1) Interest rates, legal fees (for transfer and sale later) and maintenance will eat into your profits pretty quickly. That 800k loan (assuming 1mil property with 20% down payment) at fixed 3% p.a. interest will incur more than 400k interest over a 30 year tenure at RM3k/mth instalments, so you're effectively paying RM1.4million on the purchase, which means you need to pray that 30 years later that property will appreciate at least that much. Meanwhile RM200k starting balance in investment, with a monthly additional contribution of RM3k, and a fixed 3% return rate annually, will get you over RM2million after 30 years, without including annual management fees from your UT fund house.

2) it's reliant on you to be able to service instalments, if you buy now at current low interest rates, if base rate for bank changes beyond your affordability you might run into problems

it's great as a form of wealth preservation if you buy at the right price and location, but as a way to profit? very bad 🤣 at least if you purchase a property within the past 6 years.

Don't be fooled by the idea of leveraged investment. The only one that truly works without big risk IRL in Malaysia is ASB loan

This post has been edited by DragonReine: Apr 13 2021, 07:49 PM

It's true that most investors buy to resell or rent ASAP. The main issue is that due to Malaysia's lack of transparency in housing prices and the rampant practice of inflating SPA prices to get people to finance up to 100% instead of maximum 90%/70%, over the years housing prices have been artificially inflated to the point of unaffordability for most people, especially in high demand areas where a property needs you to fork out nearly a million or higher, except in high density projects or affordable schemes or auction, which comes with their own set of problems. This is not in line with Malaysia's median salary and the relative wealth of the general population. Recent auctions themselves indicate the "true" value, in that banks are often forced to auction off at lower than 70% of SPA after several rounds of wait-and-see.

It means the average retail investor must be prepared to require the resources to buy and hold for a significant amount of time before they can sell a property if they attempt to do so in current situation. We've yet to see government or central bank make significant measures to address the practice of price inflation.

As for the latter, which is best will be dependant on, case by case, the investors' appetite for risk, confidence in cash flow/savings (for leveraged investing like property or margin trading), skill/knowledge in trading/choosing the right place to invest, and ability to stay invested. There's no ultimate best answer as it depends on the individuals needs, wants, age, and capabilities, which will change over the years.

Real estate/insurance/financial agent will obviously sell their own products first and foremost if blindly follow then you're asking for financial death, especially insurance (no insurance out there is genuinely worthwhile as a financial investment).

This post has been edited by DragonReine: Apr 14 2021, 01:22 PM

Ironically pandemic actually drove prices down to a more reasonable amount, with discounts and banks' increasingly conservative valuation still inflated but less than before. Oversupply and the increasing auction units will likely push prices even down, although I also predict not by much, because the bull run of stock market in 2020 and government incentives means many investors might have made a quick buck, enough to buy a house. High demand projects still getting nearly booked before official launch

Oh you'd be surprised at the number of insurance agents boasting of investment-linked life insurance/endowment plans being good investment because it pays the most commission it's also the most marketed and most misrepresented, it's only too late that many buyers who buy such insurance without understanding the numbers realise how much commission fees and sales charges will eat into the profits.

For self employed with no fixed income? All banks will give you a hard time to varying degrees, depending on bank. Some are VERY strict (Public) while others will cincai approve as long as your DSR and CCRIS ok (CIMB, HLB) and they're confident you're good paymaster.

However due to pandemic changing so many people's cashflow and with NPLs on the rise + moratoriums cutting into bank profits, all banks will scrutinize high risk customers more intensely, not just because they're less confident people will service loan, but economic depression means crime and illegal activity tends to rise, so they'll be extra cautious of people/businesses where they cannot verify how you gained your income easily.

My experience usually one or both of the following;

1) high risk business/job (either because tendency of staff turnover/job change is high, or is a business where stability of earnings is unpredictable).
2) CCRIS/CTOS score sub par. Usually because got too many high risk loan (personal loan or credit card), high credit card utilisation, or the most surprising to most people, lack of CCRIS history (because person never applied card/loan before or settled past loans before applying house loan).

#2 is a shock to people because many think having no loan/card = bank more likely to approve loan, but in fact the lack of credit history is just as bad as having poor credit history, because banks aren't just evaluating your DSR but also your history as a paymaster. If they see no history it's risky because they can't know how good of a paymaster you are.

apakah 🤣 you mean for buying house within nexr few months? no rush la because government said want to extend HOC, although with some changes

any SST on construction materials for current launches, developer long factored it in into the retail pricing don't be fooled by agents trying to prey on your FOMO

Klang Valley and Johor still having major oversupply especially for high rise, so don't rush into things, do your homework and due diligence for your investment first

Until economy goes back to normal.

Low OPR aim is encourage spending (via investing or loans) to get money circulating into the economy.

Think of finance and economy and the flow of money as one giant circular supply chain. When people put money in saving account / fixed deposits / money market funds, they're "dead" money because it doesn't actively flow in market. Conversely, when you invest/take loans, your money flows out to businesses, who then get capital to grow, which then can grow more money for the broader economy to partake in.

☝️ Bolded above.

Very important for investors especially those intending to flip to do homework, which means either nicely enquire with your favourite bank officer to help get a verbal valuation, or use tools like Brickz (which records transactions based on subsale, but subsales do give a decent benchmark on the REAL value of the area i.e. what people are willing to and have already paid for) and do your own self valuation. If for rental, look up advertised rental for already completed and existing projects in the area which has similar amenities/room size/furnishing etc., and to be safe deduct 10% from advertised rental because sure got arrangements where advertised rates are not the same as real rates .

