Hi Kelvin 667,

I read your analysis with interest. However, I don't quite get your conclusion. Do you think the price of DPC has shot ahead of its fundamentals? e.g. a Zenia 22 x 60 (2 storey unit) is approx 850 to 900k now.

All - please give comments and discuss too.

cheers.

personally, I think I'd rather focus on Ara Damansara vs. DPC, in terms of affordability, i mean.

the township there is also fairly well planned out, with guarded access points etc....

house with the same dimension in AD is going for approx 550K vs. a Zenia unit in DPC of approx 900K.

pls feel free to provide some other insights.

This post has been edited by Phoeni_142: Jan 18 2009, 08:33 PM

Hi,

Yes, I have been to DPC. Many times in fact.

Do u own units in BU, DU, DJ, TTDI or Kota Damansara? If you don't, not for you to pass judgement so quickly on other "posters". I am not one of those "angry people" that just want to critize others because I do not have a unit in DPC. It doesn't make my wealth go up if I feel "jealous"....so what the heck for?

My personal view - I am an investor. I do not get emotional on people playing kites, running in fields etc. Having said that, I do see your point. My wife fell in love with DPC - she certainly got emotional! haha

Now - I like that place very much too. Screw the skeptics that talk about the toll, high maintenance fees etc. etc. For those that critize - chances are they don't have any properties to show for it anyway.

JWRX - I AM NOT CRITIZING you. I see your point and I saw how my wife fell in love with the place. It's like "driving into another world", and I think it's a great place to live.

However - from an INVESTMENT point of view - I think the price has shot ahead of its fundamentals. Sure - it has nice landscaping and guarded security - but my feel is that the price will flatten out soon. Sure, I could be wrong - but I feel that other areas like Ara Damansara provide much more potential in terms of investment return. Have you been there? Did u know that even old areas in DJ have much bigger land areas - are more affordable, yet also come with guarded security? Why not we compare research? Perhaps we can benefit from info trading?

Best of luck to you.

This post has been edited by Phoeni_142: Jan 18 2009, 08:46 PM

Hi,

I think Damansara Kim is quite a good buy. Have always been a fan of the D'sara suburbs. Just a few questions.

1. Your house dimensions
2. Price
3. Investment / Own Stay

Would suggest u look around DJ - on the KDU side - there may be some bargains there - of course don't buy to near to the cemetary or college. Got one at the Atria side for 440K about a year back. Build up is approx 23 by 93.

Now, with rgds to our discussion on DPC.

1. Agree with you on the expat com build up in DPC. However, I am quite risk averse when it comes to the expat community. There are reasons why I've stayed away from Mt Kiara or Ampang or any expat enclave. It seems to be the flavour of the month. By the way, anecdotal evidence suggests that the Korean community is already migrating away from Mt Kiara. Look at the Star classifieds. At least 4 full length columns "for sale / rent" every day for MK units. Units in I-Zen experiencing a tough time being rented out. Could be wrong, but it's only a matter of time before MK Aman, Bayu and Sophia start coming down more rapidly.

2. As such, I am quite reserved about the expat build up in DPC. Whilst it may be unlikely today, - DPC could be as speculative as MK in the future.

3. I believe in traditional suburbs where upper middle class families reside - Stable, boring but dependable. That's why I'm zooming in on Ara D'sara (AD)....u could be right - DPC could be a consistent gold mine - just that I see more upside in AD.

4. I must confess i'm not too well versed in the maths in DPC. When u say the rental yields are good....please elaborate. U mean for Zenia, Adorra, Commercial lots??? I'm curious to see how the loan can be structured to get a positive cash flow, given the potential rental. PS - cash flow is the most important metric to me - not yield. Just my own personal view - too much emphasis given on yield sometimes, and it's over-rated. So what if the unit yields 13%? That metric only holds water if u buy 100% cash. As such, please do share your cash flow dynamics, if u don't mind.

See yeah!

Mate,

1. Who says I "tweak" my cash flow? Sendiri Shiok - cheat myself? For what?

2. Don't know what u are getting at - Maybe I was speaking too loosely then - COCR is the most important metric for me anyway - i just summarized it as CF (If u read my previous posts on other topics - I've always advocated COCR. By the way - +ve CF is a variable which u use in your COCR computation anyway. I only put a maximum 10% down. - So the COCR will tend to take care of itself.

---

Added on January 20, 2009, 1:15 pmSorry - I'm rushing for meetings - so no time to answer on DPC, but i'll tackle our debate on DK and DJ first.

There's no right and wrong. It's all about personal preference.

1. DK is old - my own perception is that I find the place a bit run down....yes, good for u that the price has appreciated....like i said.....whatever works for the investor, correct?
2. I like Atria - why? It's dead and quiet - never could understand why a place is considered "sexy" because a bustling One Utama is next door.
3. For the record, my unit is facing the big field at DJ, not Atria. Unit next door has just transacted at 680K. Up 200K in 2 years - who says old areas don't have potential, eh
4. DJ is now fully guarded with checkpoints and patrols - as opposed to DK.

will respond later on DPC.

See yeah!



This post has been edited by Phoeni_142: Jan 20 2009, 01:15 PM

Ok,

assuming u get a Nadia for 900K. 25% downpayment is approx 225K.

