When the music stops, someone may still be sitting on the chair.

Ever played the game of musical chairs? What happens when the music stops? The winner is the one who managed to sit in the last chair in the game. It’s not the same with investment. Buying at the highest point may have less desirable effects.

Recently, we have many people talking about how when we are united, we could beat anyone with more resources. Yes, we are talking about GameStop and Reddit.
Details here.
It has shown that in the stock market, when combined, a super big group of small-time traders or even non-traders before they joined this group could cause huge losses to super huge traders who short the market or what they call as manipulating the market? Apparently, the losses to these huge traders were in billions of US$.

As usual, when something happens in some advanced markets, it may also come to Malaysia too. Whether it arrives, arrived, thrives or whether it is successful or not, we need to understand 3 important things.

Photo by Sora Shimazaki on
Pexels.com

#1 – Someone must have bought at higher and higher and highest price as well.

In the musical chair game, the last person to get a chair is the winner. In the stock market, the last person or last big group of people who bought the stock at the highest price will be the one holding that stock at the highest price point. If it’s a fundamentally sound company and the profits from its business are going to be increasing tremendously, then these people who’s holding the stocks should be just fine even if they bought at the highest price possible.

However, if the stock price has been pushed up to a level of unbelievable height and the valuation is nowhere near any fundamental, then I do worry for these people who bought into the stock at the highest price.

#2 – Depends on whether they could hold on

Perhaps because of the high stock price, they could have only bought a very small quantity. Perhaps this is the money they could afford to lose and not lose sleep. If this is the case, then I guess everything should be fine and they just need to hold on… It’s like this, if a stock is worth RM50 and we bought 1,000 units, then our exposure is RM50 x 1,000 units = RM50,000. This is NOT a small issue.

However, if the stock price was RM350 and they bought just 1 unit, then it’s RM350 exposure. For many people, they can choose to forget this amount of money for some time. Just have to wish everyone who bought were all buying in amounts they could hold. The strength of the strongest chain is at its weakest link.

#3 – Depends on how many more of these cases

In the economics theory of demand and supply, there’s this story. Someone just out of the dessert and was very thirsty would be willing to pay anything he could for a glass of water. He is willing to pay a lot (but not as much as the first glass) for second glass because he may fear the times when he had no water. However, he will only be paying lesser as the number of glasses of water increases.

GameStop was the first case. If there are the 2nd or the 3rd, perhaps it’s possible to do it again successfully. Just note that the number of people who has the financial strength to keep doing this for more and more companies will get fewer. If the number of small time traders and non-traders are no longer significant enough, then this combined group will not have enough financial strength to ‘fight’ the ones with much deeper pockets whom they wanted to engage in the beginning.

Regulators do play an important part

No one wants to see a stock rise 100% today and drop 90% tomorrow. There will be chaos in the market. GameStop is a very good case study if they (the regulators) did not anticipated this earlier. There will definitely be more measures to also protect all stakeholders because it’s very easy to lose everything if one was buying because one was influenced to buy and understood nothing about the stock which one is buying or even whether it’s actually a fundamentally sound company.  I know, sometimes these regulators got too conservative too. However the alternative is not to have a potentially chaotic marketplace as well.

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When the price is affordable, should we buy it?

When it comes to car, it’s not just the price that matters

You saw that car model you loved a few years ago at a second-hand car listing website. The price comes with a 80% discount over the original price. It’s now affordable and you are sure the bank would approve your car loan. Should you buy it? Well, truth is, there are definitely a very strong reason for a car to drop 80% of its value within a few years. Maybe, just maybe, the repair and maintenance fees forced the owner to part with it for such a low price? So, affordable does NOT mean you should buy it.

When it comes to property, it is not just the discount that matters

It is the same as property! You saw the launching price just 3 years ago. Today, you saw the same development up for sale and it comes with a 20% discount. Looks like a very good deal but just need to remember that you would not be the only one with a 20% discount. Perhaps another 100 buyers would also get this 20% discount. Assuming everyone gets the key at the same time, how sure are you that NONE of these 100 buyers would be selling their home at the same price they bought which is at 20 percent discount or higher?

When it’s about property, the price we buy matters

We think the price is affordable. Have we checked prices of similar properties nearby? Please do not be tricked by all these shouts about RM230,000 or RM400,000 but also to look at the size too. If we know our family is growing, then buying a RM230,000 home but for a small-sized unit is not a good decision. Or even a RM400,000 unit which is said to be right next to some mall or MRT station. Buy what we really need, not buy because of the price alone. It will soon come back to haunt us.

Photo by Ivan Samkov on
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Oh yeah, everything else would be the same as well

If we need a trip to the beach because we love the beach, it does NOT need to be a beach out of Malaysia (when we could fly again). This should be the case even when flights are cheap and affordable and we could afford the flights. We may have saved a few thousands if we had gone to really, really white sandy beaches in one of the islands in Malaysia instead.

The coffee inside a cafe is just RM12 and it’s definitely affordable for us. If we need a coffee, just get a coffee. It does not need to be inside a cafe. if we insist that we wanted Arabica beans only, then it’s possible to buy a bag of roasted Arabica beans of 250gm for RM30 and this 250gm will enable us to make at least 12 big cups of Arabica coffee. By the way, the RM12 per cup of coffee will be easily RM600 if we had gone to the cafe just once per week. That’s RM6,000 per 10 years if the price of coffee in the cafe stays the same…

What if I really earn so much higher than everyone else?

Seriously, if we are able to earn a salary which is far higher than everyone else, the term ‘affordable’ changes tremendously. That car price which we spoke about earlier, it may now be defined as CHEAP, not just affordable. Plus if we do earn so much higher, why bother to look at second-hand car?

When we earn much higher than everyone else, then that small-sized unit can even be our working home (used only during weekdays) and we could even have a chilling home just for the weekends. How about owning condos with nice swimming pools in many different states in Malaysia then? That would also be good as well.

When we earn much higher than everyone else, the RM12 coffee is no longer just affordable. The RM12 may even be spare change to us instead. When that happens, go ahead drink coffee at a different cafe everyday. RM12 x 365 days = RM4,380 and this amount may be huge to many but to someone who’s earning a lot of money, it’s merely nothing…

Happy understanding that even if things seem affordable, it does not mean we should buy it.

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When the size is just too small? Plus POLICY…

Some time back, someone asked me about small sized homes. My view then and my view today remains the same. Buy within our affordability and buy the largest size possible for our money today. It may not yet be apparent but ‘bigger will always be further’ while ‘nearer means smaller.’ Don’t predict, just look at the future by looking at advanced property markets. Look at the suburbs in Sydney and Melbourne to understand why buying within CBD will mean high-rise and not landed homes.

Now, let’s look at a place where my good friend earning HK$38,000 (RM20,000) could not yet buy a home by herself.
Article in TheStar.com.my here.
 Hong Konger’s interest in micro-apartments have dissipated. These units are usually less than 200 sq ft.  South China Morning Post used data by Dataelements to monitor the sale of new flats in Hong Kong and it showed since 2016 that out of 976 units that were added, 461 units remain unsold as of this week. It says that the ‘love’ started in 2014. The reason was because of supply shortage and this caused home prices to spiral. In fact that gave developers reason to keep increasing prices. For example, CK Asset Holdings, the flagship company of retired tycoon Li Ka-shing, sold out its Mont Vert project in Fanling at HK$1.29 million after a 15 percent discount. The smallest unit was at 165 sq ft.

Then Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor started to ‘cool’ the market. She introduced a vacancy tax to force developers to release their units and banks began raising mortgage rates for first time in 12 years. Due to the surplus on the developer side, they began offering discounts across all property types. This week, Lam’s administration offered 2,545 subsidised housing in Cheung Sha Wan for sale, at discounts of up to 58 per cent to market price, offering the smallest 184-sq ft unit for HK$930,000. To qualify for the government’s subsidies, an applicant cannot earn more than HK$11,540 per month or own more than HK$249,000 in assets while the threshold for a couple is HK$17,600 in monthly income and combined assets of HK$338,000.
Full report in TheStar.com.my here.

