Hello everyone.. I am lost .. Hope I can seek for some advice here

Here's my situation:

I am renting a condo unit in KL now and was planning to buy a 200k+ condo for investment & own stay purpose. Currently, what I do is rent the whole unit and pick a room for own stay, and the rest are rented out. No cash flow involve, in other words I'm staying for free. I found this method is quite OK and planned to do it for my own properties.

I have accumulate RM30k now, and start hunting properties around KL & PJ (if you have good units, please introduce to me, thank you ). Now the problem has come. For some reason, my parent have to sell the house in my hometown and don't have a place to stay. I have 2 options in my mind now:

1. Buy a unit and stay together with them.
2. Buy a unit and rent out (looking for +ve cash flow), and rent them a unit in my hometown which probably cost you RM500 per unit.

But I am considering for future also, before marriage and after marriage... life is tough ! Buy a new house and continue to rent out the properties or claim back the existing property and for own stay?

Here's my financial details:

Income:
1. Basic salary: RM3.5k (after EPF around 3 K) <-- bank loan is approve based on basic before EPF or after EPF?
2. Allowance: not stable, as I will always work in different country and the allowance is depend on the country. But once I assigned to overseas, min allowance would be around 6-7k
3. Fix allowance RM500

Expenses:
PTPTN: RM200+/month
Parent: RM700
Meal: RM400
Travel: RM100
HP bill: RM60
Others: RM100


I definitely want to buy a property but don't know which one is better for me in this situation. In short, Home first or Invest first ?
Kindly advice

Thank you !!

This post has been edited by moneybee: Jan 11 2009, 04:35 PM

moneybee, first of all, I respect your savvynesss and it seems to me that you understand how to play this "landlord" game. Here's what I would personally do :

1. Continue renting in the same place since u r technically staying for free today.
2. Buy a undervalued positve cashflow property perhaps at zero down and rent out everything to maximise profit.
3. Rent a place for you parents in your hometown, with as min cost as possible. (mebbe 300-400)

Good luck

why your parents want to sell hometown house? settling debt? how much is it worth? is anyone interested to buy in the 1st place?

how long do you intend to stay single? what if you get married in the next 2-3 years and your wife doesn't want to live with strangers under same roof?

are you the sole bread winner?

will your parents mind to stay with strangers also? like buy another unit for them to live and rent out the other rooms.

but all and all if 30k is all you got and you plan to throw all of them on down payment leaving you with nothing = suicide, especially in this time of year.

Hi moneybee,


Good to see another property investor in the making.


It's pretty simple actually, all you need to do is to differentiate between liability and asset.

Would you rather pay for your own house 1st? Or let other pay for your house?

If you feel comfortable with your current pay and and feel like getting your own house 1st, I believe your income is more than enough to sustain a RM 300k-400k property.

However if its for me, i would invest in other property 1st before i get my own house...

Reason is, if i'm to have too much commitment in the 1st place i might not have enough saving for the later for any other purpose, be it Investment, Business or any other possible chance of gain in the future.

Besides, its always good to have other ppl paying for your stuff...


My 2 cents.


Regards,


Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Bhd
019 - 913 1127
ChuaCChie@OCBC.com

Pai !!!! I see your big name every where in properties section... thank you for your compliment.

About my current unit, the landlord is going to get back the house due to some of personal reason. I think around this area, I can have positive cash flow, but considering the condition and the year of the building, I might think twice (well, Im in Vista Angkasa, I think you know where it is).. of cos, I also consider for future stay or something.. I believe I and my family would not prefer here. This is making my head big ...

Rent a place for my parent in hometown is not a bad idea... Thanks Pai ... I will consider this...

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Added on January 13, 2009, 11:44 pmWell honestly, yes ... settling debt... If no one want to buy, it will go to auction by bank. I planned to get married after 2 years and yes, I do not plan to live with other strangers .. I intend to buy another house for family .. Now is the questions.. prepare for family first or investment...

