Thinking of buying a property for rental purpose by cash. No point hoarding too much cash when FD so low. What do you guys thing? Unker also old already, cannot and don't want to take loan anyway.

For purpose of adding another passive income. I calculated i can get 5% p.a returns. Good or bad idea? Or Cash is King?

post 30 of this thread
Ubb Trustfund covid19 6.5%
https://forum.lowyat.net/topic/4955758/+20#entry98300437
gives him 7% nett pa...

Dodgy. Don't trust.

If you can prove that you have the cash and didn't avoid tax, then go ahead. Buy house now is good as you have more bargaining power. And prices generally lower.

The first 2 years of rental collection goes toward the cost of purchase, agent's fee, basic reno and fittings .... 0% returns

3rd year collection ... about 40% goes toward agent's fee, repair and painting if the 1st tenant leave.

Other than mentioned above, investor have to take into consideration of void period, tenant's profile and capital appreciation, if any.

Later got maintenance cost/problematic tenant unker.

Leave it at epf je.. Got 5% pa

Unker already pump max RM60k into EPF this year, kennot pump anymore...

btw, if letting out condo, who pays the sinking fees? Landlord or tenant?

Monthly rental should include all charges .... maintenance, sinking fund and iwk ... do not depend on tenant to pay to avoid accumulation of charges in case he leaves without notice or a defaulter.

Guess you about same age as I do. I will buy with flexi loan, leave the money inside to offset interest, while also remain liquid when opportunities arise.

Landlord

5% yield? condo? dont forget recurring maintenance fees and all the hassle of dealing with tenants. If u have not dip your toes into rental props before, it may not be for u.

If u decide to go ahead with the purchase, shd always buy with loan, So u can offset your rental income against interest exp

Alternative to rental props are reits, highly liquid and no hassle in dealing with anything else

If you don't plant to manage the property, I recommend REITS. That one at least no need to bother with how property is managed.

Since COVID19, my properties in both Singapore and Australia have taken a hit in terms of rental relief and tenant renegotiation due to the impact of the virus on the economy. On average, I’ve had to factor in a 20% discount on my rental returns. A hotel master tenant in Sydney is only paying me 74% of the rental because of adverse operating outcomes - something that has never happened in the 15 years I’ve let my suites to them. Mercifully, none of these properties are mortgaged, otherwise, the rental may not cover the repayments. The rental yields are now around 3-4% from the purchase price, probably closer to 3% once the operating costs and taxes are factored in.

On the other hand, ALL of my investment grade bonds are still paying me the stipulated returns of around 5%. All coupons from bonds are tax free. And as mine are whole bonds, there are no management fees payable.

I’d suggest you consider buying bonds in cash instead.

This post has been edited by hksgmy: Sep 27 2020, 06:02 AM

Just to add, NB01, since the past 10 years (after we cleared our last outstanding mortgage), wife and I have been super lightweight on property. This is just our personal feel, and for the record, our property portfolios are in Singapore and Australia, with a healthy mix of residential & commercial buildings. I am still invested in the Australian commercial property scene, through a holding company that my Australian Uni classmate & I set up, and we purchase commercial properties to let out to medical professionals (well, it's something we have intimate knowledge of, so it's something I'm comfortable continuing - besides, it makes PR renewal so much easier).

The reason why I've stayed away from properties in Singapore & residential properties in Australia is because of the increasing amount of household debts, and the record low interest rates that are propping up the mortgage repayments. This, IMHO, is an artificial bubble that can only end one unhappy way.

Now, I'm not sure about the Malaysian scene - so my comments above may not be applicable to the Malaysian market.

Good luck!

This post has been edited by hksgmy: Sep 27 2020, 09:16 PM

Just be sure to get those properties in good location ie always someone who wants to rent. If you think about it, not having a tenant for a couple of months a year will already hit your 5% margin.

And yes, with covid, a few of my tenants have asked for discount.

Same my tenants also asked for discount. Ok lah, sikit-sikit, i help you, you help me. One fella even cannot pay for 1 or 2 months, but since he is with me for many years, ok lah. Unker just treat as helping friend.

But i haven't have a condo property to let so far. Thinking of buying another property to stay while current condo let it out.

go put in stashaway or wahed better lah. old liao don't take so much risks in non liquid investments

I have started with Stashaway already. Not sure how the return is yet.

This post has been edited by NB01: Sep 27 2020, 07:36 PM

If can identify property at lower-than-market price by at least 20%, then go all out. Nowadays many properties selling at steep discount

No matter at what price purchased, the first 2 to 3 years will have 0% returns on 100% cash invested.

Worried only if is underground money.

If you have the cash and knowing you are not going to use it for other major purposes, then why not? Just make sure you do your due diligence before jumping in with all your cash. Make sure you know what you are getting into.

But a reminder, set aside some cash for emergency use. You never know when you will need. It's not easy to cash out from property nowadays.