Under the
4Ps (People, Price, Policy and Preference),
 the one which has power to impact the market is POLICY. This is usually what the government does which can help to turn the direction of the property market to something more preferable or desirable. Singapore’s HDB flats are one such POLICY. It ensures most Singaporeans in need of an affordable home based on their salaries get one. We will see how our direction for affordable homes for the majority is shaped by Policy here in Malaysia. Happy understanding.

written on 22 Dec 2018

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When the world recovers, our exports move up. 63% up in April 2021.

I am against full lockdown. The issue was never about lockdown or no lockdown. Look at the basics of the issue. It is the people’s compliance. People who despite being advised against STILL WENT to another state.  People who STILL WENT to someone else’s home and have a gathering. Sigh… If you want, you can also include the enforcement which could have been better. Anyway, my opinion does not matter since it has already been decided that we will have full lockdown for the next 14 days from tomorrow.

So, yes, let’s just make sure we make best use of this lockdown by STAYING HOME yeah. Now, with regards to the world economic recovery, it is also quite real yeah. As a trading nation, Malaysia has benefited from this upheaval in demand for goods and our trade numbers reflect this trend too. In fact, our April 2021 number is really a positive one. Positive as in export numbers lah, stop thinking about positive COVID-19 numbers for a while.

Article in themalaysianreserve.com
  Moody’s Analytics said in a note today that the country’s burgeoning trade performance has been a bright spot among Southeast Asia economies.

“Exports surged by 63% YoY, but the strong growth rate is inflated by the low base effect, when exports nosedived during the peak of the pandemic and the subsequent full lockdown last year. But on an encouraging note, exports still rose by 0.6% month-on-month,” it said.

Exports of agricultural goods increased by 66.9% YoY to RM7.8 billion and mining rose by 24.5% YoY up to RM5.7 billion. Trade surplus came in at RM20.48 billion in April while imports stood at RM85.1 billion. Full article here:
Article in themalaysianreserve.com

No one forwarding good news

I do no think any of you received this positive news in your Whatsapp. Positive news do not get forwarded and it usually gets much lower clicks in kopiandproperty.com too.  It’s okay, I will still write.  So, I have to write and send to everyone lah. If you are in the export-related sectors, thank you for such a good job. Please do keep it up. Continue to operate as best you could even though there will now be many restrictions with the impending Full MCO starting tomorrow. At the moment, all of you are what is moving the economy by sending goods and services to the world who demands them. Thank you very much and stay safe.

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When there’s an acute shortage, it may not even be money that matters.

Robbers love money, usually. If they were caught, the punishment (jail sentence) will be similar whether they rob a major bank branch in the city centre or a small bank branch in a village. If the robber were to do some estimation, perhaps the amount of money stored in that major bank branch may be more than the one in village. The reason is because of the number of customers which in turn meant that more customers will demand service from the major bank branch. There will be fewer customers in the small bank branch in the village.

What if the target for the robber is NOT money then? Well, this robbery happened in a major financial centre of the world; Hong Kong. It’s also where people were rushing to buy an essential good when they use the toilet. No idea if the robber will be using these themselves or to sell it to some third party for high profits?

Article in edgeprop.my
  According to South China Morning Post (SCMP), an armed gang has taken away more than HK$1,000 (RM533) worth of toilet rolls/paper outside a Hong Kong supermarket this morning. One reason may be because essential goods such as toilet paper have become precious following persistent panic buying at supermarkets as news of rising COVID-19 infections and deaths in mainland China.
SCMP
 reported that three masked men grabbed 600 rolls in 50 packets from a delivery man outside a Wellcome store in Mong Kok at around 6am.

Reports say that Hong Kong currently has 57 confirmed cases of infection, with one death. Beyond just toilet paper, people also love to buy other ‘staples’ such as rice and pasta as well as hand sanitisers, masks and cleaning items. An AFP report says that because supermarkets are struggling to restock quickly, “leading to sometimes lengthy queues and shelves stripped bare within moments of opening.”  Please do refer to the full
Article in edgeprop.my

Yesterday, my wife bought ONE pack of toilet paper. Oh dear, just ONE pack. It should last our family a couple of weeks. Anyway, I think it’s super important to note that panic buying does not help the situation other than to make even more people panic and start to stock up goods. As for toilet papers, well, I am not so sure why the robbers were tempted to carry out the heist other than to resell it for a much higher price? It most definitely will not be because the whole group of robbers were all rushing for the toilet… Happy understanding that when there’s a shortage, even money may not matter that much versus essential goods including toilet papers.

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When Three becomes One; Thailand – KL – Singapore HSR

There’s an interesting article everyone thinking of long term investment should note. More integration between ASEAN countries is always good. Bangkok-KL – Singapore High Speed Rail. Here’s the article in
Bangkok Post.
 Yes, in brief, this will form part of China’s One Belt One Road initiative. If Bangkok is connected to Kuala Lumpur, it meant that it will then be connected all the way to Singapore. Now it gets interesting. Breakfast in Singapore, Lunch in KL and Dinner in Bangkok! How cool is that. Perhaps even supper at some other cities in Thailand. I am already thinking of the European train network which was extensive enough for me when I was travelling between 7 countries previously.

According to the article, Thailand and Malaysia will be discussing about the 1,400km high-speed railway that will connect Bangkok to Kuala Lumpur in 6 hours. Flight time from Bangkok to Singapore is around 2.5 hours. 2 hours check in on both sides meant total time taken is around 6.5 hours. Bangkok to Singapore would take around 9.5 hours which is 3 hours extra. The difference being we can stop in some towns we want and we can take a lot more photos too. Not for business travellers lah but for casual travellers, why not? It’s more advantageous! 500km of the 1,400km would be within Malaysia and the high speed trains would be running up to 250km per hour.

There’s little need to think too much. Even the
High Speed Rail KL – Singapore
 took many years before finally, an agreement is due to be signed in December 2016. However, I plan to be very positive because there’s so much good things that may come out of it economically. One day, when three becomes one. Thailand – KL – Singapore High Speed Rail. Happy following.

written on 23 Nov 2016

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When to buy and why should we buy.

We should
NOT buy when everyone seems to be buying.
 If we buy during this time, the prices are usually on the higher side We SHOULD buy when everyone is selling. If we buy during this time, the price is usually softer. This is the same for the stock market. Try to buy those usual blue-chips and they are usually overvalued (based on PER) while unknown counters do not usually attract much attention, even if based on their annual results, they are considered undervalued. Haha. Saying is easy, doing is tough. So, assuming the property prices are falling, when do we enter the market? What if the property prices are STILL rising but the rise is now below the 16-year average?

Image source:
http://housingwatch.my

Please refer to the image. Yes, it is showing something which has not happened for a very long time. The property prices are finally rising slower than the past 16-year average. So, would it continue to dip? Seriously, I do not know and do not wish to speculate BUT let me point out three facts when it comes to property investment . As of now, when we refer to most advanced property markets, all three points are still true.

Prices are usually up.

When we look over a longer period say 10 years or more, the property prices are usually up. Occasionally due to some crisis, it will dip a bit but except for the overpriced ones, the home prices would recover once the crisis is over. In fact, when we look at the property prices, it is usually above the inflation rate and this is the reason why many would say that if we want to hedge against inflation, property investment is one of the best way.

The need for more homes.

Based on the world population alone, we know more homes are needed. Based on the Malaysian population and even the demographics, more homes are needed. Based on the fact that there are close to 1 million civil servants without a home, more homes are needed. In fact, based on the ever increasing FDIs as well as the economic growth coupled with continuous urbanization, more homes are needed. This is why the home that you buy today will become more valuable in future. By the way, many Gen-Ys or even the millennials LOVE to move out instead of staying with their parents. True? J

Property is a really good investment.

It is important to diversify when we invest. Most of the time, property investment allows us to earn much higher returns than many other types of investments because the home loan is a leverage. The home prices do not increase based on the down-payment that we pay. It increases based on the total home price. This meant that the capital appreciation is based on the overall property price and not how much we put down as down-payment. This is certainly a good investment unless we bought the wrong one. Happy investing!

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Written on 15 Jan 2018

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When we are living much longer… better prepare MORE.

Do you know that in less than 20 years, Malaysia will be an ageing nation? The year that it is projected to happen is as early as 2035. Referring to the chart from
newsletter from Department of Statistics, Malaysia.
 will reveal that the chart looks pretty scary. From a wide bottom half, we can see the top half increasing while the bottom half continues to shrink. What happens when we really have so many elderly retirees amongst us?  We used to have people retiring at 55. These days, working till 60 is pretty common. Okay, working till 93 is really uncommon. What happens if we retire at 55 and we live another 15 years? It meant that we needed to ensure our money could last us for the next 180 months. Now comes the real issue. In future, Malaysians will live much longer. Perhaps the average life expectancy may become 85? This is not even a theory because in countries such as Hong Kong, Japan, Spain, South Korea, France and Switzerland, the women is already living beyond 85 years of age.
Image below. Source article here.

Source: DOSM

Source: DOSM

Humorously, we can do two things. First thing is, everyone should start working earlier. If they would be living for a longer time, the only way to earn more income is by working longer. Maybe I should start getting my daughter to work and earn a fixed salary in a few years’ time. Haha. She’s 5 years old currently.  Second thing is, she will have to pray that her father would not spend all his earnings and leave her and her brother more money so that she will have an easier time in the future. Seriously though, perhaps everyone must really sit back, think hard and spend smart. Investment is vital but by not spending so much, one would have more ‘bullets’ when it comes to investment. A government, even a good one will struggle because the number of people paying taxes would actually be dropping but the expenditure to care for the elderly will increase. This is why the tax net MUST be cast wider and not pressuring a smaller number of tax paying citizens more money instead. Anyway, since it’s another 17 years more to go, there’s still time to build MORE wealth by way of investment. Happy understanding the implications.

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written on 2 Aug 2018

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When we feel we are too poor to buy a property

This article was first published in July 2017 issue of Ivory Living

“I do not have enough money to buy a property today,” my colleague shared during a lunch recently. He continued, “I am looking at many condos but I could not afford them. I am just too poor to buy!”

This colleague works in the finance department and based on his salary is earning more than enough for a decent home, even if not luxury condos or gated and guarded properties. He was also getting married in September 2017 and he said this was the reason why he was looking for a place and yet places that he loved is just too expensive. He shared a few locations and unfortunately, all the locations were already hotspots. In other words, it would be those places where everyone wants to buy and unfortunately for him, many of these prospective buyers may be richer and thus could afford to offer higher. Should we continue to try to compete against all the richer buyers? I shared the following with him.

Asking WHY we buy is always a better question than WHERE to buy. For example, if we want to start a family, then the bigger the home, the better. For this reason alone, consider buying slightly further away where space is cheaper. If we want to have a mall nearby, then extend this ‘nearby’ to 10 minutes away and not ‘right next door.’ If we want it to be near our office, then look at connecting expressways or even nearby a public transport station instead of just within 10 minutes drive.

It need not be forever. Actually, a home today need not be permanent until the day we retire. Many of us would not work with the same company or even the same state until we retire. In fact any survey would reveal that people change jobs a few times before they retire. This is the reason why the decision to buy should must take this into account instead of that PERFECT property which would actually not happen anyway. Most of us are not so rich that we can afford anything that is being launched today.

Renting as a better option? This is a better option if we are renting a place which will allow us to save lots of money for a downpayment. This is not a good option if we are renting a very nice place so that we can enjoy and have very little savings every month. Remember, when we rent way too high, we may never buy in the future. Yet we wonder why are property owners getting richer and why some of them could afford to buy the second, third and then fourth property? Well, they rent out to people who did not buy and keep saving for the next one.

Affordability is key. We have often heard about the banks being more stringent with home loan applications. The truth is, banks love to lend to us. However, it’s not wise to stretch what we could afford to the limit. Making the banks worried means that they will reject our home loan applications. The key here is always affordability. If we can afford a RM600k home, why not think about a home of RM500k instead? Get that property and start saving for the next upgrade.

Generally, properties do not appreciate suddenly. It crawls up slowly during normal times. However, the rise is based on overall property price. Thus if it’s 3 percent per year, it’s 3 percent on the property price. RM400,000 x 3 percent up is still RM12,000 per year or RM1,000 up every month. Not many of us have increments of RM1,000 every month, agree? The only reason why we remain poor was because we refuse to accept a little discomfort today for a more comfortable life tomorrow. Seriously, when we did not use part of our salary for a property, where would the money be going anyway? Hopefully the answer is a positive one instead of a materialistic one. Happy working, saving and buying.

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written for Ivory Living July 2017 Issue.

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When we spend too much and people say we earn too little

We had a very viral piece of news about millennials spending beyond what they were earning.
The stats from BNM shows that 47% of millennials have high credit card debts.
People love negative news and the comments have been non-stop and some have started to debate and brought in politics. Many times, if we like to really debate objectively, bringing in politics solves nothing.

Some commented that this is happening because it is Malaysia and that there are so many countries paying much higher salaries. They said many of these countries have currencies which are many times higher than Malaysia. Thus, when all these happen (salary and currency), then one would not need to overspend.

By the way, I do not think anyone forced anyone to overspend in any country. Persuade, yes. Clever marketing, yes. Making the product look like a must-buy, yes. Making it seem affordable, yes. FORCE by putting a knife on our neck and tell us to buy? No. Let me share my experience after working for the past 23 years and having also those overspending periods during the start of my career.

It’s really not about the currency

Actually, it’s not about the currency, it’s about the living expenses in that country. Many years ago, I signed an offer letter for my ex-staff in Hong Kong and her salary was way higher than mine!  That pay is above RM20,000 after conversion. Yet, she said it’s impossible for her to afford even a 500 sq ft apartment in Hong Kong by herself. In some of the mentioned countries where we will earn way higher, it’s really good to read a little bit deeper into their house prices, their restaurant prices and perhaps even their parking fees too.

If there’s an opportunity, go for it. If there’s none, go find it

Let’s understand that no country is perfect but if we have the desire to work in another country deemed to be way better then where we are today, then by all means go for it. I have many friends who are doing very well overseas. One former colleague started working for a while in Shanghai and now has his own business and happily married with kids there. Another former colleague is now having her own cafe, husband’s a senior management and I could see she travel nearly every week! Just do not keep complaining and start doing something about it.

All the PERHAPS we could PERHAPS have done

If it’s here in Malaysia, just browse through any job sites today and one would realise that there are so many jobs being posted by companies which pays salaries which are above RM20,000 in the private sector. By the way, if we earn RM20,000 we could easily afford a RM1 million home and drive any segment D car. Question is, do we qualify for these jobs. If we do not qualify, then what are we doing about it?

Perhaps we could stay MORE focused on what we do currently and do it better every year? Becoming a senior manager does not happen overnight. Perhaps we could STUDY by part-time for a higher qualification and really stand out versus the peers versus watching never ending TV dramas? Perhaps we could SAVE and learn how to INVEST our money for continuous returns instead of going for expensive vacations and think we deserve it?

When nothing changes with us, then nothing changes for us

If we like to be serious about this issue of someone underpaying us, then could we also answer WHY are there no other employers willing to pay us more? If that’s because only entrepreneurs would become very wealthy, then have we read how they started and start to do something similar and take the risk they took?  If we have done none of these and just keep complaining, then we should realise that when nothing changes with us, then nothing changes for us.

Some important financial stuffs we could do?

The car we drive does NOT reflect our status and that Japanese B-segment car just tells me that you could not afford a better Japanese C / D segment car.  I drive a ‘no status’ car according to many millennials. I am still driving my 11.5 years old Persona 1.6 MANUAL which has never given me any issues until today. 146,000km. Just this choice versus a ‘higher status’ car saved me RM30,000 over 5 years. That’s RM6,000 per year or RM500 per month back into your salary… Quite a wow.

Property is compulsory. Renting means whatever we paid are gone. Buying a small place, renting out 1 or 2 of the rooms meant it’s a much better deal. Years later, suddenly we realise that the property price has appreciated, our salary has risen and we wanted to upgrade. This first property could now be rented out for income or sold for profits. Just do not believe anyone telling you to buy a property and you can get RM100,000 to spend… Sigh… That’s disaster waiting to happen.

Coffee need not be luxury. Not just coffee but also our meals daily. Also our choice of shampoo. Also our choice of TV size. Also our choice of sofa. Many more but I hope we start to realise that if I choose to drink cheaper coffee, that’s over a thousand ringgit saved per year easily. If I save RM5 per meal per day, that’s another RM5,000 plus saved per year. If we choose to buy that unbranded sofa versus that branded sofa, the savings could be another few thousand. By the way, if the sofa could last 5 years, that’s already great. Lasting 10 years still do not make paying many thousands extra a clever choice.

Hope this explains a bit that our life and our money depends on us and really just us. Putting the blame on anyone or any institution is just shifting the need for us to change for the better. Fact is, many are overspending. Question is, what are we going to do about it. Answer is not how someone or some institution can change because even if we assume one day it could change, time is not on our side. Cheers.

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Why we need to understand what we could before we do it

I read something which I learnt many years ago and is still struggling to always apply it today. I think everyone should read this article by the Co-Founder and Managing Director Mark Reijman of
comparehero.com.my

which was published in
thestar.com.my
. It reminds us again on something which has continued to pull more people into more trouble they should have avoided; superiority bias. How many times have we bought something pretty expensive and we convinced ourselves that we could afford it, as long as we are disciplined enough to pay for it over the next few months. Well, what about those who bought something which needed years to pay back? Yes, most of the time and that includes me occasionally too.

What’s the major reason we bought those stuffs? Is it because we love them? Not entirely true because IF there was no way we could ever afford them, whether we love or not, we
still could not afford to buy them
. However, when we may or may not afford them, we tend believe we could instead. Yes, this is why majority of us believe we are above average when compared to everyone else. How possible is that? I recently overspent form overseas vacation because I thought I should just enjoy myself and the excess could be covered by my performance bonus. Guess what, this year I got a lower bonus payout and thus, I suffered on both ends; spent more and got less. Sigh…

Coming back to
 property, that first home.
 How many of us would ask our banker friends who told us we could afford a loan of up to RM500,000 and then we asked what’s the maximum we could ever stretch it to? How many of us would start with a renovation budget of RM100,000 and in the end stretched it a little many times and in the end, it became RM200,000 or more? How many of us would bust our electrical goods and furniture budget simply because instead of the 7-feet sofa, it became 9-feet and instead of a 40 inch LED TV, it became a 50 inch LED TV instead? Haha.

That
more expensive home can be a future upgrade
. A cheaper one allows us to do more in the areas of investment. That renovation that we are about to slog every month to pay for it for the next few years would cease to look amazing after a while. Yes, I know because I have moved homes quite a bit within the past 10 years. Do note that the 50 inch LED TV we paid for just 2 years ago would have dropped in price by half today. Plus, the current one would have even more features too. Yes, sad but true and all these stemming from the fact that we thought we could and thus we should. As for whether we should continue to ‘overestimate’ ourselves, it’s a personal choice. Nope, I do not wish to even start debating about smartphones. Happy believing and acting based on what we believe in.

written on 31 Oct 2016

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When you do not know enough, it’s more gambling than investing.

There is one very important lesson I learnt on Sunday (16th Nov) on the second Penang Bridge. If you did not train enough, do not try and run the FULL Marathon! It’s 42.195km. Three years ago, I completed the half-marathon barely. Gotten the medal of completion and I thought, surely full marathon is similar, just x 2. I totally underestimated it and on Sunday, though I had passed the ‘3km to go sign’, I was in too much pain on my feet to continue. I gave up. In my mind, I regretted for signing up. If only I had signed up for half-marathon instead, I would have returned with a medal of completion. Well, as usual, if only. Sometimes, the even when the mental is ready, the body may not be. This brings us back to the investment world. I did a survey the other day, around 20-odd people, all professionals ranging from 28 to 45 years old. I asked them if they have invested in the stock market before. My expectation was that most of them would not have had any experience. The answer was half actually did but majority NO LONGER invest in the stock market. It meant, as at today, nearly none of them buy any stock in the Bursa Malaysia. Main reason was that they lost money. Some said, it’s so tough to keep looking at the stocks or must watch them everyday.

Personally, I started to buy stocks when I was 23 years old, 2 years after I have started working. I flipped the newspaper, look at the top 10 most active stocks, see which ones I like and buy. After that, nearly every hour I kept track of the stock price movements. Sometimes it went up, sometimes it came down. Honestly, by the end of a few months, I was losing more than winning. Haha. This went on continuously for over 1 year before I realise that perhaps I needed to change my strategy a bit. I started reading a bit more about the stocks, then the business news, then The Edge on and off and soon became familiar with a lot of the happenings in the business world. I came to know about a famous investor called Warren Buffett too. After that, I started to buy only a few stocks, keep them and sell when it goes up and hit my target price or hold them until their business fundamental changes. I realised that I am suddenly better. I think the profits were slightly better than FD. Again, it was so-so.

For the past few years, I love the stocks I buy. They have performed pretty well and even during the recent sell down, the stocks I bought was still up versus the price I paid for them. What has changed? Well, the capital that I invest has changed to bigger. The stocks I bought are also stocks which I have personal knowledge about, either because of work or one that I have been following or they have a strong fundamental; undervalued, cash rich and not many have interest in them. 🙂  Yes, there are still many of these stocks in Bursa Malaysia even today. The issue is that these stocks would only move every time they report a profit. Otherwise, the volume goes to sleep. I no longer track them on daily basis. The surprising thing is, once I take this approach, I am much more careful about the stocks I buy and thus far, returns has been exceptionally good. They say, buy when lots of people sell and sell when way too many people are selling. I would prefer to buy whenever I see value and sell whenever everyone sees the value and pushes the price to a Price Earning Ratio that I personally feel way too high. Then, I sell and buy another stock. Again, good fundamental with low or no debts in a business which is easy to understand. It’s very boring but at this point it works, so will be keeping to this.

To me, stock market is still safer than property market because it’s faster and easier to buy and sell. Thus, your loss may be minimised. With a property, most of the time, the losses may be huge because you may not be able to sell within a short period of time. Plus, stocks allow you to buy based on your affordability while a property may be too expensive for you to invest in more than one. I always encourage my friends to buy stocks but as soon as they ask me how much can they earn within a short period of time, I would advise them against entering the stock market. It meant they have the same mindset as me when I first entered the market and suffered losses previously. Remember, whenever we do not know enough, it’s more gambling than investing. Happy ‘stocking’.

written on 18 Nov 2014

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When you win RM69 million, what would you do?

If you did not read any news about the RM69.6 million jackpot winner and did not receive any Facebook / Whatsapp sharing, this is the news in NST.
Penang businessman wins the RM69.6 million largest jackpot in Malaysia ever.
The winner’s story is really a miraculous one. In fact, this is what he would be doing with the money. Donate some to charitable organisations, pay off his loans (I believe should be ALL his loans) as well as investing in properties in Penang. No idea if it’s within the island or in mainland but then again, RM69,6 million means he can buy both the island and the mainland and well anywhere in Peninsular Malaysia and even Sabah or Sarawak. 🙂  An earlier news about another lottery winner here:
RM2 exchanged for RM26.3 million, after 20 years.
Too bad, I have not won anything from these jackpots despite buying at least 3-4 times PER YEAR. Haha. Work hard… stop dreaming about these.

Just a few days ago, I was discussing with two good friends about what would we be doing if we have won that jackpot instead. One of them talked about buying many kopitiams (restaurants) and sell drinks as well as get rental from the hawker stalls. Those restaurants are ‘cash’ business he said and it’s going to give a return far higher and safer than the stock market.  The second friend disagreed. He said he would use the money to go into the stock market in a big way. Buying so much of a certain company that he becomes a huge shareholder there. He believes blue chips are the way to go. I think both are very valid assessments and too bad for all three of us, we seldom buy lottery tickets. I think they buy even fewer times than my 3 to 4 times per year. Do you know what would be the typical returns like assuming we put RM69.6 million into the bank only as Fixed Deposit and only use the interest and leave the rest there?