Using your +ve cash flow per month assumptions of let's say RM350 (Avg of 200 and 500) - this implies a +ve cash flow of RM4,200 per annum

In a very simplistic way, the COCR - is only 1.9% (4,200/225,000) - and i don't think this even includes in maintenance yet!

Either way - even if this includes maintenance fees - a 1.9% COCR is a very very very very poor utilization of your cash.

Are u sure u are quoting me the right variables here? PS - if u really want to be prudent - your COCR must at least be double that of the FD Rate. I aim for COCR of at least 25%. I'm sure Pai aims even higher.

I think Pai summarized the issues quite well (Please see his post above) - So not much for me to say, really.

jwrx,

I'm just going to offer my personal philosophy to you. In the end, it's still your decision.

DPC could very well go up in price all the way to orbit. In that sense, people like me would lose out. But I agree with Pai's view that the price would flatten out, and it shows elements of speculative play.

Personally, I only focus on COCR. That is of paramount importance to me. I have always said this quote - and i'll say it again. "Appreciation in your properties is an ancillary benefit of ownership".

In other words - any appreciation in my investments is just a bonus. I never buy for potential appreciation. Any eventual appreciation is just a bonus.

The most important is COCR with 10% down - for me anyway.

Good luck to you.

Due to ego - I made many mistakes when I first started out - I bought a couple of properties in BU and TTDI. And tried as I might - I was bleeding in terms of cash flow profusely - nearly died due to my huge ego. I admit that. The only reason I could sustain was due to good commissions and bonuses I got from my job back then.

I got lucky - prices of my units appreciated phenomenally. I sold one after holding on for nearly 2 years - and built up the equity in my remaining property. Even today - they are only breaking even from a cash flow perspective.

Okay - enough of the sob stories. My wife is the "specialist" in finding undervalued properties. I trust her judgement highly. I then specialise in structuring the deal and then managing the properties.

Our personal tenets:

1. We only buy massively undervalued landed properties - even then I know my COCR will not be very attractive - perhaps just the FD rate. Classic example - my buy in DJ about 1.5 years back.

2. Now, we only buy nothing but undervalued condo's / apartments - again, no right and wrong - i know that potential for appreciation is not as attractive as landed - but the COCR return is superb to the both of us. Plus we can repeat this strategy every 4 to 5 months.

3. I'll give u 2 examples of deals closed in the last 8 months. By the way, we try not to limit ourselves to "area-specific" strategies. It depends on where u find the deals, and whether it gives a super COCR.

(a) Sri Putramas condo, Jalan Kuching - 1,100 sq feet - transacted at 140K (Market value = 210k). Loan taken 120K. Rental = 1,100 (semi-furnished) Mortgage = 600, Gross COC return = 30%, Net return after maintenance = 17%.

(b) Faber Ria Condo, Taman Desa - 500 sq feet, studio. transacted at 120K (Market value = 145k) Loan taken = 108K. Rental = 1,200 (full-furnished) Mortgage = 550, Gross COC return = 65%, Net return after maintenance = 53%.

All those deals above added to our "income" - the extra few hundred per deal adds up when your portfolio grows. It has been great to us both - but still always willing to improve.

Pai & jwrx or anyone - pls share your stories? My wife is always bugging me to read your posts....much to my delight.

This post has been edited by Phoeni_142: Jan 21 2009, 02:15 PM

Sorry - working there? U mean u have a shoplot there or working there? What business u operating, mate?

Mr. Pai - thanks for the teh tarik session! Next time on me, ok? It was good to learn a few tricks from you....

I think your spreadsheet is comprehensive. I use a similar template, but with just some slight differences in format.

Jchong - thanks for sharing too.

Just to recap on the formula

1. COCR = Annual CF / DP of your property + One off Expenses.
2. Annual CF = Net Operating Income - Debt payments.
3. Net Operating Income = Gross Rental - Operating Expenses.

I normally go for ZEC packages and buy fully furnished.

However, if using strictly COC perspective - IMO, it is a must for your capex and one-off's like S&P Costs to be included together with your DP as acquisition costs.

Again - if we are running this like a typical P&L - we then have the luxury to depreciate the capex over a period of say 4 years, to "smoothen" out the impact.... But no point in kidding ourselves. Has to be taken as part and parcel of your DP.

By the way, how's the Ipoh market in general? Any signs of stress?

This post has been edited by Phoeni_142: Jan 24 2009, 03:26 AM

sorry - file messed up, and will upload soon

This post has been edited by Phoeni_142: Jan 25 2009, 09:06 PM

In general, banks are already squeezing valuations in so called "mature" areas like TTDI and Damansara.

Not suprised if DPC may be affected by this as well.

Yes, but you're playing a dangerous game of russion roulette in terms of that assumption in relation to DPC.

1. Are u saying that DPC will be a playground for people that are willing to spend on "expensive" products?

2. Are u insinuating that rents in DPC will potentially be 18K per month>? Whilst u may not mean it literally - perhaps u are implying as such by your statemet

3. Pls have a look at the rentals that your Adora and Zenia are commanding right now. I stand corrected if I'm wrong, but I don't think there's a chance in hell that the rentals can cover the installments.