Dear All,

Hi! I'm an Engineer getting a RM2K salary. I've been on the job close to a year now.

I'm planning to invest on real estate....preferably apartments for student/small family rentals. Basically, this is to enhance some passive income.

Since I'm a newbie....I need some solid advice on real estate and loans in Malaysia. Below is a load of questions...


1) Is an apartment worthwhile investing in?
2) Will the market value drop?
3) Is it better to have the apmt close to colleges to garner more students?
4) Where's the best place to invest for an apmt in Malaysia right now? Any recommendations?
5) What are the basic requirements in an apmt for students/small families?
6) What will you get for an apartment which is 150K-200K?
7) What are the kinds of loans I can apply to? What will be my commitment monthly/yearly?
8) Is there like a middle person to look after or maintain the property?

Appreciate your replies!!!!

1) Is an apartment worthwhile investing in?
Yes, but are you a good investor?

2) Will the market value drop?
Market value rise and fall are part of the macro economy.

3) Is it better to have the apmt close to colleges to garner more students?
You may garner more student but does your investment makes sense?

4) Where's the best place to invest for an apmt in Malaysia right now? Any recommendations?
Talk to different agents. It's part of your learning if you want to be an real estate investor.

6) What will you get for an apartment which is 150K-200K?
A 150k to 200k apartment?

7) What are the kinds of loans I can apply to? What will be my commitment monthly/yearly?
I'll let others answer.

8) Is there like a middle person to look after or maintain the property?
Talk to real estate agents.

1) Is an apartment worthwhile investing in?
What kind of investment are you looking at? rental yield or capital appreciation? Usually non-landed property provide better rental yeild while landed property give better capital appreciation. As for a start, investing in apartment will be a safer bet and learning process.

2) Will the market value drop?
Like Jason said, it depends on economy, but also depends on location and type of property. Some have better resilient during bad times.

3) Is it better to have the apmt close to colleges to garner more students?
Students market had proven to have better resilient (better but not always) during good times and bad times. But there are other challenges when renting to students. They might not take good care of your apartment unlike renting to working adults or families or expats.

4) Where's the best place to invest for an apmt in Malaysia right now? Any recommendations?
#1 Klang Valley, #2 Penang, #3 Johor Bahru

5) What are the basic requirements in an apmt for students/small families?
Students - Basic (grill, fan, light, minimal furniture)
Small families - Depends, some require fully furnish.

6) What will you get for an apartment which is 150K-200K?
Apartment lo

7) What are the kinds of loans I can apply to? What will be my commitment monthly/yearly?
Rule of thumb, ((your car loan + housing loan + other loan)*100/(Salary+other side income)) less or equal to 40% ..
This is merely guideline.. you can check with respective bankers..
credit cards will also considered by bankers...
Visit www.money3.com.my to learn more..

8) Is there like a middle person to look after or maintain the property?
In general.. owners take care of their own property, unless you employ someone to look after ..

Talk to RE agents.. Buy some books and read.. The best investment is investing in yourself first by reading books about RE investment.. Buy those books that are written for Malaysian Investors.. Good books written by Milan Doshi, Azizi Ali, and Renesial Leong.

Go thru some good forums and learn from Gurus

Attend property fairs, as they have a lot of property seminars around

Its good to hear that you are interested in investing property although only working close to 1 year.. I started investing after working 1 and half year as an engineer as well .. now I am working close to 4 years already and into my 2nd property..

All the best and good luck

This post has been edited by eugene jk: Jan 28 2009, 03:56 AM

Very good suggestions here, 100% agree. Especially beneficial for the one lacking experience. I know I benefited tremendously from this

This coming from the Maytower investment taikor.....better follow. Just click on the website on his siggy. Pai, I'm impressed

minolta

Thanks Minolta, u r very kind

So, r u planning to join the Maytower club?

For a RM2k salary you can only go for a 150k with 10% deposit at the most. For 200k, you need a salary of RM3k. This is taking into account a 30 yr loan.

Estimated repayment for 30 yrs

150k - RM746 per month
200k - RM995.62 per month

This post has been edited by DannyOP: Jan 28 2009, 04:49 PM

actually..b4 even replying to all your qs, are you sure you can afford the commitment of a loan at 2k salary? net of 2k, you are looking at 1.7k+, so lets say u have zero other comitments, meaning stay with parents, using parents car, eat at home, how much can you put aside monthly to service the loan? and having only workd for 1 year, its unlikely you would have saved up enuff for the 10% dp required for most loans

go to www.money3.com.my, they have all the loans available locally, easy to input in your salary, the dp you can afford and find out how much is the max loan you can get.

my 2 sen, its great that you start thinking of investing at so young a age, but at 2k, you hardly have enuff to set aside for rainy day, let alone as big a comitment as a property

Property investment needn't start in a big way. sometimes getting a low cost flat between 40k and 60k with minimal monthly payment, and rent them out is a good start for someone with 2k salary.

maybe we should guide him on ala baby steps rather than doubting his credibility/lack of options. Not many people think like TS these days.

This post has been edited by alanyuppie: Jan 28 2009, 05:19 PM

Yup. TS salary will eligible him to buy a low cost flat.

I tried to apply one but got rejected due to my salary.
In the end I lost RM1000 from consent and legal fees.

---

Added on January 28, 2009, 5:42 pm4.35%?

I like to know. Do you loan 100%?
I am buying a 120k property for 100k.

This post has been edited by jasonhanjk: Jan 28 2009, 05:42 PM

wah very good calculation. you are right. It is based on 4.35% since I have the 4.35% chart with me, however there are better rates now from our panel of 15+ banks since BLR has dropped.

Most of our banks offer up to 90% max so if you're talking about 120k property at 100k then 100% loan is possible.

Alanyuppie,

I agree with you. Just because a person is just starting out in his / her career or earning 2K a month, this shouldn't be a deterrant to a person starting out in property investing.

I bought my first apartment before I got married, whilst I was still staying with my parents. I'm pretty sure I earned less than 2K then.

Admittedly, I had lodging and food provided for by my parents. I stayed with them for the first 3 years of my working career. I also had no car back then - and suffered for 4 years via our beautiful LRT.

Rak3sh,

I'm going to offer my personal philosophy to you. Again, it's your decision to make.

1. IMHO, Nobody can make you feel inferior without YOUR consent. Do not listen to all the naysayers. YOU decide based on your financial situation, what are the steps you should take. No one knows your lifestlye better than you.

2. Invest in yourself first. In other words, take the time to know what you don't know. Like what Pai mentioned, please do take the time to learn from other investors. I'm stil learning, and am glad to have known a few people in this forum. like - our Maytower taikor Pai.

3. I have read many books on investment, properties and personal finance. But, this book had a deep impact on me. Please do have a read when u are free. "Creating Wealth" by Robert G Allen. Fantastic book on real estate.

Good luck!

This post has been edited by Phoeni_142: Jan 28 2009, 07:00 PM

Agree that never too early nor too late to invest...

Suggest to learn more, read more, know more ppl in the industry and pay more visit to showrooms and existing subsale units.. never be too shy to engage RE agents to bring to the apartments... you may find your 1st property after 20th or 50th or even 100th visits... Don't care lah.. visit whatever show units that are around (apartment, condos, DSL, Banglow, shoplot, office units etc.. even condos in mont kiara that worth millions that you can't effort) ..

What I have learned is that we need to build the confidence level in ourselves as there are ppl advise us to shy away from RE investment. There are a lot of uncertainties as property is influenced by numerous factors, and we need to have the confidence to make our judgement right ..

