Hi,
Need advice for a property purchased 4 years back, on govt loan for 30 years, with 2300 installment. Property valued at 420k during the time of purchase, by agent from developer. Now got possession of property last year and can rent for 1100 partially furnished. And property value devaled to 340k (or actually property value was bloated by agent in the first place).

As can see, rental is quite lower than bank monthly payment. What's best advice to deal with this situation? Specially, looking at recession and prosperity market slowdown. Continue as is, rent property? Or sell . If later, have to taje the loss ? Any better approach to get out of this ?
It's condo in bangi - southville city savanna executive suite ~900 sq ft 3 rooms without balcony. Original intent is investment.
Thanks.

This post has been edited by techman007: Jan 26 2023, 11:44 PM

Landed?

Usually landed will be this situation as it favours more in capital appreaciation

Depends on what ur goal is

Hold for 5 to 10 years n sell at good price or u predict even with time the property cannot increase or too slow increase of price?

is this a condo with cashback?

This all goes back to your original intent of buying this property and if you foresaw this would happen.

If I were you, I’d look at creative ways to increase my rental first. And really examine your personal cashflow to see if this property is sustainable.

In any investments, investors must be able to cushion any 'temp' loss and hope for a recovery.

Letting is one way to do it but it can also add further to the losses along the way such as default rent, repairs for damages, wear and tear, void period, unpaid bills, agent commission, time cost etc.

The less painful method is to self occupied.

The last choice is dispose to reduce further losses. Accept the one time loss as a poor capital investment.decision.

What do you mean by prop purchased (4 years ago) value bloated by agent? I can only think it was a subsale, correct? But doesn't seem so as you then said take possession last year after 3 years (re-edit)

I blur, can share some lights here. Subsale or new fr developer? If the later, how agent bloated the purchased price?

This post has been edited by jojolicia: Jan 22 2023, 06:32 PM

It's a condo. Completed in 2-3 years, that's where i meant, i got possession, to live or rent. Bought directly from developer, but at a later stage, and i think at a higher then market price/value. Didn't do proper check before agreeing with agent involved from developer.

Original intention is to get rental and pay bank installment through it and eventually own it .

The property purchase price is set by the developer. Agents are only hired and authorised by developer to market and promote the said property development.

This post has been edited by happysalad: Jan 21 2023, 10:26 PM

Haiya this is so common nowadays. You may have seen a paper capital loss of 20-30% which is common for most high rise nowadays vs some which were severely marked down by more than 50% of their purchase price. The projects that break even or are positive cashflow are the real outliers now and uncommon.

You are not the only one going through this and many have walked down this horrible path of Malaysian real estate. Until the real fundamentals of the economy improve for the better, nothing will change... yet.

subsale and auction buyer rejoice🤭🤭

It’s not agent’s fault. The price was set by developer, and you agreed to purchase it. Once VP, when rental rate is lower than your expectation, you can’t blame anyone else but yourself for not doing your own due diligence in rental yield.

The only places that see continued strong rental demand are your usual suspects in MK, DPC etc where expats and affluent locals desire to live in.

Going forward, what do you intend to do ?

1stly, all rental potentials are hype up by agent. Locals would not pay 2300 for rental. Max around 1800 to 2k. Hence, you and many fallen trap by agent.

As for quick solution, cut your looses, sell it of at a lost if you can't maintain the mthly difference.

Long term solution, continue the mthly top up until price recovers then sell to breakeven. But that could be in 5 to 8yrs time. Anyway, min 5yrs for tax free if you profit in selling. Good luck.

With so many condos are building around Klang Valley area, condos rental price will be only getting competitive in the future. Supply demand curve.

You bought directly from developer, then its not price bloated by agents as you claimed.

Made under impression, made believe rental yield, yes agent selling pitch but not your entry purchased price from developer

This post has been edited by jojolicia: Jan 22 2023, 04:08 PM

4 years back was during later part of the property boom in Malaysia, and since you bought it from developers' agent, it was "current market value" at that time. Property agent wouldn't be able to con you much since for under construction project, prices are set by developer.

Now after the price correction from oversupply and less foreign investment, value from that purchase would have lowered.

Unfortunately sounds like you listened to sales pitch and didn't do your due research on market movements+ didn't plan a Plan B in the event of rent/price drops.

If you can afford to hold on, then rent out first and hope for prices to appreciate slightly to be able to let go.

If it's a strain on your finances now, then sell ASAP to protect your own financial security/prevent financial embarrassment of being forced to auction, and take the loss as a "fee" to be a more prudent property investor in the future.

This post has been edited by DragonReine: Jan 22 2023, 02:09 PM

To be fair, no one truly knows the true state of things unless they are very immersed in the property scene. Back then, who knew how bad things would get.

We seem to be one of relatively few developed property markets in Asia where new property can halve in value or landlords end up subsidising tenants.

The country just needs to live up to it’s potential and things will improve.

The supply and demand curve is only applicable to the property that is not in a prime area and strategic location

Some look old but the demand is high due to the location

Landed or high rise building?