To me 25% gross is near impossible.. or maybe 1 case out of 1,000,000.

The only way something like this happen is :-

The property was bought 10 years ago & have appreciated over time, hence the higher rental rate, somemore in Melaka Even in BU a RM500,000 house also can't get that amount.


For new properties.. you'd be lucky to get a tenant.

This post has been edited by DannyOP: Nov 29 2008, 02:46 PM

auctioned house?

Still searching for a second property.
First one is a low cost unit.

Century Mahkota. It's a condo.

Post 105.
It's in Chinese though...

http://cforum3.cari.com.my/viewthread.php?...page%3D1&page=5

Didnt know Melaka properties can give such high yields. Is this an exception or the norm rental rate for this Century Mahkota?

An exception.

Initial launch 340k.
It's listed back to hotel.
Low occupancy rate, owner sell to this guy at 160k.
Currently price gone back to 220k.

His tenants are foreigners working locally.

This post has been edited by jasonhanjk: Nov 30 2008, 10:02 AM

Cool, 'lucky' dude. Whats the average rental rate for other units?

how to calculate return.
this is my formula, kinda new, so feel free to comment.

one time payment:
-(a) down payment 10%? 5%?
-(b) Sales Purchase Docs
-© Loan Docs (if i can use ZEC, i choose that one)

monthly payment
-(d) pay bank (321.04 -> 326.00)(round up to next ringgit, ad RM 2.00 for maybank2u transfer, maybank easiest for most tenants, but no way i',m getting a house loan from maybank)
-(e) maintenance

yearly payment
-(f) land tax
-(g) quit rent

so basic formula is
money coming in every year = (rent * 11) - ((d + e) * 12) - f - (2 * g)
start up cost = a + b + c
rent * 11 = expect half a month empty per year + misc expenses
(d + e) * 12 = even if the unit is empty, still have to pay bank, maintenance fee
f = once a year land tax
g = twice a year quit rent

so percentage is calculated in this way for me

money coming in every year / start up cost * 100

any comments on this calculations?

This is COCR. It basically calculates your real returns for each property. Mine is the same, and here's a sample of my excel sheet snapshot on how I analyse a deal



Attached thumbnail(s)

what's your usual formula for misc expenses and house not having tenants? and how do we factor in BLR fluctuation and rent price increase/decrease?
every 5 years increase 5%? is that too extreme?

misc expenses : Set at RM300 p/a

Not having tenants : I know we should made some assumptions on this but I dont. Its a waste of time, IMO

BLR fluctuation : This one, again its a waste of time to project.

Rent increase or decrease : Waste of time to speculate.

Rental increase : No rules on this, but 5% increase every 2 years is quite reasonable IMO.


Hope this helps.

Well I am not sure.
From his post, his properties are normally mark-up higher.

Hi,

1. I do think it's quite necessary to include in BLR assumptions in your calculations. Let's not pretend to be economists and predict the monthly / yearly fluctuations of BLR.

2. However, it is necessary to do a "stress test" of shorts. Assuming your current rate for your mortgage is BLR -2% suggest u "stress test" it to BLR - 1%. IMO, that is just a prudent measure.....I normally factor up my actual mortgage rate by 1%.....If the maths still make sense - It makes my conviction stronger.....

3. From experience, if your investment can't take an upswing of approx 1% - it shows that it's quite cash flow sensitive - which may warrant u to relook into your investment decision.

if i am not mistaken, any fluctuation in the blr will only affect the term of your loan, and not the monthly instalment, unless you instruct the bank otherwise, correct?

in such a case, the COCR should not be affected.

Hi Johnson,

Your monthly installment will definitely be affected. Just depends whether it'll be higher / lower depending on the BLR movement.

Any "instruction" to the bank to "change / manipulate" your monthly installment is amounting to loan restructuring....normally for "distressed" sellers.....Obviously, it's not a good position to be in!

As such, your COCR will most definitely be affected by BLR fluctuations - hence why I always "stress test".

Oh b4 i forget - if u really do not want any volatility in your monthly installments - take a fixed rate loan. If u want virtual certainty for the next 30 years fixed - try AIA or ING.

Anyway, the pro's and con's of fixed vs BLR loans is a story for another day.

This post has been edited by Phoeni_142: Jan 29 2009, 07:57 PM