Hi, fellow sifus…
Please advice….. I am about to purchase my first investment property and have done the below due diligence.

Type of property – landed, residential, 4 bedrooms and 3 bathrooms, double storey, intermediate unit

Location – at the exit of Penang second bridge, Batu Kawan on the mainland, Peninsular

Growth potential of Batu Kawan – low for the first 5 years, moderate to strong from Yr. 6 to Yr. 10,
Batu Kawan has been earmarked as a new township to be developed by PDC, a Penang state development corporation.

Purchase price = RM245,000 (it is next to impossible to find this in Penang island)
Loan to value ratio (LVR) = 90%, Loan package = BLR – 1.9% = 6.3%-1.9% = 4.4%; Public bank , Monthly installment = RM1,102

Expected outcome after Yr. 10;
Property price = RM350,000 (very prudent estimate)
Assumption,
Prudent/ conservative appreciation of about RM100,000 given the township of Batu Kawan at Yr. 10
Monthly installment = RM500 (tenant’s portion) + RM600 (my contribution)
10% down payment = RM25,000

Sales price at Yr. 10 = RM350,000
Total payout (my contribution) = RM97,000 = RM25,000 downpayment + RM600per month x 120 months
Loan principal pending to clear with bank = RM175,632.90
Gains = RM77,367 at Yr. 10

Problem with this;
Negative cash flow of RM600 per month (assuming no rental increase for 10 years)
Maybe hard to find tenants during the first 2 years – the place is abit remote;
Currently, the location is just a palm tree plantation but has got a huge growth potential as it is the exit of Penang second link.
Have not calculated miscellaneous costs yet.

Any feedback/ opinion on this?