Yeah, 30k is all I have for 200k+ property... would it be too little?

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Added on January 13, 2009, 11:51 pmHi Merce,
I'm not an investor YET, but I definitely will be. hope so...

ahh.. .. since you are banker... i think you can help me on this question, would it be difficult to loan say 200k+ from bank if my basic salary is only 3.5k ( after EPF is around 3k) bank will use which one as evaluation?)

My basic only 3.5k and my bullet only have 30k.... do you think i afford to buy a 300-400k property???



This post has been edited by moneybee: Jan 13 2009, 11:51 PM

No.

A RM 200k loan strech for 30 years with 4.75% interest per annum would give you about RM1000-1100 of installment per month (i think... i dont have my calculator with me at the moment. )

I'll explain how OCBC calculates your loan approval...

If you are receiving a basic income of RM3.5k, EPF and Tax deduction is estimated around RM 450, you have a nett income of RM 3050.

Installment vs nett income needs to be lower than 40% for 1st level approval, in your case is as followed;

Installment (RM 1100) / Nett Income (RM 3050) = 1100/3050
= 36.06%

So you can get a RM 200k loan for 30 years, provided that your total commitment(the total of all of your loans) is not more than your nett income.

Installment for RM 300k loan over 30 years with 4.75% per annum is around RM1500-RM1600. Its kinda hard to get approval unless you can provide more income documents.

Hope the above helps.

Bear in mind this is base on OCBC Bank income calculatio protocols, it varies from bank to bank.


Regards,

Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Bhd
019 - 913 1127
ChuaCChie@OCBC.com

moneybee, I woudlnt go for Vista Angkasa if I were you unless its 20% below market value, simply bcoz the building is too old and teribly mantained. Hilpark is a better choice, makes sense investment-wise and own-use-wise.

300k loan is possible if your EA states your income as above RM60k...........

with RM30k in hand, it's abit tight to get a prop of 300-400k.....unless you can withdraw enough from EPF Account 2....let say 30k......strectching to the max may not be good...theory of elasticity.....go easy and hunt for something below market value.

LIke what ah_suknat say, it will be riskier at this kind of time to purchase any property now unless your job is very secure. however a job security now does not mean that earlier. mosdt of the buyer now adapt a wait and see strategy. Good or bad ahead, no one known, the choice is your.

P/s : ah-suknat, you are definitely a practical man..

my philosophy....Never rent when times are bad...try to grab one yourself

Hey honeybee,

Based on very limited info from your story, i 'm doubt about your need to buy a new house while your parent have to sell off theirs to clear debt. That just doesnt make good sense to me and i believed there are people who will also agree with me. Let bank auction your parent's house at your hometown should be the last resort, not to mention the house value will go below market value up to 20% if bank don't manage to sell it. Unless your oldman can recover a big sum of money from it at the same time they are desperately need those money for emergency cause. Since you are renting from people and free of mortgages , i may suggest you settle whatever outstanding amount of your parent house and claim the ownership of the house and let your parent continue stay there. I don't know how much is the house at your home town worth, but if you can acquire that, why not ? It just doesn't sound right to me to let the two old man staying at rented house and will be chased out of it if you don't pay for the rent one day. Unless, there's a BIG UNLESS there's a hidden story that they deserve it e.g. your oldman gambled off the money and so.