Hey Pai... I tengah kumpul bullet for Studio unit.. you have to pass down some knowledge later ya...hahaha

This post has been edited by eugene jk: Jan 29 2009, 01:53 AM

I started learning and looking at properties 2 years before I sealed my 1st deal. Didnt buy until I was EXTREMELY sure it was the RIGHT buy

Boss, was wondering..........why you r gunning for studios?

f


I bumped into that via your siggy link and was very surprised. Never thought of the potential for small niche market till now. Only thing I'm worried of is the sustainability....not that I'm doubting your investments, but I'm worried of the coming 12 months. I'm contemplating now on buying now for rental income or wait and save my bullets. Wait & see for the next 12 months or so before plunging in. If there is no upside in the economy withinn the next 12 months, then the credit squeeze will be worst and we will finally be seeing the distressed sales we've all been waiting for(you know you want it too haha)


cheer,
minolta

Hi Minolta,

Here's my view on your thoughts. You could wait for 12 months but Im confident the following will happen :

1. You'll not get it at today's low prices. Today you can get a 351sqf for just above 200k. 6 months ago you could get one for a mere 170k only. There arent many many 351sqf units in the market anymore.
Similar studio by comparison, a 380sqf Casa Mutiara is selling for nothing less than 260k-270k, despite the fact that Maytower has the better location and the rental rate is same for both studios. My take is in 12 months, one has to pay min 10%-20% premium VS today's prices.

2. Valuation and credit issues - U might not get 90% financing and you might have problems meeting the valuation set by the seller. Even if yield and ROI makes sense, valuer and banks will always go for a conservative stance. Today, u could still get 90% financing (or even more ) and financing rates are still bloody attractive (approx 4%).

3. Distressed sales - Its gonna be very hard to find unless we have a major economy collapse (KLCC sells for 800psf, MK & Bangsar at 400psf etc) . Reason is simply bcoz rental yield today is too great + these 1st owners bought their units for less than 200k. They can rent their bare studio at only 1k today (fyi bare unit is rented at 1.2k today) and still be cashflow positive. No desperate owners == do distressed sales.

4. You'll be forced to buy bigger units like 439sqf, 466sqf etc when all 351sqf units has been snapped by investors. That means you pay lower price psf but higher price on absolute amount coz if the bigger size. Rental wise both 351sqf and the rest is about the same. Got to know that a 439sqf today was rented out for 1.8k p/m for 1 year. I got the same for my 351sqf unit

For your sake and my sake I hope that my predictions are wrong. Lets revisit this in 12 months to see if I come even close to my predictions. All the best

This post has been edited by Pai: Jan 29 2009, 01:56 PM

Pai & Minolta,

My 2 cents - if things get even worse in 12 months - it's probably one of the best times ever to buy landed.....

In that sense, suggest we keep a "buffer fund" if that oportune time becomes a reality.

Looking forward to that too

landed in good areas cost a bomb......and 20% deposit (assume credit crisis is really that bad) is probably approx 100k already.

Not sure if I can afford that amount in 12 months

My friend, I'm sure u can.

1. If the economy turns bad - banks will tighten as a whole - but they are not stupid - they'd still want to get their hands involved in subsales - especially in those so called "mature & stable" areas.

2. Like it or not, we live in a very materialistic world. I could be wrong, but it's highly unlikely for valuations in areas like TTDI and BU to fall short.

3. If u get at a bargain price - the 20% down is just to "tweak" your COCR. (Using your lingo). But this is one of the few times which I'll break the COCR rule....Why? Because I would have built INSTANT equity by buying the undervalued landed prop. Again, this is different from potential appreciation.

4. Btw - One particular DSLH in TTDI 22 x 75 - baharuddin helmi - now is going for 450K (Negotiable). Just to give u a benchmark, that's about the transacted price for a SSL. Saw it, but didn't quite like it for certain reasons. Point is, more rampant bargains may become a reality soon.

This post has been edited by Phoeni_142: Jan 29 2009, 02:48 PM