

Cheers

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Added on July 26, 2007, 10:48 pmAgreed... nothing is certain... that's the risk we've to consider...

This post has been edited by wcwroger: Jul 26 2007, 10:48 PM

if u hav seriously considered the risk , a risk which most investors ( too bad, not many here) know, u wont hav do so, worse case, obviously, u aware of this risk n still go on with it, n it's a risk which is totally out of ur control..
all the best !

This is seriously gutsy move. My salary is higher than your previous year's salary but still no property.

care to give a latest update to your property acquisition?

wow... very daring indeed!

Lets not jump on his throat la... maybe he has enough cash reserve to see him through rocky periods?

Personally, I wouldn't have acquired that many properties in such a short span of time but to each their own.

There seems to be alot of speculation and uncertainty in your plan but so long as you have a secure backout plan then *shrugs* (Able to quickly sell off one or two properties in case of unforseen circumstances-hopefully at a nice profit) I am guessing you won't balk at the course you are taking now since you seem very confident.

I think one property acquired every 2-4 years is good if one can afford it and has carefully planned their lifeplan with consideration for worst case scenario (life is not a script which will follow our will as we wish after all). Then by the time they are close to retirement 3-5 properties which may ensure shelter and passive income. Again, each person's situation is vastly different and variables are aplenty so don't take it for granted that one can cash out easily or collect passive income at all times...

If you are able to profit from your endeavour then I applaud you but do be prepared for the worst... Optimism will only get you so far...

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Added on August 3, 2008, 10:08 amwhat if you lose your job if there is economic slowdown? Can really expect the salary rise rise rise (unless you are a govt servant?)

Personally i dont really agree with a fella who own few properties and thinks that he is earning big bucks already
You must be able to sell it at a reasonable price then only it is considered a good investment. If you just rent it out with a few tenants, i just wondering whether you can maintain with a tiny salary of RM3000-4000 with the possible increase in BLR (unless you get govt loan) and inflation.
Properties a type of investment, in some extent, is like share market. If the price drop tremendously, the bank can request you to pay a certain amount of money to them and you can suck big time.



This post has been edited by muscaa: Aug 3 2008, 10:10 AM

And you will continue to disagree until you own a few properties and start earning decent passive income. Ppl r often sceptical until they experience it themselves.

When you earn approx 2k monthly passive income (clean after minus all cost) and your investment capital has triple in just 3 years, you'll have a diff outlook





This post has been edited by Pai: Aug 3 2008, 12:32 PM

True true. If a person managed to reap rewards (in the case, properties being rented out and held on to) from their investments then naturally they will have a very positive outlook on it.

I think properties, well handled, can ensure a person is comfortable for life-but life is uncertain so don't see it as the be all end all. I feel those that believe that need to learn the meaning of 'asset allocation'.

That said, more than a few people rely on property investment as a passive stream of income and possible retirement fund after it is eventually sold. Some even hold on to properties as inheritance for the following generation. It is hard to deny that properties can create a person a lot of wealth so long as they don't bite off more than they can chew.

Hmm, interesting point here. Im personally not a big fan of asset allocation actually, due these 2 cons :

1. No time -In order for it to work ie getting good returns, should one plans to segregate their investment into 3 asset class, say property, shares and precious metals, they technically need to master all 3 asset class.

Since we only 24 hours a day, I'd rather concentrate my efforts to become really good at only 1 asset class. Better be a pro at one thing than become an average at many things.

2. Measly returns - Not only its time consuming, you could end up being an average investor for 3 asset class, and geting a mere 5%-6% returns p/a. My view is that one concentrate on maximising returns when they are still young, then explore asset allocation once they've accumulated a comfortable wealth level, say at RM3Mil.

Also, there no one I know got rich thru asset allocation. What do you all think?

Actually I do agree on those points with you. After all, some (if not most) of the richest people in the world make their fortune by mastering one asset class and specific skills. However, there are risks involved and I believe most of them had alot of patience to learn, perfect and master their skills and assets and had enough foresight to ensure they don't go completely under should unexpected events cause their investments to go 'under'.

But I cannot completely condone those that stretch all their money in either property, shares or precious metals. Admittedly, I am more of a medium risk investor though I am aware of the fact that higher risks will reap higher rewards. There must be enough room to buffer any investment and for me that would mean leaving part of my assets in cash (with sad FD returns but what to do? ). I am still learning a little more about shares though so eventually I hope to invest part of my assets there.