Here’s that simple calculation. Assuming we take out RM600,000 so that at least we have some spare change, we would then put in RM69 million into the bank. Fixed Deposit provides 4 percent (Your amount is huge) RM69 million x 4 percent per year is equal to RM2.76 million in interest per year. Divided by 12 months. That’s JUST
RM230,000
 basic salary per month. More than enough to pay for many properties every month and start getting rentals and rentals and rentals. Yeah, it’s true, the rich will become richer unless they gambled it all away. Okay, enough about potential due to our luck or ‘investment’ into these jackpots. . Let’s get back to our work tomorrow. It’s Monday. Quoting my CEO’s words many days back. ‘My life is about hard work and I accept it.’ Haha. Happy buying, whatever it may be that we are buying.

written on 23 Sept 2017

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Actually, where has my money gone to?! (after working for 35 years)

#1 Coffee.
Starbucks Malaysia just opened their 300th store. Here’s that article
Article in themalaysianreserve.com
  I have no idea how many cups do Starbucks Malaysia sell on a daily basis. However, if we take my personal latte consumption number as a calculation, then on a yearly basis, I would have bought 52 cups of lattes or one per week. The rest of the days, I take cheaper coffee, say RM1 extra for Subway white coffee with my Subway sandwich or RM1.80 fora cup of usual mamak restaurant kopi. RM15 x 7 days is too much lah…

Out of all these ‘expensive’ lattes, 10% of this will be in a Starbucks cafe. Rest will be in all the different cafes all over Kuala Lumpur these days. Anyway, if it’s RM15 per cup and 52 cups later, I would have spent RM780 per year. I will not count in the occasional splurge for a slice of cake with my latte. Assuming I am the median for coffee spender, then I would have spent RM7,800 in 10 years!  After working for 35 years, and even assuming Starbucks does not increase the price of their lattes, that’s RM27,300 spent just on ONE latte per week.

#2 Smartphones.
 There are RM499 smartphones with these specs as below.

There are also smartphones with a price tag of RM5,000. The difference? Specs loh. Will the inferior specs kill us? Actually, not really because there are millions of people using these cheaper smartphones with inferior specs which are still alive today. Assuming we just change a phone every 2 years? That’s RM4,500 savings per 2 years or RM2,250 per year and over the year 35 years? That’s RM78,750.  Crazy numbers but real.

#3 Car
   We could get a 4-year old Perodua Axia for just RM300 repayment per month stretched over 7 years. As this is a mature model, maintenance is likely to be low and fuel consumption is definitely low too.

Or we prefer to get that MINIMUM standard Segment B car so that we do not lose face when  our friends and colleagues saw the car we are driving. That’s usually RM70,000 or around RM910 per month for 7 years. This is with a downpayment of RM7,000. Well, we assume fuel consumption and everything else is almost the same, even if it’s not. We look at just RM910 – RM300 per month for a RM610 savings. That’s RM7,320 per year. If we assume, we do not change the car and drive it for 12 years instead, then we will only need to change / buy a car 3 times  before we retire. That’s RM7320 x 7 years x 3.5 in total = RM179,340 during our working lifetime.

We have yet to calculate the cost of meals. Am extremely conservative savings of RM2 per meal is RM6 per day for three meals. That’s RM2,190 per year and RM76,650 of savings until the day we retire. Actually, as soon as we add up these SAVINGS, we will start to see where our money has flowed to. Let’s stop calculating. One more way to ensure the above are okay is to ensure our earnings are rising faster than what we were spending. If that’s the case, then I think we could still spend and do not need to worry too much about where has my money gone to. Happy earning more!

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Where to buy? Still where to buy? You should know lah.

I visited many relatives during this Chinese New Year. My mother’s side would be in Ipoh and my father’s side would be in Sitiawan. My wife said that she is surprised with AEON in Sitiawan. It’s huge. Actually along the same road, we have Tesco and Giant too. Yes, the developments in the Manjung district (Sitiawan included) is really second only to Ipoh. There are many billboards put up by developers all over Ipoh to promote new developments and it’s the same in Sitiawan too. What’s the typical price? Well, my cousin brother bought his home, a semi-detached double storey for less than RM500,000 a few years ago. However, his renovation is like buying an affordable apartment. I have to agree that after the renovation it looks very comfortable, a home I would love to stay for a long time too. Anyway, renovating for own stay in Sitiawan is definitely different from
renovating for investments lah
.

During one of the visits, a relative who’s working in KL asked me this question, ‘Where should I buy if I want to buy in KL?’ I asked, ‘What about the area that you are staying today? The relative answered, ‘I don’t like it. It’s too jammed and the density is too high. I am just staying there because I can reach my office in 15 minutes if I leave earlier.’  I just smiled and said,
‘I think it’s best that you start viewing units in other areas. Talk to agents and evaluate what they tell you about that particular area. Agents in Area 1 will be able to tell you advantages of area 1 while agents in Area 2 can tell you advantages in area 2. You can then decide. When you have shortlisted the final three, we can always have a casual chat about it.’
 The relative said okay and we moved on to other topics.

I do not think the relative would ever come back to discuss about it but I think everyone should note that even for my relatives, my answer remains the same. We should buy
based on what we know
 and not where someone pointed us to buy. My ‘favourite meat’ may just be your ‘poison!’ A case in point? I like Kelana Jaya. It’s near to everything. I could even walk to Paradigm Mall when I stayed there a few years back. Food is easy. Pasar Malam full of things I love to eat and buy. Of course, I know, it’s crazily jammed during peak hours. Once when it rained, it took me over 3 hours to arrive home from my office in KL downtown. Haha. However, a recent conversation with a good friend who had just moved to Kelana Jaya was a little negative. She complained way too much about Kelana Jaya versus the place where she moved from, Kota Kemuning. Well, I like it but I moved away. She moved in but she hated it. This is life, not a movie. So, where to buy? You should know lah. Happy deciding.

written on 1 Jan 2017

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Demand will determine rental and prices. What’s happening in Manjung?

Sitiawan is located within the district of Manjung in Perak. This is the hometown of my father and it’s a place I visit a few times every year. It’s quite a happening place (please do not compared to Kuala Lumpur yeah) and I could feel the  growth every time I am in Manjung. This is especially when compared to my hometown Ipoh as well as
that town with a world title called Taiping. (read here for the title)
  Plus, it is now along the route of the West Coast Expressway (WCE) too and this will mean even more
accessibility and connectivity too. (read more on WCE here)
 Here’s more news about Manjung, Perak.

Article in nst.com.my
   There is a new development with a gross development value (GDV) of RM2 billion in Manjung. The development is called Riverbank Cove and it is situated in the rivermouth of Sungai Tiong overseeing Pangkor Island. The plan is a 52-hectare development with residential and commercial properties, a healthcare centre, a boutique hotel and student accommodation. The developer is Perak based RH Consortium Sdn Bhd.

RH Consortium group chief executive officer Hamzarul Hazmir Hamdan said the Manjung district is surpassing Taiping and Ipoh in terms of rental rate and sale price thanks to all the industries located there.  Manjung is home to TNB Janamanjung, Petronas oil terminal, Sapura Energy fabrication yard, shipbuilding companies, mineral companies who export their products through Lumut port, and Vale, a Brazilian iron ore firm. There is also UniKL with 2,000 students and this number will grow to 5,000 within a few years. Please do read more details in the
Article in nst.com.my

About 10 per cent of the total land size in Riverbank Cove is allocated for green spaces. Courtesy of RH Consortium

I really do think I should drop by and take a few pictures and report the latest update on this project in my next trip to Sitiawan. A check via AirbnB today for a place in Manjung to stay next weekend reveal that there are indeed a good number of choices and a very good number of superhosts too which is a good sign. Image as below:

Will keep everyone updated. Happy visiting Manjung yeah.  Lots to eat, lots to see and lots to do. That’s another article.

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Which are the top 10 countries for property price growth?

In one latest list for the top 10 countries for property price growth, we are seeing many new countries which were nowhere near top 10 in the same period a year ago. Yes, all these countries are still affected by COVID-19 yeah. Usually, when transactions happen during good times, property prices may go up. When transactions happen during bad times, the property prices may come down. Just note that there is no guarantee that when transaction numbers drop, the prices will also drop yeah.

Is Malaysia inside this top 10 countries for property price growth list? Sorry, Malaysian properties are not ranked for any house price growth. Remember the many predictions that our property prices will fall? Well, that did not really happen either but if we get compared to some of the countries below, we are technically nowhere near them too; price growth wise. Take a look at the countries which were not in top 10 in 2019. They have shown a tremendous jump and that may also because their numbers were really low previously. For example, Turkey is number 1 for Q1 2020 and it was 32nd in Q1 2019 and used to have just a 3.5% price growth then.

Specifically, if we look at Australia (the country where many Malaysians love to visit or even stay), the 12-month change is a positive 8.6% for Q1 2020. This was after it being ranked a lowly 56th in Q1 2019 for having a negative 5.1% for price growth previously. I have no idea how people would think about this but to me, I think it also showed again that if that property market is one which many are eyeing, prices should stabilise after a negative year. No one can predict for sure what will happen in Q1 2021. What’s more important is to understand that if it’s property, then it’s a long term play. 12 months is just too short. Cheers mate.

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Which is the oldest country / region in East Asia as at 2020?

Which is the oldest country / region in East Asia as at 2020

To understand the significance of population, read this article:
Population collapse will happen in future
. Now, answer this question. Which country / region is the oldest in East Asia? Japan? Yeah, you have guessed right. The median age for Japan is 48. What this meant is that most people you will meet in Japan is generally as old as 50 years old. The younger ones are far fewer. While I did not notice this in my last trip to Japan, I think when I visit Japan again in a few years’ time, I think I will notice it in the next trip.

Japan’s abandoned homes (Akiya)

By the way, there are an estimated 8 million abandoned homes in rural Japan. The selling price of these homes could be as low as US$500 (RM2062). The local government just want people to move there and repopulate the area.
Here’s that article for reference.
 Many of these abandoned homes were left empty after relatives died or when people moved away. By the way, they are not looking for foreigners yeah. They are looking for Japanese who’s willing to move back to these rural areas.

As for all the other country / region in East Asia, their median age is as below.
Image source: Statista.com

Other selected country and their median age

Singapore – Median Age is 42

Thailand – Median Age is 40

Indonesia – Median Age is 30

Malaysia – Median Age is 29

Info source: worldometers.info

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White Coffee – Keng Nam Coffee Shop, Ipoh

I love white coffee, both ice and hot. Iced white coffee in Keng Nam however, is, well, just barely meets my personal minimum standard for white coffee. It’s ok though as they are famous for their curry/kaya glutinuous rice which you must try. As well as the dry curry mee which is good but not within my top few choices. Oh nearly forgotten to rate. For iced white coffee, 6/10.

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Who says don’t buy Johor’s property market? You should buy!

Note, the above title is NOT from me. It was mentioned by KGV International Property Consultants (
Johor
) Sdn Bhd executive director Samuel Tan in his speech during the Malaysian Property Summit Mid-Year Review 2016. He said, “Who says don’t buy in Johor’s property market? You should buy! There are a lot of good property to buy, it is just a matter of
where to buy, what to buy and at what price.”

He also shared that the Johor property market is inching closer to bottom and is very near to the level of no confidence which meant that in a matter of time, the market will reach the bottom and start to recover.

So, do you agree with his assessment? On a personal note, I have no property in Iskandar yet but I if the right opportunity comes along, why not. So, I think I would have to agree with him at least on the ‘it’s just a matter of where and what to buy and at what price.’ Property market Johor is still consolidating I guess. In Q12016, Johor recorded 9,450 units transacted which is a drop of 24.3percent year on year and 17 percent quarter on quarter. Samuel also shared that some investors seem to believe that the economic corridor has failed. This is not true and in fact property prices are still holding well and
Iskandar Malaysia is successful.

I remain optimistic with the prospect of any area next to a city state which is already one of the most expensive cities in Asia. It does not need any genius to understand why. However, in order to leverage on this advantage, the state government or the master planner would need to keep thinking ahead and block out the typical short-term noises. If
HSR is going to be ready only in 2026
 and building a third bridge has not even been discussed, then it’s time to push ahead on those which has been studied. For example, the Rail Transit System connecting both countries. Perhaps even the Bus Rail Transit. Ferry service can also be considered but it should not be the main connection lah. Happy working on it.

written on 30 July 2016

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Please tell me honestly, who wants property prices to fall?

In a conversation with two younger friends not too long ago, I asked them if they believe property prices would be falling since 2016 is going to be a ‘bad’ year. They said they hope so because if it falls, they can then buy. I asked them, ‘After you buy one unit, do you hope for the prices to go up or down?’ They laughed and replied, ‘Of course going up lah.’ This meant that they will switch their views as soon as they sign on the dotted line.

Actually, the owners of properties would not want to sell lower than the price they purchased, even for those who purchased towards the peak in 2012. The banks that lends them the money would also not want the property prices to go down. It meant that their risks would increase since the loan is no longer backed by an equivalent or higher property value. The government would also not want property prices to fall, what would happen to the confidence level from potential buyers and investors? Do we seriously believe the House Buyers Association (HBA) wants the property prices to fall? Read here:
HBA: Not hoping for prices to come down suddenly

Would the developers want the property prices to fall then? Well, if it falls, I am not sure how many would proceed to build since they may need to accept a lower profit margin compared to their earlier projects. Honestly, not even one stakeholder would want the property prices to fall. In fact if it starts falling continuously, get ready for even lower transactions. It’s a vicious cycle.

The two friends told me that they would do their best to buy one property within 2016. One of them is moving to Shah Alam soon and intends to rent a room first. I told him that he should set a 6 months plan. Save as much as he can plus his earlier savings, buy his first property and rent out two of the bigger rooms. It should cover nearly all his mortgage. Even if he wants to go back to Penang in a few years time, this must be done. By the time he wants to go home, market should have recovered and the prices would have also increased even if based on a conservative 3 percent per year. Working till the day we retire will never give us enough retirement funds. Only through investment that we MAY have enough to retire. Else, get ready to contiue working well beyond 60 like some seniors in a neighbouring country. I wish this young friend all the best.

written on 6 Jan 2016

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Whoa… this is huge. RM8 billion into property market (nope, not in KL)

We think there’s oversupply of property units all over Malaysia. By the way, this is far away from the truth yeah. While it’s true that there are some places where the number of units were just too many and time is needed for it to be sold slowly, most other places are doing just fine. This is especially true for developments targeted at families looking to upgrade or needing more space. This is why if you ask me, I think developments which have a right target market should continue to be built. After all, developments could not happen overnight. Here’s one with a RM8 billion gross development value. Not in Greater KL.

Article in the nst.com.my
  Iskandar Waterfront Holdings (IWH) has teamed up with Metallurgical Corporation of China Ltd to jointly undertake a property project on a 148-acre prime commercial land in Skudai, Johor. The GDV is estimated to be RM8 billion.  in gross development value.

The company said, “The project is one of the largest of its kind to be announced since the start of the Covid-19 pandemic earlier this year.”

This development will be one of the biggest foreign direct investments (FDI) in Iskandar Malaysia and is a confidence booster into the Johor property industry. First phase of the project would be a mixed-use development on a 38-acre land site. Construction is starting in early 2021 and has a estimated GDV of RM2.88 billion. Please do read the full article here.
Article in the nst.com.my

I have not been to JB for many months. I think I will tell my wife that our November cuti-cuti Malaysia could just be to JB. We should continue to support the economy by spending money around Malaysia. After all, everyone needs a holiday, else we would become a dull person.

The biggest advantage which JB has over Greater KL is certainly the distance to Singapore. Truth is, the only thing which is lagging is just more connectivities. I do think the Rail Transit System (RTS) will change a lot of dynamics. It could carry 10,000 people within an hour one way. That’s very impressive to me because this meant that workers could stay in JB versus in Singapore.

It will also lessen the stress of those who chose to stay in JB and had to wake up at 530am to travel to Singapore daily or to come back only after 930pm. With the RTS, they could actually wake up at 730am and still be on time to reach office by 830am. Plus, think of all the potential economic activities which could happen too. Let’s be realistic, majority of Singaporeans do not own a car. Thus, this RTS presents an easier and cheaper mode of transport for a weekend in JB. Happy anticipating.

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Who’s more powerful or nothing built forever?

Remember an earlier article about 1MDB’s huge piece of land in Air Itam Penang which was earmarked for 9,999 units of affordable housing? It was said that the Chief Minister of Penang Lim Guan Eng said that nothing else must be built except for the 9,999 units of affordable housing. Since this is within the island, the maximum price for the units would only be RM400,000. It may not be that viable if the whole land is used only for affordable units. Maybe with a very strict cost control, profits may be obtained but it’s not going to be easy. Full article here:
9,999 units promised? Sure, build only affordable and low cost please.

Today, I read in propertyguru.com.my’s news article that the Chief Minister wants to talk to 1MDB on their plans for that plot of land. There was no mention of whether the Chief Minister would be willing to give some flexibility since in his earlier announcement, he was adamant that nothing beyond affordable units are built there. Perhaps this time, let me speak on behalf of the future owners of these 9,999 affordable units. If I am one of the owners, I would also want the area to a developed one, if possible with some additional comforts like a mall, nice restaurants, schools, if possible hospitals and perhaps even a park for my kids to run and play. For one, I would not feel that amazingly cool if everything that I can see are just rows after rows of flats or low medium cost units. It would also not be good for me unless I intend to only stay in such units forever. For prices to also appreciate meaningfully, that development should be sought after. I am not talking about crazy price growth because with majority of affordable units, it would be unlikely anyway. However, just refer to the places where there are just rows after rows of ONLY flats. Think seriously. Do you only want to buy such places? Yes, this is my view if I am one of the owners of these affordable units.

Thus, my hope is that whatever talk or discussion that the state government may want to have with the private developer, it should always be focussed on the benefit for the people, not just currently but also for the longer term. This is not the time to show who’s more powerful compared to the other. While the state government can choose to bulldoze their views across, the private developer can also choose not to proceed any further, sell the land off and even the new owners would still find it tough to build only affordable units. In the end, actually, no one wins anything. In fact the loser would just be the people who really needed a better home compared to what they have currently but still wanted it within the island and not in mainland. Happy talking to both CM and 1MDB.

written on 19 Nov 2014

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22,500 affordable units to be built in Penang over 10 years

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Why RM40,000 for a car park and not lower?

Someone asked me the other day about my latest car park article which asked that everyone should buy an additional car park if the condo came with just one. In fact the calculation of price per sf should take in an additional RM40,000. Why RM40,000? There are some developers who are selling lower. If the developer is selling at a lower rate, that’s the best for you, quickly buy. Just so that everyone is clear, there are ‘amazing’ developers in Penang who are already selling an additional car park space at RM50,000. I hope they have reduced their crazy price and be more considerate.

I bought my first additional car park at RM10,500. That was in 2006. I told my brother-in-law to quickly buy one because it is going to be worth the extra money. He did not and we know the typical prices today. Most of the time, the extra car park ranges from RM30,000 to RM40,000 for condos in Penang. Yes, some have started selling it higher. Rental ranges from a low RM80 to RM120 that I know of. Assuming it is RM80 per month, this meant that it’s RM960 per year. How much must we have in fixed deposit to earn RM960? At interest rate of 3.75%, we need to have close to RM25,000 in the bank, untouched for 12 months. In other words, it may be better to pay RM25,000 and get to OWN the car park rather than paying a similar amount per year but never getting to own the car park or benefiting from it.

Now, do you see why RM40,000 seems reasonable? In KL, I rented an additional car park in Kelana Puteri for RM160. I needed to save RM51,600 at 3.75 percent interest in the bank for 12 months just to earn this RM160 / month. Yes, the price of the car park should be in relation to the car park rental of a similar condo nearby. If the rental is low, of course the developer would be selling the extra car park at a lower price. In fact if the rental is low, perhaps that’s because there are lots of space outside the condo to park your car. Do not be fooled though. Number of cars will increase, number of car park spaces will reduce. When supply diminishes, the price would go up. If only you had bought that extra car park earlier. Last but not least, you do not lose. In future when you sell that condo, an additional car park carries with it an extra premium which is equivalent to the price you paid if not higher. Oh yeah, my condo in Penang was sold at a much higher price than even units that were much higher because I had TWO car parks while majority of all the units had just one. Happy deciding, even if the decision is not to buy that extra car park.

written on 7 July 2015

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Why are there no ACTION? Cracks on flats my dear authorities..

I think it is important that we take serious matters seriously, way before any untoward incidents happen. Nope, I am not talking about some hill slope incident which has happened recently. I think that has been reported extensively by all medias. Hopefully, there are already more positive changes in enforcements, control and urgent remedial actions. There’s another one which was reported in TheStar metro just a few days ago. I think it deserves more attention from the NGOs (if any) and the authorities.  Full article in
TheStar Metro below:

— start —

RESIDENTS from the Seri Berembang low-cost flats in Port Klang say they are dicing with danger as their 30-year-old homes are in dire need of repair. Blocks A, B and C, which house more than 300 units, were built in 1989 and buyers had been facing various issues ever since.

Residents said the condition of the flats was so poor that the Klang Municipal Council (MPK) never issued its Certificate of Completion and Compliance. A check by
StarMetro
revealed numerous cracks on the buildings, including the walls, staircases, corridors and ceilings.

He said he was from Kampung Seri Berembang and almost all the villagers were relocated to the flats in 1989.
“The condition of the flats was unsatisfactory from day one as there were a lot of cracks and defects even then.

“Initially, the cracks appeared to be minor but over the years they have grown to become a serious problem as they kept reappearing after being patched up, along with new ones,” he said. S. Nagamah said Block C was the worst affected as the cracks on the walls were visible from outside the building.

She said she had been living on the first floor and her flat was in very bad shape due to cracks on the walls outside and inside her unit. “I have repaired the cracks many times but they keep reappearing. And the ceiling looks as if it is on the verge of collapsing. “I can only pray that the building will not collapse,” she said.

A. Balakrishnan, 61, said the residents faced myriad other issues and described the conditions at the flats as unbearable and almost “unlivable.”  He said the Block C building had partially sunk and the residents were worried about their safety. Besides the cracks, Balakrishnan said the building’s roof had been blown away in some sections, which led to numerous leaks appearing.

“The water tanks are also in bad condition due to lack of maintenance,” he said, adding that even the electricity control room was left unlocked. Balakrishnan said the residents had spent a lot of money on repairs and maintenance, but it had not helped much because of the overall condition of the buildings.

Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar said he was informed that the condition of the flats was unsafe for the residents. Noh urged MPK to carry out a thorough assessment of the safety of the buildings so that the extent of the damage could be ascertained.
Full article in TheStar here.

— end —

Another issue that all authorities must take fast actions would be double parking. Seriously, this is the reason why jams happen day in and day out. Just look at some mature neighbourhoods where the lanes were sufficient for one car from each side to pass through. As soon as some cars start to park on one side and NOTHING happens to them, that one car would be followed by one whole row of cars. It’s hard to get people to be civic-minded without some PUSH. Just look at our neighbour down south. Everything is fine because FINES happen almost immediately without fail. I love their enforcement efforts.