Put the old house one side now, we talk about the property you wish to buy. First of all, with your saving and your monthly income ( doesnt count your future wife / potential GF income ) , you are on the very edge of the borderline ( consider your your income is fixed and no commission based ), if you granted a loan of RM 200 K, which you need to pay RM 1,000 - RM 1,200 a month based on 20 - 25 years loan( very rought estimation based on current BLR ) , you are pretty much stuck with your current life style for the next 10 years to come. If BLR increase in huge margin ( check BLR stats for the past 20 years ) you will be in deep trouble. Also to be able to rent out the two extra rooms, your property need to be situated at decent location; i think choice is very limited taken into consideration that you are buy apartment at the region of RM200 K +/- . And you got to be extremely sharp hunting for the best deal in town, most likely second handed one. If i were you, i will keep my saving and patiently wait for more victims to surface ( those can't affort to pay off their property they bought during good time ), pick up those good one with minimum loan from bank. Remember one thing - Don't buy for the sake of buying ! Some people bought their house with the mentality of ' people buy , i must buy ' or get very excited after reading too much forum and ended up not happy with it but stuck with it for the next 20 - 25 years to come. Buy it only when you really need ( family building ) or it is really good deal. Friend of mine told me " We got to save for the rainy days" , i told him" Not rainy days, its THUNDER STORM ahead of us". More saving mean more flexibility to choose and time, so no rush. Developers are more worry than you that they cant' sell their house, so never worry there's no house for you to buy if you ve got money in hand " Sorry for the text of wall and good luck.

at the moment based on your basic alone, a RM200k property will be most likely to get a loan approval. There should be a lot of good deals this year due to recession, just be patient and hunt around.

Just remember that buying a house is a LIABILITY until you own it or make use of it to get positive cashflow.

This post has been edited by DannyOP: Jan 17 2009, 09:58 AM

Hi DarkChocolate,
Thank you your advice.. I believe every family has their own difficulties that hard to explain to others... so do I ... I know what I should I do as a son ....

Ok, back to my property I wish to buy ... mm... yeah, is kinda stretching if only consider my basic salary .... but erm.. the nature of my job is to be kuli in overseas.. and thats help a lilttle bit I believe .. Yes, if I want to buy the property for investment, Im sure will look for a decent location.. Maybe after 2-3 years, I will get back for own stay of continue renting it and buy another one .. ( am I dreaming too fast? ) And yes again ... Im not rushing now , I will hunt like crocodile.. my 30k wont stop here... it will increase every month..


Everyone out there, which one you will do first if you are ready to buy a property, Home or Investment ?

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Added on January 18, 2009, 10:11 pmyeah i though that too.. just wonder why merce say is possible in the earlier post.... Thanks suiteng

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Added on January 18, 2009, 10:13 pmHi Merce,
Thank you ! Im getting more clearer now ... you are very kind

This post has been edited by moneybee: Jan 18 2009, 10:14 PM

Cause i've done some before.

it's not entirely impossible... but its REALLY not advisable.

In some of my cases, those Investors tend to file some ridiculous low annual income in their BE/B form... still they get afford loans over the capacity.

Banks generally use figures and numbers as guidelines... however there are always other ways to justify your income other than just payslips.


Regards,

Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Bhd
019 - 913 1127
ChuaCChie@OCBC.com
----------------------------
Call me for the FREE items!!
FREE OCBC Mortgage Loan consultancy.
FREE OCBC Personal Loan consultancy.

Merce,

My company did not pay EPF for years
Due to some reason, I still work there,
How crucial will this be affected my loan application, assume that 1/3 criteria fullfill after car loan and strong support document like Payslip, Bank Statement, no blacklist in CTOS, Fine CCRIS and relatively good matrix in previous loan payment.

Thanks in advance.

Kelvin667

buy house is also an investment. if you got good knowledge on chosing the rite house then go for it. landed properties are prefered for long term investment while apartments and condos for short term investment mostly. also make sure u buy from developer to maximize ur profit.

This post has been edited by Lefty: Jan 20 2009, 12:25 PM

As long as banks or mortgage institutions uses other methods to justify your income, you should be fine. no worries



Regards,

Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Bhd
019 - 913 1127
ChuaCChie@OCBC.com
----------------------------
Call me for the FREE items!!
FREE OCBC Mortgage Loan consultancy.
FREE OCBC Personal Loan consultancy.

Thanks for the advice merce.

Regards,
Kelvin667