Property though still remains a form of investment I hope to master (as well as the rest of the people in this forum I guess) as it is least likely to cause me financial ruin as long as I manage it properly. By the time I retire, I hope to have 2-3 paid up properties which is able to provide passive income for me, 2-3 properties which I would be able to sell with nice capital gain for $$$ and my own live-in home. So that would be 5-7 properties by retirement which are completely paid up for. Very general goal that I have yet to micro-plan to achieve. LoL! Give me time. I will figure it out as I learn from all you gurus

As for the 3 mil mark... Would that be completely in cash or mix of assets that make up 3 mil like a few of properties worth 1.5mil, 0.5mil in cash and the rest in stocks;unit trust;etc?

If a person has 3mil in pure cash along with other assets then I think asset allocation is definitely in order With that much $ then a person really shouldn't put all of it in one investment. But that is just me. I am not so brave I would strive to ensure that the value of my assets (cash or otherwise) remain the same if not more by appreciating more than inflation and provide me with a reasonable income though.

Every person will have a unique plan to make their fortune. What works for one person may not work for another so I won't let myself fall into that trap or feel pressured into something I am uncomfortable with. I simply wish the best of luck to anyone brave enough to stretch themselves financially with one form of investment alone with no buffer.

[quote=shadowz,Aug 3 2008, 11:36 PM]


Property though still remains a form of investment I hope to master (as well as the rest of the people in this forum I guess) as it is least likely to cause me financial ruin as long as I manage it properly. By the time I retire, I hope to have 2-3 paid up properties which is able to provide passive income for me, 2-3 properties which I would be able to sell with nice capital gain for $$$ and my own live-in home. So that would be 5-7 properties by retirement which are completely paid up for. Very general goal that I have yet to micro-plan to achieve. LoL! Give me time. I will figure it out as I learn from all you gurus
[/quote]

Sounds like a good plan, at least for me

[quote=shadowz,Aug 3 2008, 11:36 PM][/quote]
As for the 3 mil mark... Would that be completely in cash or mix of assets that make up 3 mil like a few of properties worth 1.5mil, 0.5mil in cash and the rest in stocks;unit trust;etc?
[/quote]

3Mil of pure cash or in highly liquid investments bro.

[quote=shadowz,Aug 3 2008, 11:36 PM]
If a person has 3mil in pure cash along with other assets then I think asset allocation is definitely in order With that much $ then a person really shouldn't put all of it in one investment. But that is just me. I am not so brave I would strive to ensure that the value of my assets (cash or otherwise) remain the same if not more by appreciating more than inflation and provide me with a reasonable income though.
[/quote]

Agree. When u reach the 3Mil mark, capital preservation should rank highest (unless you plan to reach the bilionaire gang) and should be one's top priority. A 5% yield would already give a person 150k p/a pocket money


[quote=shadowz,Aug 3 2008, 11:36 PM]

Every person will have a unique plan to make their fortune. What works for one person may not work for another so I won't let myself fall into that trap or feel pressured into something I am uncomfortable with. I simply wish the best of luck to anyone brave enough to stretch themselves financially with one form of investment alone with no buffer.

[/quote]

Very true and I respect that each person has their own investment preference and risk appetite. What I dont like is those naysayers who cast doubt on every lad here by making negative remarks with no supporting proof. Im very sure that there's plenty of kids out there who come here looking for investment advise ended-up being a chicken due to this unfounded but "sounded-logic" remarks. they then ended up regretting their "chickenness" few years down the road when other ppl took their chances and made significant profit, be it properties or stocks or any other investments

Dont get me wrong, I dont plan to get everyone here to buy properties blindly.

Pai, well said. It is better to just master 1, than to be average at all 3. Being average could mean you break even on all your investments, and over time taking into account inflation, you are basically losing. But that also means leaving your money to melt away in a FD account while waiting for the right time to pounce. There can be no win-win I guess.

Hi Pai, you sound like someone who reads a lot & owns quite a few property. Mind to share your success story?

Wonder how is wcroger doing now.

As for me, i got interested in property investment since attended Dolf De Roos seminar (damn, it was very expensive but it opened up my mind - at least after that, it thought me that debts can be good, esp for property).

I bought one positve cashflow property after that seminar (not much though, around RM 250/mth after maintenance & installment, exclude agent fee which I think cannot run away every 1-2 yrs when tenant leave) in 2007. Oh ya, nothing down technically but with closing cost, MRTA, valuation fee, furnitures...it cost me slightly > 10% of property price.

Now looking forward to another property in the next few months or latest 2009 (my aim is 1 property every 2 yrs). Any good recommendation Pai?

We havent heard from wc Roger for a while since the economic turmoil...

I got started after reading Kiyosaki's book, and agree with his idea on leveraging as a wealth tool, hence decided to go for properties.

Recommendation --> Not many value buys today, but based on current valuations, Maytower is probably one of the best rental yield properties available. Not many properties at circa 200k today can give you above 10% yields. Rented my current unit for RM1900 p/m to a corporate company (expat) and spend zero for advertisement and agent fee's. Using history as an indicator, think the price will go up by another 20% by mid next year, which is a fat bonus IMO given its alread strong rental yield.