Assess the property for defects and identify areas which will affect the long term integrity and cause major problems. The 'big four' to look out for are

1) Water damage
2) Plumbing/sewerage
3) Electrical/wiring
4) Presence of termites/major pests like rats

These are usually issues that can cost you up to hundreds of thousands if not nipped in the bud early.

Get a reliable home inspection company to check the property for you and then approach a contractor for costs for fixing/preventing these defects.

Things like painting, appliances, cabinets/wardrobe etc. can be done piece by piece/in stages as and when you get funding.

General recommendation is to not spend more than 10% of the property price on renovation, unless you're rich and this is going to be your forever home/holding it for at least twenty years.

Should be ok, although admittedly I've not kept myself updated for past two years prices.

If also staying there for long term and have extra funds for it + big rooftop, might want to look into installing solar panels to take advantage of savings/earnings from net metering scheme. Banks these days also have interest free/low interest loan on installing panels with zero/low upfront cost. Currently savings on monthly electricity for solar panels is around 20% to 30%, which can mean a cool few hundred if your house is big.

Just that it might not be aesthetically pleasing

Glad to help! I would say also that don't overspend on first purchase Furnishings especially, you can and should take time to accumulate select good quality pieces that can last, like a nice sofa etc. Most people eventually move out/upgrade from their first home, especially near retirement, so focus on comfort and practical needs first. Too many built in furnishings especially if you do a lot of interior decorating in a particular style will affect future resale value because it can look very dated and out of trend in a decade.

Good luck!

If I recall correctly, this only applies to residential properties under commercial title (i.e. service apartments).

Developer would have initially applied commercial first as title is commercial.

Subsequently when VP you as owner when apply for electricity supply for your unit you can apply to get residential tariff. Some developers will claim to do this for you on your behalf.

Condos under residential title there is no need to convert, unless the land itself isn't converted to residential title.

This post has been edited by DragonReine: Apr 30 2021, 06:56 PM

1) DSR/commitment if too high will affect chance of approval (banks don't really look at rental income because it's high risk income which isn't steady)

2) Bank may not give you 90% of SPA loan margin if they see high DSR and you're buying several properties in a short period of time, unless your annual salary is in 6 figures range 😅

NP! Banks rarely take 100% rent as income because they will account for things like agent fees, maintenance costs, assessment tax+quit rent etc., the % they use varies from bank to bank, and will depend on whether they view your tenancy agreement as valid and/or if you submit proof of steady income (like bank statements). Some will only accept based on your tax declaration of rental income, which usually is already nett after deducting expenses, so it won't be much on nett income already. So your colleagues' assurance, while correct technically, is very misleading.

1) Is this residential or marketed as 'residential under commercial title'? Progress schedule under HDA only applies to residential use properties like suite apartment. SOHO/SOVO/SOFO don't count arh that's consider commercial property, no HDA style progress payment.

2) Ask for draft SPA, you can see if it's under HDA schedule because there will be a Schedule G or Schedule H on top of first page + mention of HDA

But usually for "refurbished" cases not under HDA la, cos it's simply cosmetic upgrade of existing building structure. Will be similar to subsale or commercial property sale, you need to start paying loan immediately once developer sends billing to bank asking bank to release money.

Ah, cool, you can try ask for copy of existing land title also, if nothing on it mentions for residential purpose or for the purpose of "bangunan servis" then it's most likely commercial property

most likely have to fork out large DP 😅 banks usually only give max 80% for commercial use, and even then quite rare, so you need to give the full differential sum on SPA signing unless developer give special arrangement in SPA (like payment in instalments etc)

A lot of newly launched properties have such promos, but please read the fine print carefully.

Most only cover legal fees if you sign with their panel lawyers.

You usually still need to pay for stamp duty on memorandum/instrument of transfer aka MOT (chargeable when received vacent possession) and for loan agreement.

However if you're first home owner there's full stamp duty exemption given to both MOT and loan agreement for the purchase of a first home worth not more than RM500,000.

This exemption will be for the Sale and Purchase Agreement completed between January 2021 to 31 December 2025.

In addition there's current Home Ownership Campaign where you can apply to waive the stamp duty for MOT, subject to application of unit with REDHA (not all projects/units within project are under MOT).

Beware that sometimes during application of HOC developer often marks up property price to report to REDHA and this may cause you to need to pay extra charges (sometimes few hundred, sometimes few thousand) because there's a difference between initial agreed price and the REDHA price.

Note that properties with 0% downpayment are often sold at "future price" and are over current market value, so if you're doing this for investment/short term stay, be aware that there's high chance you're overpaying for the property, so do your due diligence.



This post has been edited by DragonReine: Nov 17 2021, 11:53 AM

If you want to avoid MOT altogether then your best bet would be to look for any property with ongoing HOC, or look for property under 500k under residential title if you're first time home buyer to be eligible for exemption.

Other T&Cs associated with first home buyer exemption:
MOT will only collect when property is fully constructed so it depends if you're able to save up that much during the construction period.

yeah 😅 limited to smaller high rise or non-klang valley property.

Can calculate the standard fees for stamp duty and legal fees from the following graphic: