First timer stress: Buy now? Buy leasehold?

I think this is an issue for all first-timers; the thought of buying that first-property of a few hundred thousand ringgit. 16 years ago, when I was ‘ADVISED’ by my father-in-law to buy a property before getting married, I too was stressful. What if we bought the wrong property? What if I could not afford to pay for it after a while? When my wife and I found that property which seems perfect for us, we used the next 2 months to think, rethink and think again. A reader of kopiandproperty.com wrote in to me a few days ago. She had the same issues as my wife and I when we were thinking of whether or not to buy that first property. Here’s her two questions briefly.

— start —

“Hi Charles, I became an avid reader of your blog recently after I stumble upon it accidentally. I’m stuck in a situation and I really hope to get your advice before I finalise my purchase for a property.”

1. We are not sure what to think about leasehold property. Is it a wise investment?

2. Is it a good time to buy now?

— end —

My brief answers

1) whether it’s leasehold vs freehold, it matters more whether you like the property or not. Leasehold represents good value because it is typically 20-30% lower than freehold property within same area. We should however make sure the leasehold does not expire in less than 50 years. I have personally bought more than 1 leasehold properties in my 15 years of property investment journey. When the opportunity is right, the question of leasehold or freehold is towards the bottom of the consideration list. It’s not the first, usually. One very real example, when I bought Kelana Puteri condo when it was still RM182k, many people mentioned to me that it’s leasehold and that it’s less than 90 years left. I just smiled. I sold it a few years ago for RM460k.

2) There is NO such thing as the best time to buy. Frankly. However, it’s very important to know the “WHY” you buy. If the WHY meets all your reasons and you can AFFORD it, then it’s the best time to buy. Please do not borrow funds from Ah Long to buy for example. Using bad debts to buy good debts is still a bad decision. Plus you are buying for your own stay, which meant that even if there’s a crisis, you will not be forced to sell. Remember, financial crisis never lasts forever. 1997 Malaysia got hit by a financial crisis, by 1999, it was back to normal and booming. US’s mortgage crisis hit in 2008, by 2010, it was back to business as usual.

Last but not least, the market is slow currently. This represents an opportunity to buy. It is not suitable for speculation. Only when market is good that speculation fluorishes. By then, itmay be best to be very prudent because when prices rise way too fast, the property bubble builds up quickly and may just burst too. Here are a few signs to refer for those signs.
Understanding the 3 property bubble signs and more
 Happy investing.

written on 24th Oct 2018

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Buy Now Pay Later (BNPL) is a Boom or a Bomb?

It’s not just about convenience yeah

Many years ago, when I shared that Buy Now Pay Later (BNPL) is not about convenience but it’s more of a financial issue, someone said that BNPL has been around for a long time. This someone then gave two examples, buying a car and buying a property. I replied then that both are assets depending on the utilisation.

Anyway, short answer is this. If one is driving for living for example, that car becomes an asset because it generates return. If one buys a home and stays inside it, this is also an asset because one saved rental which would otherwise gone to the owner and in the end the tenant has nothing. Thus, as long as the thing which we put under BNPL is to generate returns, then it’s positive and should be encouraged.

As long as it willl generate returns

Think a little deeper. How many of the BNPL stuffs people buy are actually to generate returns? That pair of branded new sports shoe? Yes… there are people putting this under BNPL already. That new smartphone because the old one is no longer in-trend? Or even that new 70 inch LED TV because one deserves the very best and a 40 inch LED TV which is now very affordable is NOT good image when friends come visiting?

Here’s another view.

Article in cnbc.com
  4 in 5 U.S. consumers use BNPL on everything from clothing to cleaning supplies, according to Experian, and most shoppers said buy now, pay later could replace their traditional payment method which is likely to be via credit cards.

Marshall Lux, Fellow at the Harvard kennedy School said, “Three years ago, people talked about Peloton bikes, now people are buying sneakers, jeans, socks.” When people start buying household goods on credit, that signals a problem. When people start buying household goods on credit, that signals a problem.”

Acocrding to a survery by LendingTree, nearly 70% of buy now, pay later users admit to spending more than they would if they had to pay for everything upfront. Further more, 42% of consumers who’ve taken out a buy now, pay later loan have made a late payment on one of those loans. Read more here:
Article in cnbc.com

When we buy more than we could (financial capability)

Affordable is a word which comes from afford and able. It means ACTUALLY I could afford it based on my capability. In this case, this capability is financial capability; I do have the money to pay for the item which I am about to buy and put it under BNPL. Most of the time, in the beginning, this was the case. The issue comes when the number of items under BNPL becomes way too many and just the repayments alone may force the person to start defaulting on one or some of the BNPL payments. That’s why even if the marketing pitch is about convenience, the potential risk from BNPL is that  it may become a ticking financial bomb sooner or later for some people.

BNPL is fueling economic activities too

BNPL is however fueling demand for goods and services and this is driving the economy too. Stopping it may also incur the wrath of consumers because this is considered a convenience. For many businesses, BNPL is also driving up their sales revenues too and this is important for their survival / profitability. I do think BNPL will continue growing aggressively; booming. At the same time, I could not stop thinking that this is also a financial bomb for some of the BNPL users.

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Buy Now Pay Later. Shopee gives me up to RM6,000. In this whole article, there are NO affiliate links for me to earn any incentives from Shopee.  I just happened to be a Shopee user who got offered a Buy Now Pay Later offer. Happy reading about the worldwide phenomenon called Buy Now Pay Later.

What is Buy Now Pay Later?

Buy now pay later schemes are schemes where a shopper will buy whatever they want (and also need) and they do NOT need to pay for it immediately. They pay be required to pay later, maybe 30 days later. They could also choose to pay via instalments and usually this may easily be over 12 months, 24 months and so on. This scheme is now becoming very popular all over the world and I think it’s a big financial issue for those who could not control their shopping expenses.

RM3,000 and now RM6,000? Wow

I wrote this article earlier when I learnt that Shopee was offering me RM3,000 to Buy Now Pay Later. Read it here:
Did you get RM3,000 from Shopee?
  When I checked with some friends, I realised that not all shopee users are offered such a credit. So, when I have just paid for my latest purchase, the Buy Now Pay Later by Shopee to me has been increased from RM3,000 to RM6,000.

No idea if it was because I did not use the RM3,000 and thus they wanted to give me more.

Anyone activated already? Please do share your experience

I counted, I buy roughly one thing per day from Shopee. Haha. However, I am not going to activate the RM6,000 because I do not wish to have that ‘thinking’ that I should continue buying since I have such a good deal. Buy now and pay later, so easy! So, for those who have better spending control than me and you have activated this, please do let me know your experience yeah. I am very sure many would love to know.

Will I stop going to the malls?

I am not going to stop going to the malls yeah. Buying from Shopee is for convenience, not as a replacement for window shopping. The feeling is totally different. I have 31 pairs of shoes, I prefer to see the actual shoe, actual colour, try it on, walk around and then only decide… to go to the next shop to also try and then compare before I buy. So, Shopee cannot fulfill all my needs.

This is one good article about Buy Now Pay Later

I always read this website for personal finance stuffs.
ringgitohringgit.com  The founder, Suraya has this article for your reading pleasure: Buy Now Pay Later is Evil.
 By the way, property investment can also be considered a buy now pay later deal too yeah. You buy a home and you start staying but you pay for it for the next 30 years. Of course, the right property is an investment yeah and this is not like some things you buy online with a buy now pay later scheme.

Happy deciding yeah. If you are really someone who can control your urge to simple spend, then buy now pay later is a decision. Else, stay away.

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Buy on fundamental, not based on speculative stuffs? Why not based on WHY?

Suddenly friends started to say, ‘we should buy based on fundamental, should not buy based on speculation.’ The reason? Well, the
High-Speed Rail KL – SG (HSR) – read here

has been scrapped and a day after, the
 MRT Line 3 (Circle Line)- read here

has been scrapped too. Apparently they were referring to friends who may have bought some potential investments related to these mega projects. This was why they said people should not have bought into all these speculative stuffs. Frankly, do we know what is speculative and what is project being scrapped? Speculative is when it’s not official, something that we came to know from rumours and speculative is also when we try to guestimate what’s the potential share price like tomorrow or next week. Both the HSR and MRT 3 has been in the news like forever in all major media and confirmed by the former government of the day. How can these two be under the ‘speculative category?’
Yes, I hate speculative stuffs. Earlier article here.
 And
also another one here.