Maytower? the 400sqf shoebox?

no, the 351sqf shoebox

Its the location, my friend.

This post has been edited by Pai: Oct 15 2008, 06:33 PM

I hv a friend living there - dont know whether rented or not. From the outside it does look impressive. I guess they're trying to ward off bad omen from the phailed project next door (*cough* CityOne *cough*)

sorry brothers, where is Maytower ah???

Its funny rite? That area has :

1. The failed CityOne - 3-bedroom condo being rented to bangla's for only 1k p/m, and selling for approx rm160psf
2. The decent Maytower - Shoebox studios being rented from 1.3k - 2k p/m and selling for rm580psf
3. CapSquare condo - 2 n 3 bedroom condo being rented from 5k onwards, and selling for rm700psf

Best part is that all 3 condo's are just 50 meters away from each other

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Added on October 15, 2008, 11:26 pmOpposite the upcoming & new shopping mall, Capsquare

This post has been edited by Pai: Oct 15 2008, 11:26 PM

wow, why like that one? mind to share ur thoughts?

btw, how many units in Maytower? How come so good rental? Expat?

timing of purchase is very important

Look, altho im very biassed towards Maytower, its not like its the perfect investment. I could think of 3 mains cons when it comes to Maytower :

1. Built quality is only average.
2. Mayland has a bad reputation as a developer and to have known to screw their buyers despite their track record as property managers is quite decent actually.
3. Flooding - Apparently is prone to floods but personally I have never encountered this before after a few months.

Also, like any other investment, Maytower has no guarantees on returns. However, I consider the above risk is negliable when I weight the strengths of Maytower :

1. Location - In Central KL, less than 10min walking distance to shopping malls, Putra & Star LRT, Monorail, cinema etc. KLCC, Bukit Bintang is just 5 min drive subject to traffic. Its extremely convenient. I cant think of any other units that cost you approx 200k today that could give you the same level of convenience.

2. Maytower basically addresses a key issue : limited supply & high demand. Apart from Casa Mutiara studios, there arent any modern studio's supply located at KL center today that cost anything less than 300k and being rented out for anything less than 2k p/m. Its caters mainly for short term expats who doesnt wish get a car and rely mainly on public transportation. I got my current Maytower expat tenant using free internet advertisement within just 10 days, and I paid zero for advertising and agent fee's.

3. Price VS Rental yield ratio - IMO its currently undervalued and still about 20% cheaper psf compared to Capsquare condo next door, but it commands 20%-30% more rental psf compared to Capsquare. Strange right, but small is sometimes big in returns
This wont stay for long as ppl will quickly realised that 10% yield is too attarctive and sellers will adjust their sale price upwards to match Capsquare. Furthermore, when BRDB launches Capsquare2 at indicative quote of RM900psf, Maytower price can only move upwards.

4. Past performance of similar studio's - By similar I meant by similar sized units, similar accesibility to public transportation and less than 5 years old :

a. Suasana Sentral - Launch at rm300psf - now asking for rm600psf, (100% increase - 4 years old I think)
b. Parkview@KLCC - Launch at RM450psf - now asking RM1000psf (>100% increase -3 years old)
c. Sommerset Bukit Ceylon studio's - Dont remember excat size (think approx 550psf), but studio units were launched at approx 250k, now selling at min 400k. (>60% increase - 3 years old)
d. Casa Mutiara - Launch at RM350psf, now asking RM650psf (>70% increase - 1 year old)

5. Very strong rental yield - The unit I bought 4 months ago now gives me 12% rental yield. Another fella I know who bought at the same time as me today enjoy 13.5% yield.

These 5 reasons are why Im quite bullish on Maytower

Pai,

Thanks for the head's up. I did some calculations and personally think that Maytower is a good investment whilst being in a dodgy area IF I can get it rented. I'm just going to wait for the real estate market to crash and burn, maybe somewhat like 1997 and grab a unit.

I'm currently in the process of disposing one of my medium-cost property - collect bullets to face near-future meltdown. Hving high asset and low cash is making me a lil uneasy.

This post has been edited by Syd G: Oct 16 2008, 08:24 AM

agree on that point. got a letter from my md to one of the bigshots in mayland, threatening him to buck up or else

btw, i might be in a wrong thread asking this, but any of you guys can give some advice on real estate investment for beginners? i am looking into venturing in RE, but am low in capital at the moment. might start venturing by march 09 if all goes well.

sassyset,

INMVHO, this is not a good time to invest in real estate. Malaysia's RE is still on a bubble that could burst in mid 2009 or early 2010. The pattern is there - very low interest rate on loans (just like the US) that will inflate property's price and for now it will rise up very fast but I'm thinking that the price will drop faster than the time it takes to settle your purchase paperworks.

There's this project by WingTaiAsia - Veritas Residensi (i pass their billboard sign everyday to work) on Bukit Ceylon (near Raja Chulan) - price from 2.3m for 2 bedrooms onwards (6m for a penthouse). I nearly choked on my morning breakfast.

In times like these, cash is king so collect some bullets instead and go shopping when the time is right I started on RE 3 years ago when I was 23. I withdrew all my life savings, almost gave my parents a heart attack and bought things that appreciate (houses, some investments here and there) instead of a new car or an iPod

Syd,

Sounds like a good plan IF you can afford to cough up more than 30% deposit in cash. Good luck mate

Erm i think overseas market have faster and better returns compared to msia...

Say Middle East especially Dubai. If u dun wanna live together with construction workers to RENT a decent apartment is in the range of AED 100,000 to 150,000 per year. Their currency is slightly lower than ringgit. Price of property for that kinda rental costs around AED 1m to 2m.

Well a lot more money to pay but a lot more higher returns than msia...
unless u're so lucky to have bought a house in bangsar for around 100k at that time....

Hence 'bullets'

I'm much more conservative lately. I guess all the financial news hv been draining my energies.

point taken
thank you
neway, what would be your investment of choice, looking at the current economic situation? (this IS off-topic ... sorry sorry...)

No worries chief, u r defo not alone here in being concervative in these trying times. In fact, some banker fren's of mine are currently feeling the slowdown as there's significant reduction in loan applications

Guess it boils down to our respective risk-appetite, investment strategy and bet. Im making a contrarian decision so praying for the best now

To be frank? Very conservative ones like short-term FD. Will buy more things when the right time comes

Pai,

I salute you for having more balls than I do . Liquidity is a big problem for me right now so I have very few options

On the loan application note, I'm sensing their deep desperation. There are flexi homeloans offering BLR-2.00% now. Am so tempted to refinance... *slurps*

Having bigger balls means nothing if the big ball will get burnt

If the flexiloans can give you significant savings and also increase liquidity, why not go for it?? In trying times, having that extra cash could be your ticket to significant wealth increase

I'm tired to be frank. The current loan was processed in 11 MONTHS 3 years ago. I'm not sure whether I'm strong enough to jump hoops again. My current rate is BLR-1%. I'm gonna lose on my MRTA and early exit penalty too. We'll see

Yo Pai, you bought below market price? From the yield u mentioned, it's 190K purchase price which I think for such unit, it's a fully furnished unit and all selling around 230K and above. Your loan is 90%??? Still postive cashflow?

mate,

The unit I bought 5 months back was the 351sqf bare unit @185k. Loan was 90%. Have to admit now its a bit hard to find a 351sqf@ below 210k. The 2 that I recently agreed to buy was just slightly over 200k.

If you cant wait, your best chance is to go after the 439sqf ones, and that should cost you 220k to 240k. Still cashflow positive with extra RM300-RM500 (depending on rental) pocket money every month kua

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Added on October 17, 2008, 2:03 pmIf can get min 20% more cash, think its worth your while. Good luck mate

This post has been edited by Pai: Oct 17 2008, 02:03 PM

Thanks mate

Let me get this straight - you currently have 3 eggs in one basket?

Syd,

u r spot on. I know its not a complicated strategic move to some ppl & diversification is a safer way but the returns are just too mediocre. If my calculation is right, I'll have very decent passive income stream ELSE I'll just have small passive income stream

This topic has been laid off for quite some time since it started at the end of 2008. Everyone was waiting for the right opportunity to come, and now it is end of 2009, has the long waited property meltdown arrive or have already gone through that era??

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Added on November 18, 2009, 1:48 pmWaiting for all gurus comments and discussion...........

This post has been edited by Rosemount: Nov 18 2009, 01:48 PM

All gurus busy discussing bout buying other properties @ other thread

hi guru out there, came across this...
pertama residency at cheras area...studio unit...lauching price RM180 now sold at RM240k...can fetch rental @ RM1,500 per month...good buy or not? if you have other development in mind pls share with me..thanks...thought of buying property below RM250k as investment...cheers

sifu pai, u still lurking in lowyat? haha. how is maytower now? based on rental still can get decent roi 6% above if can find 300k or so unit.

im one generation late sort of. now aiming to chew on leftover bones.

What's your game plan?
It's 1000psf and it's aging.
Only buy for rental? With limited capital upsides?
No new catalyst that would push Maytower higher
It's siblings are also tops at 1000psf
Nearby better accessibility and newer option doing 1k psf as well. Well, there are better options giving u potentially more capital upsides & sustainable rental

In d beginning, every venture is difficult. U hv to build up critical mass...