What is buying based on fundamental then? It’s buying with knowledge about what we are buying in and it may be undervalued or fully valued. As long as it’s not over-valued. A very good example, buying blue chip stocks. A famous company is usually fully valued or sometimes over-valued. People continue to buy those bluechips because they believe the business will keep growing and thus, fully valued for the stock prices this year will be under-valued next year. Isn’t this a little like speculating? Should we not be looking at those blue chips and then use the same performance benchmarks in some cheaper stocks which not many knows about yet? Haha. Yes, those reasons WHY you bought the bluechips, use it to evaluate the cheaper stocks.

Another example, buying a property. We know the properties in hotspots are already much higher than other not so popular areas. However if given a chance, we would immediately buy into a hotspot instead of trying to understand the WHY factors for the hotspot to be a hotspot. Even more importantly, we did not even evaluate our actual reasons for buying in the first place. Was it because it’s close to our office? If it is, please note that there are at least 4 different places we can buy. Areas north of our office, areas south of our office and well, you guessed it, west and east too. So, how can it be just evaluating ONE area? If we buy just one area but not considering the other three sides, is it not also a bit speculative as well? If it’s due to an international school, there are now plenty of them everywhere. If it’s due to access to expressways or even the LRT / MRT (except MRT 3), then the choices suddenly explode. Yes, understand the reasons WHY you like the hotspot and use those same reasons to evaluate the cheaper spots. Usually those are the future potential hotspots but we will be entering by investing lesser.

I think fundamentally, we must invest in order to get returns and making our
money work harder. Earlier article here.

Investing in fundamental whether it’s the stock market or the property market is however beyond looking at just the usual. It involves understand the WHY. If we do not know the WHY, we should not be saying that we are investing in the fundamental because fundamentally we have not done enough research and we do not understand what we are buying, fundamentally. Oh yeah, the next time the government announces any mega projects that will start only after a future general election, should we say that we better wait till the election is over to make a decision? Frankly, NO. The businesses of the listed companies will still be the same before and after the election if that’s the reason we are buying. Unless we are buying because it’s connected to some political parties yeah… As for the properties, do note that many of the hotspots of today were not really hotspots 20 years ago yeah. All will continue to change when new catalysts are built into the equation. Happy investing with a WHY in mind.

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written on 31 May 2018

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Buy Penang or Iskandar first?

I think if you ask a Penangite, they would most probably tell you, buy Penang. Iskandar is just a piece of empty land 2.5 times the size of Singapore. If you ask a Johorean, they may tell you that they have only begun to believe that Iskandar might just work but to buy in Penang does seem very far fetched. How about asking an Ipohan like me then? Even if I have worked in Penang for over 15 years.

First things first, I think the first question is where are you based? If you are based in Penang, without any doubt, buy Penang first and vice-versa. However, if this is already your 3rd property and you are deciding between Penang or Iskandar and you already have two in either Penang or Iskandar, I think you should buy the other side that you have none yet. Reason is simple, even if you feel the appreciation in either place is faster, why not diversify a little? Thus, the main advice would be to ‘Diversify’.

Penang island is smaller than Singapore. Iskandar by size is over 2 times the size of Singapore. So, if you look at the potential, it does seem that price appreciation in Penang seem much higher, especially now that there are 10 flights or more daily between Penang and Singapore, connecting both places as close as Singaporean taking a MRT ride from one end to the other in terms of time. I also believe the prices in Penang can only increase due to scarcity of land and the fact that there are favourite areas which are appreciating and thus bringing up the areas which are less favourable as well. The areas available to build is also much lesser than Singapore because Penang is not so much of a flat piece of land and it has even a Forest Reserve National Park within the island!

Iskandar meanwhile is less than 1 hour away, even at it’s furthest point from Singapore. With the potential of RTS and the fact that Singapore PM Lee Hsien long wanting to have even more of the world’s talents working in Singapore, Iskandar is a very good choice. The MNCs can base their staffs in Iskandar at less than 2 times the usual cost and yet have the best of the world working with the best in Singapore! Singaporeans who needs to retire more comfortably may also be willing to relocate to JB because when you look at even the prices of HDB resale units, it is already higher than the prices of new condos in Iskandar and it comes with sea view.

Thus, it matters very little where you choose. Sure, you may earn more with certain investments but once you look at it objectively, you would realise that investments in either one makes good sense. Some may argue, KL may overtake Iskandar if the bullet trains come into play. I do not think so but if you believe so, then fine, keep your cash until that day when the bullet train is finally approved officially and both countries agree on all the costs, stations, procedures, immigrations… wow… still a lot to talk about.

written on 4th Jan 2014

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HBA: Buy property later, price is falling.

National House Buyers Association (HBA) secretary-general Chang Kim Loong said that buyers should wait because the cooling measures by the Bank Negara Malaysia is working. At the very least, hold on the purchases till next year. He specifically mentioned that the tighter lending rules and related measures are achieving their desired impact. Prices have gone down and is expected to go down further. In fact he asked buyers to focus on secondary and auction properties instead. He also shared that any investor clubs are now rushing to sell their properties at lower prices as there were no takers and predicted that the number of foreclosures should increase because of this desperation.

I do agree with him that prices have stayed almost stagnant and in fact for the luxury segment, for those overstretched, prices definitely is coming down. Looking at the REHDA’s recent comment would tell us the same picture of unsold new launches, especially high-rises. Focussing on secondary meanwhile must also be on less prime areas. This is because if one were to look at those hot areas, even the secondary prices are still crazy in my opinion. No comments on the investor clubs trying to unload their properties. I have always been against any speculative purchases irregardless of whether they are clubs or individuals. When one is lucky, speculating may bring huge returns. When the timing is not right, that’s the end of the game.

He explained the property prices before the Bank Negara measures had a steep climb spurred by excessive speculation. As for the new properties, it is not just more experience but also developer controlled despite the lower construction costs. (Note: REHDA members in a latest survey said the costs of construction have gone up.) I think it’s best to let both sides say what they wanted to say and see who would be able to influence the market better. If you look at the type of properties being launched, I think it’s clear that there are many more launches for those priced around RM500,000 compared to just 2 years ago when everything seemed unbelievably high.

I think the construction costs vary between developers but the most important would be the gross margin that the developers are aiming for. Perhaps the best aim currently should be a lower aim and faster selling. This is especially for those who bought the land many years ago, actually the prices they can sell can also be lowered too. It does not need to be higher than the market value of that particular area. Sell fast, build it, get the profits and move on to the next. Not the best time to keep delaying by selling at higher prices and then offering rebates, discounts, special renovation packages or whatever. Information is very transparent, I can find out when was the first time that the project was mentioned before and I can immediately know how long have you been selling your “selling fast” properties today. This is no longer the ‘newspaper’ days of yesterday.

HBA has also forwarded several new recommendations to the government before the Budget 2016 announcement. They include higher stamp duties corresponding to the number of properties owned and making mandatory the Build-and-Sell scheme as decided in 2012 but was put on hold. The utility companies should also be building the utilities and not factor in the costs of those onto the developers because this will in turn be factored into the final house prices.

If approved, I think the higher stamp duties would apply to me in my next property purchase. Let’s just say that I am neutral in this. The Build-and -Sell scheme is indeed a good one but as soon as we look at the gearing ratios of many of the listed property developers today, we would notice that majority of these would have to cancel at least half of their projects today. Some of those huge developments by developers without deep pockets may have to be cancelled too. I would still prefer for current situation but the buyers should be educated to reject stupidly priced properties; especially those who offers you ‘Zero Entry Costs.’ This education part is not easy but I think I am also trying to bring this up in my articles.

Last but not least, do not believe REHDA’s warning totally that prices would always be increasing. For your information, when prices are way too high that no one can afford, they would have to change their plans. Do not just wait for prices to fall as per HBA. This is especially if you are waiting for prices in those very preferred hotspots. For these areas, demand is way too high and supply remain almost the same, prices are unlikely to fall much. Buy based on affordability and buy to stay first. Happy deciding on who to believe though I prefer that you believe yourself.

written on 26 Sept 2015

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We buy properties for our children’s education, right?

Malaysians have been buying properties in countries like the UK or Australia for years. I meant the super wealthy ones with kids studying overseas. For a number of them, the property investments are for the future of their children. A place to stay, for example when their kids are studying overseas. An investment perhaps which could be used as a leverage when their children needs to study overseas would be another example. A hedge versus the currency fluctuations may be another example. At this moment, this group does not include me. As a working professional, it’s just not that possible. It’s hard to save enough for the 30 percent downpayment these days. Perhaps some top UK universities here in Malaysia may be an easier and better choice since the degree is exactly the same as that obtained in the UK. What about the Chinese (China) buying properties in Malaysia for their children’s education?

According to an article in EdgeProp.my,
 education is one reason why the Chinese are buying properties here. the article quoted Juwai.com which says that with Malaysia’s plan of hosting up to 250,000 international students by 2025, it will be a larger driver for Chinese in buying properties here. According to Juwai.com CEO Carrie Law, “Chinese buyer demand in Malaysia is relatively concentrated, with just three cities accounting for the large majority of demand to date. Kuala Lumpur accounts for more than 40% of all buyer enquiries so far this year. It is followed by Johor Bahru and Melaka.” Her conclusion? “In the case of Malaysia, if macro, market and regulatory conditions remain positive, the global trends … will drive growing Chinese investment in local property. It is not unrealistic to expect Chinese investment in Malaysian residential real estate to at least double by 2025.” (POSITIVE!)

It’s easy to note Kuala Lumpur as a main place with lots of action and university as well as Iskandar with its significant progress but Melaka is a pleasant surprise for me.
 Yes, I do love Melaka!

In another report, according to
UNESCO, Malaysia is now a top 10 destination for post-secondary education.
Many reasons were stated and one of them was the availability of top UK university branch campuses here. For example, Nottingham University, University of Reading, Heriot-Watt University and a lot more as soon as we count in all the franchised programmes as well as the famous 3+0 programmes. Beyond just the UK, we also have many Australian universities too. Monash University, Curtin University of Technology and even Swinburne University. Let’s not forget that
our local and private universities are also starting
 to stamp their mark in the international arena too. Keep following!

written on 5 March 2018

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Buying things online may mean buying properties online too?

I buy stuffs online on a monthly basis. The latest one was a Queen-sized bed frame and mattress. Haha. Yes, it arrived in 4 days and so far so good. The price? Slightly below RM700 including delivery. I was even thinking of buying a whole bed-room set but since I have time to view, touch and feel, I think I will skip this for now. Will visit the furniture store instead. I think if everyone thinks like me, then the traditional outlets should do just fine, for now. I buy most of my stuffs from the traditional outlets and only few items online. What about properties?

Many years ago, when I was still with a leading property portal in Malaysia, a customer stated, ‘No one buys properties online. I just need to advertise in newspaper and people will come to my show room and buy.’ I smiled and replied that I could not see the future but the time has come where advertisements in newspapers are not effective anymore IF the new development has no property site for the customers to understand more. He said that buyers can call instead after looking at the advertisement. I told him I agree but not many buyers would be tempted to call WITHOUT understanding and knowing more first. He disagreed and I wished him all the best. A few weeks later, I caught his advertisement in another property portal. Haha.

I could still not accept buying properties online, even if I could view a 360 virtual tour of the property. Due diligence can be done via google these days BUT I remain a traditionalist and I would love to drive to the area, see what I wanted to see and feel the vibrancy (hotspots) or the potential (for future). So, as someone who has been in the online industry for 14 plus years, I think media must work together in order to be effective. The time will come when advertising online makes better sense. Just look at the new generations taking helm at many of these developers. They have no ‘history’ with newspaper and they embrace technology easily just like the majority today.

Happy browsing for properties, regardless of the media you use.

written on 12 June 2016

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Buy property asap or don’t buy? You decide.

Still remember last year, before GST many people advise that we should buy properties soonest because with the impending GST, prices will rise further. If we buy later, the GST would have been factored in and the prices even higher. Whatever advice that you hear from any consultant, famous speakers or even best selling authors, remember that you should also decide objectively.

Developers association would never ever tell you that prices are expected to come down because if they said that, no one would buy properties and the developers may not need to develop anything. Nevertheless, are all developments commanding a higher price year after year? Out of 10 developments that you viewed, how many in your opinion are really as real as what the brochure stated? If they said 15 minutes from the nearest school, did you drive around to verify it?

Real estate agents would tell you to buy now. They would tell you that there is another potential buyer who has viewed the property one day before and the owner may decide to sell to him first. If they act on your behalf, they would try to tell the owner that the prices are softening under current market slowdown. The owner should sell asap. If the property is fully renovated, they would then tell you, this saves time and in turn money. If it is not renovated they tell you that this is better as you can design something you love.

Friends who does not own properties would tell you, don’t buy. They heard so and s0 said negative things about the market. That the market is about to crash. How can prices continue to rise without stopping? They would never believe that there are still apartments below RM250,000. Preferring to tell you that all the properties are beyond affordability of majority!

All your friends who invest in property earns huge money. However, do you know that for those friends who invested in money losing properties they would never tell you? That’s the reason why everyone who buys seem to be profitable all the time. Those who lost money just…. stay low.

Whatever you read or hear, be knowledgeable enough to understand. There are no short cuts, you need to read more, view more, listen more to be really knowledgeable. Even then, this does not mean you will be earn profits all the time. Property investment is not like fixed deposit. Do not buy properties like vegetables or even like shares in the stock market. Know why you buy and what are your goals. Last but not least, do not be greedy. Should your property appreciated to a level that has met your expectations, sell. Just like if you gamble and win, it’s time to leave.

written on 4th jan 2014 and updated on 25 Mar 2016

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Buy property, get wife free.

In an article in Singapore’s major property portal
PropertyGuru.com.sg
, one property in Yogjakarta has attracted huge attention because when you buy that house, you can also get a wife free. No, it’s not a spelling mistake for WIFI. It’s the correct spelling for WIFE. Yes, buy that said property at the price the owner is asking for, the buyer gets the owner of the house as a wife too. Buy one property, get one ‘wifey.’ I have seen lots of marketing gimmicks but this is really a first. I think it should be legal because there are terms and conditions. As long as buyer is an adult, this is thus a deal between two consenting adults! I think one main condition would be the buyer must not have wife! Okay, the buyer can choose to buy just the house if he does not need a wife. If the buyer is a lady, I think she would not want a wife too.

The owner is the one on offer and she said that she accepted the idea from the property agent. She does not mind anyway since she is currently single. I assume when she said she is okay, it meant she is not just single but also available. The women has been the target of many media interviews and the real estate agent has received huge numbers of calls after his advertisement has been highlighted by everyone.

Seriously, this may sound like a joke but truth is, why not? After all, there are also lots of cupid clubs out there with lots of different activities to match make single ladies and men. I think if this ‘transaction’ ends with ‘and they lived happily ever after,’ more of such special offers may be coming soon. The only catch is that these single women should also own a home which is attractive in the first place. Oh yeah, the property price should also be affordable too.

written on 12 March 2015

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Buying property? How much is too high, really?

In a famous property guru’s Facebook, he asked the question of whether should he accept a deal from a developer who was asking him to help them sell their RM1,200psf condo which was within just few km from KLCC. The responses were mostly negative. RM1,200psf is looked upon as very high today with current sentiment. The sentiment today is nowhere near the bullishness of 2009 to 2012. In fact, another friend who has accumulated over 10 properties told me in our latte session that he is keeping cash and hopefully his prediction of
more auctions would come true
. Especially the higher end ones because the prices have gone up way too much and with the newer launches all going for lower prices and current negative sentiment, some are bound to have to sell.

Just few months ago, another friend said that she was offered a good deal for a new condo. RM700psf only in a very popular and matured area. She said the reason given was because the developer was not famous, thus it was not easy to sell but the whole area was already above RM700psf. I asked her,
would she be willing to stay there?
 She said of course not. She prefers landed. Then, I asked her if she is single would she rent that condo. She said, it would be tough as the rental has to be at least RM2,500. How about renting to a couple then? She said, RM2,500 is still high even for a couple as the couple can buy a condo and pay lower mortgage instead. She laughed and understood. If she does not want, why would she buy and hope other people would want? Of course, she can also buy and wait for completion and upon completion, for the prices to appreciate 20% like the years before. Then, again, if you survey around, the newer condos are already sparsely occupied today. Should we take such risks?

Personally, I think it’s considered a
high-risk if you were to buy properties which could not get rental yields to at least cover your mortgage.

Of course, the market may suddenly rebound and your decision to buy today may be the best ever 3 years down the road. However, do attempt this only if you are really very cash rich. Do not do this with your first investment property. Seriously, the only reason why your friends who bought such properties tell you how successful they were was because of circumstances then. PLUS, those who are still holding their high-end condo and could not rent out today did NOT tell you about their sad story. There are still lots of opportunities, even if the return may not be as lucrative as your high-end property. Happy deciding.

written on 18 Mar 2015

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Weakening demand for luxury condos, increasing prices for cheaper condos

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Buying a property now is like committing suicide

Just as there are two sides to a coin, we should always note that arguments happen because both sides are at the other end of one another. Yesterday, we read about
PropertyGuru’s Sentiment Survey
 which said 58 percent of those surveyed will be buying a property within the first 6 months of 2017. This is quite an aggressive number in my opinion because I do not see that percentage among my colleagues and friends. One of my colleague forwarded me an article in
freemalaysiatoday.com  (FMT)
 which quoted a chartered property surveyor Ernest Cheong’s views about PropertyGuru’s survey result. He advised prospective house buyers to wait until property prices come down. Buying at current prices with both the domestic and
international economies
 not doing well is like committing suicide. (Strong word actually but he explained later on why he said so.)  He said the property market does not exist in isolation and buyers must take note of the economic conditions.

He also shared that it is not true that house ownership could guarantee a roof over a family’s head. In fact, rental can be a valid choice. He then added in his FMT article, “you have so-called property gurus encouraging families to buy homes they may not be able to pay for in the long run, claiming it is an investment since property prices don’t go down. What happens when you can’t afford to pay the instalments and can’t sell the property off, or if rental values can’t cover instalments? You’ll be stuck.” With the current economic uncertainty, it’s best to rent a house instead. He then shared a good advice for all the buyers who are looking at properties beyond what they could afford safely. He said,  “The monthly repayment for a home should not exceed 25% of a family’s net household salaried income. The other 75% should be reserved for living expenses and, if possible, savings.”

In brief, based on Ernest’s suggestion, if the net household income is RM8,000 it’s best to only buy properties with a maximum monthly mortgage of RM2,000 Please refer to the image for some idea how the RM2,000 is derived. For families with a total household income of RM8,000,the maximum property price they should be buying would be RM450,000 or lower. He said that the typical tenure of a loan is 30 years and during those 30 years, the cost of living will go up but the salary may not be rising in-tandem. Besides, it was also reported that developers had not been able to sell 18,908 of the 81,894 units of residential and commercial properties launched in the first quarter of 2016. The unsold units were valued at RM9.4 billion. This meant that there is an oversupply situation and this has also caused rental rates to soften. This is a good time for people wishing to rent.

Should we believe the positive PropertyGuru’s Market Sentiment Survey or should we listen to a veteran in the property industry? I would say decide based on our judgement. Once we have viewed many, it is likely that we can decide better. Whatever investments we do, it’s always good to be prudent but it’s equally as important to build our wealth. Assuming we think
property prices should continue dropping
 and we would like to wait, then set a target for it. Please do not think that we want to wait for the bottom. We will most probably miss it. Even if we
want to rent, we must still be making plans to own a good unit.

Happy deciding.

written on 24 Jan 2017

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Buy property now or buy later, which is riskier?

This article was first published in Property Insight magazine February 2015 issue.

When I bought my first property 12 years ago, it was the toughest, both financially and mentally. Financially because both my wife and I have only worked for 5 years and our savings are not high plus both of us have never read a lot about properties before and thus have
never prepared for it financially.

Mentally stressed too because we felt buying a property is very risky. What if we lose our jobs? What if the apartment that we bought loses its value? There were many unanswered questions. Majority of the friends our age then do not own a property. Frankly, buying early or buying later, which is riskier?
How about if we rent?
 Would there be less risk? What can we do to manage some of these risks? Let’s explore a few today.

Save more before we buy. True? The truth is, our salaries are growing slower than property prices. Since majority of us are working people, there is no way that our
salaries would rise faster than the rise in property prices
. The reason is because whatever the quantum of increase that may happen, it will be based on the base. We may have a 10% increment but this number is likely to be smaller than a 5% increase in price of the condo that we intend to buy. That’s because the 10% based on a RM5,000 salary can give us an additional RM6,000 per year. The condo that we are aiming might be RM600,000 but 5% meant it has increased in price by a whopping RM30,000. The solution is to buy one when we can afford it. Ifwe could not afford a RM600,000 unit, how about RM400,000? If not RM400,000, what about RM200,000? Never stretch our financial limit too thin, that is the highest risk of all! We may lose everything. A good property is a
hedge against future price
 increase and of course once we have bought, the price increase is now an advantage to us. Time awaits no men is applicable in many situations including the purchase of our first home.

Property bubble is bursting soon. First do we believe a bubble is bursting soon? If we believe in one, the next question would be, when is ‘soon’? 6 months? 12 months? 18 months? What’s our strategy today and after the bubble bursts? If we believe, then have we saved as much money as we can for the past many months? Did we refrain from any unnecessary spending? If we have saved none but continue to cry ‘
bubble bursting soon
,’ it is not a risk but it is a huge loss of opportunity if the bubble really did burst as per our expectation. When we always miss all these great opportunities, in the long run it becomes a huge risk.

To those who believe that they must wait until the bubble bursts before buying, think really carefully, if we did not dare to buy before the bubble burst, would we suddenly be so brave to buy when everyone we know tell us not to buy during bad times?

The younger generation can no longer afford anyway. Better just rent. Renting forever is never a risk. However, renting for 10 years and suddenly we feel like it’s time to buy our first property, that is a risk. Can we afford one at that time? Do note that the difference between paying rental and paying for a mortgage may be very little. Major difference would just be the first 10% before we get a loan for the remaining. In other words, the rental money could have been your mortgage payment. Assuming the property price rises only 5% per year, after 10 years, that is a compounded 63%. A RM500,000 home today would be RM815,000 by then. That’s not too bad right? The only issue is, the house prices for the locations we like has been rising faster than 5% while areas which have hardly moved, it may not be something that we like. The younger we are, the better it is to buy because we
can stretch the repayment period longer

and when we are more capable, we can choose to shorten or pay faster LATER. Do not kill ourselves right from the beginning.

Understand the risks when we are not using our wealth to continue creating new wealth. My friend told me proudly that she aims to finish paying for her RM700,000 property within 10 years. She wants to be debt-free. A good goal but to be honest, there is very little difference in having RM700,000 and doing nothing with it versus finished paying for our first home and staying in it. In both cases, the RM700,000 is not doing anything. Yes, the house price is increasing but we could not do anything with it unless we do a refinance. If we want to do a refinance, then why pay so much in the first place? If we do have some money, use it to create wealth. Please remember that overstretching financially is far more riskier than paying off the home loan early and doing nothing with it.

The rich are becoming richer
. We, the middle class are becoming poorer. Take out our smartphones, google for ‘income disparity’. Look at all the countries shown. Except for countries we have never heard of, income disparity is happening in every country in the world today. Even in our neighbor down south. Rich people are becoming richer because of how they manage their wealth creation process. The middle class thinks they are poor and believe there’s nothing that can be done. Without any doubt, this would become true after a while. One reason for some of these richer ones is because they create more wealth with the wealth they have. Most of the time, it includes property investment. Question is, do we want to think like the rich people or the middle class. The choice is actually for us to make.

If we think that we should now rush out and buy a property, that is a big risk. The reason why we should buy a property when we can afford one is so that we do not need to struggle even harder a few years down the road when our savings are even lower versus the property prices. The reason why we should not think of property as a ‘sure rich’ formula is because it is not. If there are ‘sure rich’ formulas, why are majority still in the middle class?

Personally, how many friends have told us about their
failed property investments?
 I have quite a number. One told me that he bought a huge semi-detached in a very new area. He thought staying there would be awesome. When it was completed, he did not like the location enough and today, he could not sell that property and yet he has to pay for another one for which he is staying today. Think clearly, if we do not like the location, never believe someone would like that location. Majority of us actually think alike. That’s why middle class is the largest pool in all countries including developed ones.

In conclusion, did we invest in ourselves? For those who are reading this now, I think you are on the right track because you are reading a property magazine. Sufficient knowledge allows us to make a better decision. It does not mean there are zero risks. However, with the right mindset and a good understanding about ourselves and the property market, we are able to manage the risks much better. Under normal circumstances, it may be better to buy earlier than later. However, this highest risk of all? It is to pretend like nothing is going to happen and do nothing. Happy investing or waiting for the right opportunity.

written in Jan 2015 for Property Insight magazine, Feb Issue.

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Potentially, the better way to buy property; OPEN BIDDING by MNP Auctioneers

Message by MNP Auctioneers on upcoming Open Bidding on 27th April 2018 (Friday)

Did you know that there are many good buys in property auctions? There are property auctions by the High Court and the land office. There are also property auctions from the local and foreign banks. These are usually properties which are being auctioned off when the owners were unable to continue paying for their mortgages. For these properties, sometimes the reserve price is lower than the market value BUT one is NOT able to view the properties properly. In other words, no one is allowed access to view them and that is why sometimes, even though the reserve price is below the market value, people may not bid for them.

How about property auctions where the reserve price is BELOW the market value and you could VIEW the units? Not just from the outside but also the interior? View all rooms? Get to know even the brand of the electrical appliances inside the unit? Buyers are also assured that there are NO hanky-panky because the auction is conducted via the Dual-Bidding way. We would like to bring to you MNP Auctioneers’ Open Bidding for properties by private owners themselves. Please take a look at the properties below.

How to join in this Open Bidding session?

For even more details, call 017 – 400 6661 or visit
www.best2bid.com

— end of message —

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Buy property… stocks and wait? CIMB’s advice.

Good news for those who has some spare cash and wants to buy stocks instead of property. After meeting with about 20 fund managers and analysts, CIMB Equities Research said, “Most funds still underweight property stocks in their portfolios but we sensed that sentiment on the sector had improved compared with during our roadshow in late March 2016, when there were grave concerns about the perceived oversupply of properties and the decline in housing affordability for the general public.” In brief, property stocks receive very low interest thus far and thus may potentially be rebounding.

CIMB Research shared that some of the fund managers and analysts even believed that the worst may have passed. It expected developers to
launch more mass market properties in the coming months.
 (In brief, affordable ones which majority of every buyer can afford and thus have interest in) It also said that for the property developers under their coverage, they are sticking to their launch dates. (Of course, this would show confidence level of the said developers which is certainly a good news to hear). If we do read of strong take-ups, then this would boost the investor sentiment further. In this case, the property stocks.

These are the few developers that CIMB is recommending. They offer decent dividend yields and strong management and has potential share price upside once recovery in demand for physical properties becomes certain. These stocks include LBS Bina,
Mah Sing,
 and UOA Dev. Their top pick is however Eco World because the stock offers the highest share price upside as it is the most leveraged, financially and operationally. So, ready to buy some of these stocks and then wait for the potential re-rating of property stocks in H2 2016? Well, CIMB Research did provide this downside risk to their call;
a sudden economic shock.

In other words, they are not expecting this. Happy believing and buying if you like property stocks.

written on 30 July 2016

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Knowledgeable investors always have options

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Are you buying for VALUE or GLAMOUR?

Gen-Yers are said to be less tolerant, want to be promoted fast and most of the time, spend their money as it there’s no tomorrow. As a Gen-X, I beg to differ. Thus far I have had pleasant working relationship with many of them and some are really above average likely to be very successful in the near future. Reason is, they are faster learners, thus more knowledgeable and this meant they decide faster. Right or wrong is another debate. One of them would like to share his experience on buying a property. Let’s learn from him. This is his first property in KL, after moving down from Penang.

– Start –

Many people complain that houses are no longer affordable while I beg to differ. For those who think that properties are rich man’s game, perhaps you’re looking at the wrong place. Take a dip into
www.iproperty.com.my
 or
www.propertyguru.com.my
 you’ll find huge number of houses easily fit into whatever budget you have. The real question is, are you buying
value or glamour
?

October 2013, I began hunting for my first property in KL based on my initial REQUIREMENT and horror struck me when I found that I could not afford any. There goes my dream of owning my own house. Then a thought struck me, what do I really need? When I began listing down the requirements, I realized that I have more buying power than I initially thought I did. Suddenly the properties I can shortlist grew to pages. Finally after viewing several, the choice is clear. I need a place which can comfortably fits into my budget and at the same time, has ample room for potential growth. I chose Kepong Sentral Condo.

Why Kepong Sentral Condo?

Only MYR254.68/sqft

Next to Sungai Buloh where the growth is happening

Next to MRR2 and literally steps away from a KTM station

5 minutes away from Aeon Big and Jusco.

Guarded with a swimming pool

Covered multistory parking space

Maintenance fee of only MYR0.145 / sf

Fully furnished rental yield MYR1,300 or higher.

Balcony overlooking Twin Tower ???

It’s true the building is next to a cemetery but back in Penang, properties are selling for MYR500/sqft minimum for a similar setting. It’s a matter of time when even these outskirt area cheap houses won’t be cheap anymore. Growth in Klang Valley is continuing, fast. More changes would force people’s mindset and buying behavior to change but of course, facts and figures won’t.

Today, 13 months after I signed my SPA and stayed in my condo for many months, the current market price for my condo has gone up RM55,000. Based on the downpayment that I paid, that’s a paper gain of slightly over 100%! Recently there’s a proposal to form a Joint Management body, which meant things can only be better for the future. I always feel there’s no point burning a hole in the pocket for things that we can barely afford. I’ve gone though the days where the month seemed slowing down towards the end my piggy bank is empty. Now I spend half of my earning in what I can afford, and the other half goes to potential future growth. After all whom are we trying to impress?  Why own one when we can have two? I have already stayed in this condo for 6 months, when are you going to make your move?

written by How Jun, 30th March 2015.

– end –

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Buy REAL books at Big Bad Wolf @MIECC (6-16 Dec 2019 and it’s open 24 hours)

I have bought a number of e-books. Sorry, it’s not for me. I continue to love the feeling of holding the actual book and I believe I could read better with a physical copy of the book. Kindle is just not for me, regardless of what many of my friends say. One reads via Kindle every morning but even she continues to buy real books and finishes a book nearly weekly.

Oh yeah, coming back to the actual reason for this article cum announcement. Please do go and visit Big Bad Wolf (BBW) 2019 yeah. It’s starting tomorrow @ the MIECC (The Mines). Discounts are announced as between 75 – 95% and there are 4.5 million new books for sale. As for anyone who just could not sleep after a trip to the mamak, you can also drop by because it’s open 24 hours.
Its Facebook page is here.
You can go to the mamak again after visiting the BBW.

The last trip I went, it was 90% books for the kids and well, 10% for me. I did not have time to browse slowly because both the kids were with me too. I think this time, I shall go only when both of them are asleep. If I see you there, please say Hi!  A famous quote by Jhumpa Lahiri: “That’s the thing about books. They let you travel without moving your feet.”
Its Facebook page is here.

Oh yeah, there are surely hundreds of property related books too. Read more! Cheers.

Please LIKE
kopiandproperty.com FB page
 or
Sign Up for free
 to get daily updates about the property market. Else,
follow me on Twitter here.

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Jammed for an hour just to buy books?

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Buy, rent out and keep 10 – 15 years. Why not?

Buying a property for flipping is not something easy these days, agree? Heck, even buying a property is getting ever harder. Just look at all those who complained about their inability to get their loan applications approved.
Difficulties in getting a loan will continue… 2019

Well, many are still looking at the primary market and buying the affordable ones and within a few years time should save enough for renovations. I trust most of them would not be selling those units as it should be for own stay. There are also many of these affordable units which meant that flipping them for good money is not a good idea. Demand would continue to grow, of course but when supply is completed in tens of thousands, then it’s good for the buyers and not so awesome for the sellers. So, what about those who think that 2017 or even 2018 would provide an opportunity to buy? Then, they may want so read what Ron Ong write in an
article in NST here.

I do not know the writer personally but according to the introduction at the end of the article, Ron Ong is a practising lawyer, investor and property manager who owns 19 properties worth RM17.76 million. An impressive number that most of us would love to aspire towards. He shared that there is no such thing as a good or bad time to buy. The reason is because bust cycles is often followed by property boom and every boom cycle is then followed by a busy cycle. Latest boom? 2010 to 2012 and all those who bought during 2008 and 2010 should have enjoyed good returns on their investment. He shared that 2017 to 2018 is a downturn and he believes the recovery would come in a few years’ time which meant that it’s a good time to buy now. He also said that banks have also been tightening their loan approvals and the current slowdown has resulted in negative sentiments for the property market. It is thus the best time to buy and buyers would find it easier to negotiate too. His strategy is to buy properties, keep them and rent it out. He would then hold these newly bought properties for up to 10 or 15 years. His full
article in NST here.

My brother-in-law asked me about ‘disposal of asset under the real property gains tax act 1976’ when he was submitting his tax returns a few days ago. I told him that he has not yet sold his current condo, so he does not need to pay any tax on those. Actually, if we did not buy because we want to flip, there’s really not too much to worry about tax or even the ups and downs.
The riskiest remains if we bought the wrong property.
Haha. As for what is overpriced, well there are
transaction price guides here.

Always understand the prices of similar units nearby. Yes, it’s true that landed units would provide the highest potential that it will increase in prices since it cannot multiply which the high-rise can be built ‘higher-rise.’ It’s also true however that majority of Malaysians could only afford a high-rise unit…..  This is why it’s not so important to keep debating whether landed or high-rise. It’s better to analyse where to buy instead. Happy buying, renting and not flipping.

written on 28 April 2017

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Buy secondary. 30-40% cheaper.

I think I have written on this a few times. It was also supported by my good friend from the industry, Michael Geh (Senior Partner of Raine & Horne International Zaki + Partners Sdn Bhd) Today, an actual number was given by the president of Malaysia Institute of Estate Agents (MIEA), Siva Shanker. He said the secondary market is worth a look as the houses could be 30 – 40 % cheaper. He said many people were unaware of such ‘gems’. I think some do know about this but still chose to forego them. Somehow, the feeling they get from a new home is better. Somehow, when you buy secondary, it’s not as prestigious as a new home. Somehow, those could not afford would still try to apply for a loan and got themselves rejected. Until today, majority of my friends would only consider a new property, never a secondary. I do not wish to dwell on the reasons given. Want to read a bit more? Here:
Experts said, ‘affordable properties’ NO MORE (nonsense)

Actually, why are these secondary properties cheaper anyway? There are definitely a few reasons. For example, they are older units, thus if you buy one, you need to get contractors to check the wiring, the piping and perhaps do a new one. The renovations done may not be to your expectations, thus you may need to redo. Just taking down the existing cabinets would cost you. The tiles may be dated or looks jaded and thus you need to retile the whole place. All the bathrooms ‘feel’ dirty and you juist have to redo the whole bathroom. Suddenly, you have additional costs that you have to factor into the secondary property and thus it does not look so cheap anymore compared to a new one. Well, not true. Even with a new unit, you are still going to do renovations. My colleague just told me
his renovation would cost him RM150,000.

The main reason is because he is likely to stay there forever since it’s near to his parents. Thus, must do the best. 8 years ago, a relative of mine spent RM95,000 for his renovations.

Okay, so should you still be thinking of secondary then? Definitely. Except for my Penang home, my two condos in KL were all secondary properties. Both were renovated units too. One would have cost the owner between RM50,000 – RM80,000. The current one which I am staying in, the renovation of the cabinets alone would have cost RM100,000. Do I like it? Well, I can accept it. Haha. So, I saved at least RM100,000 but I renovated both the bathrooms and just the two bathrooms cost me RM30,000. So, the trick is,
keep looking for good secondary units.
 Surely there is one that meets your expectations and thus you save the 30-40% mentioned and only needed to do minor renovations. Just go online, iproperty or propertyguru. Lots to choose and lots to view.

Oh yeah, if you think MIEA would always say good things about secondary while REHDA would talk great things about primary properties, I can safely tell you that I am not an MIEA member or even related to any developer. I speak only based on my personal observation. Whether you love primary or prefer secondary, I think both have their own advantages. If you need a place to stay, wants a bigger size and lower price, for now, secondary really do stand out. Of course once demand pours in, as usual the price would go up and very soon the price difference may narrow. Happy selecting.

written on 24 Dec 2014

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Buy land for RM8,336 and sell for RM43.3 million

Until today I still remind my wife about my property investment mistake. I had booked another unit of Regency Heights many years ago during its launch. I decided that it was too risky and did not proceed. Well, this unit was RM269,000 and today, it would be easily RM650,000. Then, I read this piece of news. Perhaps I should have bought lands instead! Global Oriental Bhd in a filing with Bursa Malaysia said that it will be selling a piece of land it bought in 1994 at a cost of RM8,336 for RM43.3 million. This is sold by its wholly-owned subsidiary Pertanian Taman Equine to Kemanis Residences Sdn Bhd. What an awesome return.

Of course, over the years, the total carrying value of the land as well as other related development expenditures as at March 31 2015 is RM15.27 million. Thus, this proposal would only give it a net gain of RM15.92 million for the financial year ending March 31 2017. As per a valuation report by CH Williams Talhar and Wong Sdn Bhd, the market value for that piece of land is RM42 million. In other words, the buyer is paying a very slight premium over the current market value. The proposed disposal should be completed by April 2016 and the proceeds would help to improve the group’s cashflow. Instead of holding a piece of land that they have no immediate plans, turning it into cash may be a better decision.

I remember many years ago, I went with a few friends to view a piece of land in Balik Pulau Penang. It was 11 acres if I remember correctly, planted with durian trees and rubber trees. The selling price then was RM1.2 million. The plan then was to buy, get it subdivided and build some facilities for team-building and homestay. Nothing happened with a group of friends who are not really that close and daring. Haha. Today, I think that same piece of land would have given us handsome profits. Lessons learnt? Property investment does not need to be just the building, buying the land on which the building is built may be worth a more serious consideration. After all, the number of high-rise may rise in terms of numbers but that piece of land would remain just that piece of land. Happy searching.

written on 18 Aug 2015

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Land scarcity or abundant, which is better?

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Buy because of the business, that’s safer.

There was an article in
TheStar: A fed up TS Wong sells stakes in Palette and MUI to quell speculation
 which tells of how shares of some companies shot up because of some reports of POTENTIAL news related to someone well known who happened to own some shares in those companies. TS Wong released this statement, “I acquired insubstantial shares in MUI and Palette as passive investments. Unfortunately, certain media quarters have extracted these information from the annual reports and published stories that created the misperception of impending merger and acquisition activity. I wish to clarify that I have disposed of all my shareholding in MUI and Palette and will refrain from making any passive investments in listed equities in the future.”
Full article in TheStar here.
 Well, after the clarification, the share prices have since started normalising. To the earlier buyers of those shares, if they had sold for profit, they would have gained. To those who bought towards the tail end before the clarification, well, they would have lost money. A company can do badly but can recover after restructuring internally for example and this would usually show in the next one or two financial years. It should not suddenly profit this quarter and then lose almost all of its profits next quarter.

Even though I love properties, it is very hard for me to buy one every few years. The reason is because I am just a working professional like the majority of Malaysians. ( I have no tricks whatsoever on how to buy a property every year or even a few properties within the same year. I do not wish to learn these too) What do I do before the next property? I try to keep it safe, some goes to unit trust, some goes into stocks. For stocks, it is almost a certainty that I only buy those with dividends nowadays. I am still a beginner but here’s someone who’s an expert. One of Warren Buffett’s famous line is this. “
“Never invest in a business you cannot understand.”
 What this tells us is that buying shares in a company is not that hard but we should understand what it does. If we do not, then we are exposing ourselves to higher risks than needed. There are many books and articles written about Warren Buffet. Whether it was endorsed by him or not by him does not really matter. He is one of the most successful investor in the stock market, ever. As per google (image), his net worth is now US$79 billion. I think this is bigger than the GDP of some small nations. How about learning some of his ideas about stock market investing then?

Another awesome statement from Warren Buffett. “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.” What this tells us is that a good company will be a good buy, especially during bad times because it would be undervalued then; the business versus the share price. A so-so company which has dropped a lot but suddenly have some huge potential investor is really not worth the gamble. It is either gain a lot or lose money. Examples abound but of course, greed is usually the ‘haze’ surrounding our logic.

One last one before we end. The hardest one to do, actually. Haha. “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”  Study a company enough. I would usually look at the management profile as well. A family business may still be a great company ok. It depends on whether it is professionally run. I have not been buying companies with huge debts. I know, without lots of debts, sometimes it may be growing slowly. Just my choice. Big names mean nothing because sometimes when we look at their Balance Sheet, we realise that the only thing left would be its brand. I still prefer property over stocks. Haha. Happy investing.

Here’s some real tips from a stock expert.

written on 14 Nov 2017

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Shopping mall lots versus buying landed shops

It’s tough to decide when it comes to buying a commercial property. The usual hotspots are having prices which are too hot to handle. As for whether it’s worth the price we pay or not, let’s just be honest. The reason why prices continue to go up is because the rental could support the growth or the other way round. However, both rental and prices are supported by the business that the owner or tenant is doing and there’s always a ceiling to this. No one can keep increasing the price of their noodles just to cover ever higher rentals yeah. One day, the whole thing will collapse.

This brings us to these few questions that we should answer with some due diligence.

Time is gold. Remember this famous quote? If we look back at hotspots of today, there are a couple of reasons why they would become hotspots in the future. What’s the population growth like? When we drive around the area, are there huge residential units which will provide the business with the customers it needs? Are more developers looking to build within the same area? Are there other supporting amenities nearby? For example, offices, education institutions, hospitals and even a regional mall? All these would help us to understand if we buying into a potential hotspot for the future instead of paying way too much for a hotspot today.

What is it for? Do we know the potential business that we would like to do? This is extremely important because a restaurant serving great food will be popular whether it’s in a shoplot (there’s Facebook today!) or located inside a mall but if it’s inside a mall, it will need to follow all the mall’s guidelines which includes even opening and closing hours! If I am the customer, I would like to drive over to my favourite restaurant, park along the road and walk in to order. I would not want to drive to the nearest mall, find a car park space, walk a few floors to my favourite shop and then pay for parking. One word? Convenience. Remember to know your business before deciding!

Potential capital appreciation wise, anything on a land is going to be worth more. We can refer to many advanced property markets of today to understand. In fact people are staying further away because prices are growing beyond what they could afford. This is why when areas within the city centre increase in price, areas further away would soon follow. This is unlike retail units within a mall which is usually leased. If the retail lot was purchased, then it’s important to know if the mall is extremely popular or just another run-of-the-mill.

Flexibility of purpose. A shop-office could be used for many other types of businesses versus a more limited number for retail lots. One very good example would be budget hotels, especially nowadays when business travellers (usually SMEs) wants just a clean place to stay instead of paying expensive prices for a 4-star or a 5-star hotel. It’s a difference of staying a few nights versus just one night. A retail unit within a mall would very much depend on the size too. Businesses which would be run would have to depend on the size of the unit as well.

Remember that famous restaurant serving lots of customers when the whole row of other shops are closed after office hours? Yes, I have been to many and these famous restaurants are happy that everyone else has shut down after office hours because they could then put tables and chairs even long the corridors of all these other shops. There’s one particular restaurant with up to 100 tables in PJ. This cannot happen within a retail lot in a mall.

Last but not least, understand the purpose because sometimes a retail lot within a mall may better serve the purpose. As for some reasons stated here, I think there are reasons why shop-offices continue to flourish even with the number of increasing malls. By the way, failures of commercial properties happen whether it’s shop-office or retail lots in malls yeah. Please do due diligence before signing. Happy thinking.

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written on 3 June 2018

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Do you buy-to-live or buy-to-leave?

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Buy smaller and then try make bigger?

We should note that available sizes for homes are slowly getting smaller. It’s the only way for it to be affordable. In Hong Kong, an apartment is already as small as 180 sq ft, complete with a bathroom! Location is of course within the Central Business Districts (CBD). Prices are in the millions. In Malaysia, when we are looking at small parcels of lands within the CBD or even right next to the MRT stations, the only way for developers to build is to build as high as
possible and as small as possible.
 Typical sizes currently for SOHO would be around 550 sq ft. This is where the launch price can still be advertised as ‘affordable.’ Can a couple stay in one of these? I think it’s doable lah. For a family with baby, maybe it will be harder but as we noted, when location is the main criteria, some sacrifices would have to be made.

To the usual readers of kopiandproperty.com, you would know that I prefer buying a bigger place instead of a smaller one. You are right. I do prefer to buy a bigger place. However, whatever place we buy and whatever size we buy, we should always strive to make them look bigger. The reason is simple, everyone loves a bigger place, even those who thinks 550 sq ft is enough would still want that 550 sq ft to be fully usable. That’s the reason
why renovation costs f
or a smaller unit is not necessarily lower than a bigger unit because of the many special customisations involved. Once renovated, the unit looks better and bigger. When you need to sell it in the future, your main competitors are other units within the same development. If I am a buyer who has viewed five units within the same development, which one would I choose? The bigger one lah.

Objectively, the buyers / renters who have decided to view a certain 550 sq ft units in a certain development would view 10 of these to decide which one appeals to him the most. Many times,
 location is already the reason
why he selected to view the project. Thus, your competition would always be with the similar sized units. Imagine conversations like, ‘this unit has many built in cabinets which helps to ensure as much of the unit is usable. Without these cabinets, it will be messier and smaller.’ The conclusion is thus very simple. Regardless of the size of the unit that we buy, it’s always advisable to renovate it with the aim of’ maximising space available.’ It is always a plus whether for future buyers or renters. Happy enjoying your unit.

written on 7 Jan 2017

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Will your affordable apartment be RM1 million one day?

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Why we usually fail to buy that property we say we wanted to buy.

Good question, right? Who can answer?

“When will property prices be falling?” Briefly, for those who are waiting to buy a property for 20, 30 or 40% below the market, they will have to wait longer. Unless the property they want to buy is the one NO ONE WANTS to buy lah. For those, these days there are already a lot in the auction market, secondary market and even heavy discounts from developers. Do not ask me where, call any of your real estate agent friends to ask yeah.

A question for ourselves under current market condition

Perhaps we could ask ourselves this question. If we could still pay for the home, would we do fire-sale for the home or not… So, the first reason why we may fail to buy that property we wanted is because unless these owners become desperate, they are not going to sell their properties at 20% below the market…or higher.

If we want to buy properties which are priced 20% below the market, we need to wish for many of these owners to go into desperation mode. Are you wishing for this condition in your prayers? Hopefully not.

Second question, are we close to these desperate sellers?

Second reason? We assume that there are a number of these owners who are really in trouble and wants to sell their properties by 20% below the market value. If the person happened to be a your close family member, they may tell you FIRST. So, you get to buy that property at 20% below market price.

However think about it, how many of these desperate sellers are your close family members? So, if they are not your close family members, they will sell to THEIR close family members… or their neighbours… or even that real estate negotiator who’s also a property investor too. Certainly not to to you… because they do not know you.

Third Question, how many of these are in the market anyway?

There are just not enough of these below the market properties to go around yeah. You see, in some areas, the prices could already be 20% below the market but not many buyers. In popular areas however, as soon as there are a few of these 20% below market price properties pop up, there would certainly be a long line of potential buyers.

One of my close friend, a Gen-Y saw a new property listing at the condo she was staying within a few minutes the listing was posted online. She was in my car and I was driving her out for lunch. The listing she saw was 10-15% below the market price. She called and took a two hour time off to view and immediately pay the deposit for it! So, how many of us watch the property listings every other minute…? Plus we can decide to buy that property almost immediately?

Fourth question, are we already in the game to buy that property or not?

There are a lot more reasons but perhaps a better waiting game is also by befriending many good real estate negotiators who may tell you about such a good deal first before they tell others?

It’s also vital that you have already understood the area you intend to buy and the market price yeah. As soon as an opportunity comes along and you want to think about it, someone may have bought it first.

There is no time to investigate and research because when the property is truly attractively priced, the window to buy is really a small one.

This is why we need to stop thinking that we can wait and wait and wait because someone told us that it is currently the buyers’ market.

Happy understanding and I do wish you could get that unit at the area you want at the price you truly wanted okay. Cheers.

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Do you buy-to-live or buy-to-leave?

There are newly completed developments today where the occupancy may not be that high, not even 50 percent. A close friend’s condo in Penang was completed last year. He has moved in and has stayed in the new condo for slightly over a year. Yet, every time I dropped by, the number of cars parked in the car park would tell me the occupancy statistics. Sometimes when we think about it, why are the units empty when it has all been sold? Well, my friend bought it to live while many may have bought it ‘to leave’ it open for any potential sudden capital appreciation. For example, potential of selling it for good profits which became hard because the home prices are today not like yesterday. In brief, incomes need time to catch up. When it does not (rising income), it’s EITHER home prices stay stagnant or home prices suddenly collapse, when the owners could no longer pay their mortgages. Let’s wish for the former shall we?

Second reason why they buy-to-leave is because they may have wanted to move in but have now decided to delay a bit because even the renovation would have cost a bomb. Unless people feel they will be getting a promotion or a huge bonus soon, it’s not wise to spend too much currently. By the way, do not overspend to do the renovation, the great feeling does not last forever. After a while, everything normalises but thats also the time when you realised that you have spent so much for renovations. Here’s an earlier article:
Advantages of buying a renovated unit

Your future buyer may not share your taste too… Third reason is a forced one. They bought-to-leave because they followed the trend then. Everyone was telling them that everyone was earning good money from the property market. So, now they are still paying for the homes while deciding what to do next. Many would have told them to rent it out but even renting it out would mean spending some money. An empty unit fetches very little, really.
I usually rent out fully furnished.

Personally, for owners of these ‘buy-to-leave’ units, it’s much better to spend a bit and rent it out.
How about thinking about AirBnB? Earlier article here.
 Buying to live is seldom wrong. The reason is simple, we need a roof over our heads and we need to rent if we do not have our own place. If we buy a place with three rooms, we could even rent out one or two of the rooms and it helps tremendously versus just renting a room to ‘save cost’ which actually makes little sense on a longer term. Oh yeah, it has not happened in Malaysia but in the UK, if one were to buy a home and leaves it empty for more than 2 years, the owner will be fined!
Well, it’s not that successful. Here’s one recent article in the Guardian.com.
 There’s another
one here in thelondoneconomic.com
  Do we think our government would do the same? I guess it depends on how bad the property prices are, especially if the prices keep rising faster than income. Happy following.

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written on 26 May 2018

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Buy to stay FIRST, before buy to sell; safer.

If you have been to property fairs recently, you would note the many available talks from experts and property gurus. More often than not, their presentation skills are good and their slides are very nicely done. For the speakers who did not prepare well, I think we should just ban them and tell as many people as possible. 🙂 My personal view is this. Whatever was presented, no matter how persuasive they are, always understand between the IF and the Planned and the Approved.

IF
. IF the highway is built. IF the new bridge is built. IF IKEA starts building. IF means probably, maybe or at maximum, most probably. If you are buying because you want to stay, then the IF is ok. Please do proceed to buy if the rest like location, size, design and other reasons meet your expectations. The reason is because IF you are going to stay there, it means that you would have considered many things more than just the IF that was presented.

Planned
. A new highway has been Planned. Who is the one planning it? The federal government? The state government? The developers? What stage is the planning at? Still at the developer’s table? Already submitted for approval to the local authorities? Plan is already approved and pre-launching soon? The truth is, if it is a huge plan, irregardless of whoever was the presenter, you would have already heard of it online. Search for more details. More often than not, you will uncover a lot more compared to just one talk. Of course, if you yourself Planned to stay there, then yes, it’s a good buy. Reasons above.

Approved
. Approved by who?
Approved by the state government?
 Most of the time, for any typical residential or commercial development, the state government is the one approving. What was approved? Please be reminded that there are lots of approval being revoked later when the public make noise due to the many concerns. This is especially for those special ones like on top of a hill, nearby a natural lake, next to a secondary forest etc.

I think you see one very important point. IF you
PLAN to stay there and your family APPROVED, then you should buy
. If it is for investment, it should take more than just listening to one talk and buying. The temptation is not easy to resist, especially when after the talk, so many seem so interested and as the developer said, only limited units are available. Ok, if that’s the case, do online checks well in advance before the talk and ask during the talk or after the talk. Oh yeah, if no
information is available online
 at all, no websites, nothing, I would normally say no and move on to the next project. Yes, in this respect, I follow the Penangites and the Singaporeans, ‘KIASU’ and ‘KIASI’. It’s my money after all. Yes, I may never get the best deals like many who were lucky but most of the time, I would not be too worse off too. Happy listening and evaluating.

written on 27 Oct 2014

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12 inspection tips on buying secondary properties

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Why offer to buy up the whole listed company? Offer of 60 sen.

Why go for public listing?

A company would aim for public listing because it wanted the public to recognise its business value and in the process get the public to invest into the company. The public would get to participate in the growth of the company and as the company continues to grow its business, the share price should technically keep moving upwards. This would make the company shareholders happy and would usually attract even more to buy the company share and this would push its share price up further.

Of course there are also many other reasons too. For example, to get more credibility, to make the brand more well known and for the owner to cash in by selling some shares.

Sometimes, this does not happen (value recognition by the public)

People somehow does not see the value of the company and the owner may become frustrated and seeks some funds who had the same thought to buy up all the shares of the company and get it delisted instead. They are confident that the profits of the company is more than enough to repay the loan used to buy the company shares.

This happened a few years ago to a company I rate highly but many did not. HOVID. This is one of the pharmaceutical company with full R&D and it’s highly recognised throughout the world! Anyway, I was forced to sell all the shares when it got delisted after the owner has bought enough of the shares from the public. It seems that there may be another such potential happening and this time, it’s within the real estate industry.

Article in thestar.com.my
.
 Property developer Easter & Oriental Bhd said Datuk Tee Eng Hong, one of its directors, has made a conditional mandatory general offer to buy out minority shareholders in the company for 60 sen a share. This is after Tee, through his private investment vehicle Amazing Parade Sdn Bhd on Friday acquired an additional 10.89% stake in the company from
Sime Darby Bhd
 for 93.5mil, or 60 sen a share. Together with other parties acting in concert, the offeror’s stake in E&O has increased to 42.71%, triggering a conditional mandatory takeover offer.
Article in thestar.com.my

No speculations please, just wait for the news which would definitely be reported soon

Of course, I have no idea about the actual intention for this mandatory takeover offer. However, it is definitely because the offeror sees the value in publicly listed Eastern & Oriental Berhad yeah. This is the share yeah. The price is close to the 60 sen being offered. As for analysts, their target price for this company is lower than 60 sen.
Here’s that information from i3investor.com
.
 Image as below yeah. Perhaps from the target price by the analysts, we could guess the reason for the 60 sen offer yeah.

All the best to the company and all its shareholders. This may not be the best time for real estate listed companies and perhaps this may not be the only case. There are definitely many other real estate developers where the share price is trading at even below its total landbank value! 🙂  Happy investing and it does not need to be just buying the property itself. It could also be buying the shares of the developer you love too.

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Why so many people buy used car?

Who would buy used car car if ONLY the new car have sales tax exemptions? Do you agree? So many friends have shown the photo of their new car last year and this car. I could only envy them as I am still driving my Persona 1.6 MANUAL which will is now in 11th year. By the way, the power window is ORIGINAL yeah in case you are wondering. Haha. So, if the tax exemption is only for new car sales, only the new car sales should go up, right?

Actually, not entirely true because most friends I know owns a car or two. In other words, if they are to take advantage of the new car sales tax exemption, they would have to sell their current cars and because of this, the number of second-hand car sales would also increase and if they increase, what would happen to the price? It gets competitive and the buyers of second-hand cars also benefit from this too. That’s why second-hand car sales will be breaking the record which has been around for the last 2 decades soon.

Article in themalaysianreserve.com
  Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor Chong Boon said there was a surge in demand for used cars in the third quarter of 2020. He said, “Looking at latest sales performances, we are expecting sales figures for March 2021 to be the highest since 2002 or 20 years ago. Year-to-year comparison, the total sales figures for used cars will pass the 400,000 marks.”

Khor said the moratorium on car loans and other incentives announced by the government under the short-term National Economic Recovery Plan, also known as Penjana, have helped sustain used cars businesses. He added, “While Covid-19 may have ‘distorted’ our used cars market, it has also shifted how used cars at auction are viewed and used. We are witnessing good responses, good speed in adapting to digital retailing, and sheer determination and hard work from used car dealers.” Do read the full article here.
Article in themalaysianreserve.com

Car sales always a positive sign

If someone could make the decision to buy a car, it shows that the person feels confident about his future. He believes that his salary will continue and he does not expect to be retrenched anytime soon. This also brings us back to an important point which I mentioned in an earlier article before.

Instead of focusing too much on the unemployment numbers which went up to 5.5 percent but has since dropped to 4.8 percent, we must focus on the employment numbers because these employed Malaysians are the ones driving the economy through their consumption.

Car sales is not just the price we pay to the car company

When we buy a car, we are helping the car salesmen to earn a living. We are sustaining the car manufacturer who will continue to employ people. These people would then spend their salary on other goods and services. This is what we meant by multiplier effect. We have yet to include pumping petrol for the next 9 years (at least)… servicing the cars as well as bringing the whole family for holidays. (within Selangor of course, for now).

So, if one is capable and could pay for the car, please do go ahead and buy a car and enjoy the smell of a new car or buy a good second-hand car and enjoy the convenience of loading it with lots of souvenirs during a holiday trip. Happy buying.

The below are the two sites I use to understand about the options of used-car. You could try them too. First one is
carlist.my
.
 Second one is
mudah.my

Source:
carlist.my

Source:
mudah.my

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