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Maintenance is key to secondary high-rise properties

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Why must it be at the bottom? Who decides? Who knows…

It amuses me every time someone asked me about the lowest point for the proprrty market. The bottom point. Even if the speaker is someone very famous, how is he going to know when is the bottom point? Using stats? Well if so, then why need the speaker…  Why not they sell just you the report.  Everyone can just wait till that day and just buy. Then everyone becomes a multi-millionaire after a few years later. Or using historical data? If so, then the best speakers should be statisticians or even historians. By the way, the ones usually asking about the bottom point are also the ones who are still finding more reasons not to buy. Funny but true! Failure to see opportunity beyond the usual always ensure only the few who saw becomes wealthy. Have you read how many people said no to Jack Ma or even KFC’s Colonel Sanders before both became successful? Both definitely did not predict when is the best time to push what they believe. They just do it.

One thing is for sure however. The median property price for Melbourne or Sydney is already very high, even if the Australians are earning in AU$ which is supposed to be 3 times higher than Malaysia. Here’sone earlier article:
Median home prices – Australian cities. (by Corelogic)

Fresh graduates in HongKong is earning 3.5 times more than their friends here in Malaysia.

Fresh Grads and Micro Apartments

Or even the fact that
Singapore’s property prices are dropping
 but is still far off from how much they went up within those few booming years. What about the property capital of the world, London? Well, an earlier article here:
Global property bubble about to pop? Pop means kaboom
 These are property markets which has by farmore foreign participation than Malaysia. They are considered more advanced, nothing less than a decade more advanced I personally think. Draw one line across their property prices over the past 10, 20 and even 30 years and the line goes up. A dip here and there perhaps due to the overall economic situation but it is clear, prices continue going up or at least inching upwards.

As for Malaysia’s average property prices, I seriously do think that the average property prices would have to drop because of the many affordable homes which are being launched, built and delivered across Malaysia, especially within the Greater KL area. The number of units per development can be over 1,500 units and these are mostly below RM400,000.  Average property price in

KL used to be over RM700k
.

Earlier article here:
KL property prices? Still up….. slowly
 Assuming the average prices do drop, then when will it be bottoming? I think those prices offered by
PR1MA,

RUMAWIP
 and even
Rumah Selangorku
 is already a bottom. Anything lower would mean that Malaysia is in an economic crisis with lots of people out of job and no longer just something in trouble with the property market. Let’s hope that this kind of bottom prices do not happen. As for those first-timers still waiting, go for the affordable schemes first. After a few years, can always upgrade.

The waiting game is best played after we own something

Cheers.

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written on 11 July 2017

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Why buy and why not to buy for stocks (shares).

Many people say that this is not the time for property investment. Plus the fact that it requires such a huge downpayment amount, not many could afford property investment. I think we missed the point. If we truly think of property as an investment, then who focus on current?  Why not look back into history for lessons and look into future for potential (simply due to inflation for example). Anyway, since everyone is always comparing the stock market (which is now pretty active) to the property market (which is starting to be active), then let’s look at some of the pros and cons of investing into the stock market. I repeat, investment into the stock market. I did not say buy now, sell few seconds later. That’s BUY.
Here’s that earlier article for reading if you like to know my meaning for investment.

The Pros for stocks.

#1
Buying and Selling can be within the same minute actually.
 Thus, there is no need to wait for the property price which will take weeks, months and years and even then selling it and getting back our money and the profits will take months… In other words, the stock market is highly liquid and when you need money, you can change the stock into cash within days at most.

#2 Diversification can easily be done.
We could own some shares in a bank, in a glove manufacturer, in a high technology company and even a mineral water producer. Entry cost is usually very affordable and RM10,000 may be more than enough to diversify into a few different industries. It’s impossible to diversify easily when it comes to property yeah. Just buying one property would mean many years of savings before we could purchase the next property.

#3 No stamp duty, lawyers fee yeah.
Typical fees to trade stocks? Very low! Take a look at the image: (As low as Rm7 per transaction yeah).
Source: imoney.my

Ready to jump into the stock market? Read the cons too yeah.

The Cons for stocks.

#1 Prices can move VERY FAST (High Volatility). While this is good if the price is up, it’s also bad when it’s coming down. In other words, it may be nerve wrecking for many people especially if the price kept dropping right after we have bought it. It will cause many sleepless nights. However, there are people who prefers to invest in some stable counters for continuous dividends.

#2 Due Diligence would be harder to do.
It is not often that we would drive to the manufacturing plant which shares we bought. However, if we are evaluating a property, it’s possible to drive around the neighbourhood and even to view the actual unit if it’s a secondary property. Many counters do not reach their potential because of the management team. It will be very hard to do due diligence on the management team except from reading their profiles.

Yes, I love the stock market and continue to buy whenever I see opportunities. I think this may not yet be the best time to sell. At the same time, I also trust the unit trust agents and have invested into
Stashaway.com too. Follow me if you like yeah.
 To me every investment would have its pros and cons. We just need to understand them so that our decisions are made objectively and not emotionally. Cheers.

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Why buy if you are staying with your parents?

This morning, I was listening to the radio as usual and the topic of property investment was being discussed. The DJ wanted callers to call in and tell him at what age did they buy their first property and the reason(s) they did. I think this is good because only the ones who has bought a property will call in and their sharing may encourage all other listeners who has yet to own a home to think a little more. I was right, a lady called in and happily shared the following. (Summarised for easy reading)

Caller:  I was 24 when I bought my first property with my husband. Both of us feel that buying a property is a good thing to do.

DJ: Wow, you and your husband are amazing. So, how long did it take for you to save up for the property?

Caller: 1 year only because both of us were savers. We saved RM20,000 for the downpayment because the house was in Klang and it’s typically cheaper.

DJ: So, are you staying there now?

Caller: No, I rented it out because we are still staying with our parents.

DJ: Oh, you are not staying there, then why did you buy?

Caller:  We think of it as an investment for the future.

The next caller said she started to buy a property when she was 21 and the DJ asked why did she buy a property when she was so young! The caller said she started working when she was 16 or 17 and thus managed to save some money for the property. She sold the property a few years ago and is now staying in a better home.

Dear DJs, if you are NOT ready to speak about a certain topic, it’s best not to speak about a certain topic. Property investment is something extremely worthwhile to do and these buyers showed that they are not speculators but are merely good examples for young working professionals too. Negative remarks even if you do it jokingly tells a lot about your understanding about property investment. Personally, I think if we stay with our parents, that’s even more advantageous to buy a property. Give part of the rental to our parents instead or bring them holidays every now and then. This is much more encouraging than spending all the money on something / whatever… Happy understanding.

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written on 21 Dec 2018

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Why buy new property? 8 things to take note.

Which is better? New property or secondary property?

My first property was from the secondary market (Relau, Penang). My second property was from the developer (Sungai Ara, Penang). My 3rd property was from the developer (Kota Kinabalu) and my 4th property was from the secondary market. (Kelana Jaya). By the way, all of these are high-rise units. I have only recently purchased my first landed unit.

Since they are high-rise, it has to be in levels. In terms of levels, first purchase was on level 5, second one was level 5, third one was level 2, fourth one was level 7. Hey… all are low floors! People say anything below 10 floor is considered low floors. Haha. Okay, the highest level I have bought thus far was level 21. That’s out of 42 levels.

This has always been the same case for me even after so many years of property investment experience and I do not think I have any special preference for new property or secondary property. I love both, as long as it meets my requirements.

Today, we look at just the primary properties, both the advantage and the disadvantages. The next article, we will look at the advantages and disadvantages of a secondary property.

Advantages of Primary Property (New / from the developer)

Contemporary.
It is usually based on current trends. Thus, it will look better, nicer and more modern compared to a 10-year old property. Of course, we need to be reminded that new today would still mean old tomorrow. (perhaps 10 years later)
Easier Entry Financially
. Home loans of 90% is quite usual from the banks for the particular property. With the current market, this down-payment of 90% could be even lower depending on project and the developer too.
Promotions.
These days, developers are more focused on selling versus trying to maximise their profits via high prices. We have developers who are more open to offer something extra such as renovation packages, electrical goods and more.
More unit choices
  There are more choices in terms of unit availability. Even if the development is left the final 50 units for example, there are still 50 units versus the usual one unit when it comes to secondary unit. There are more choices whether high-rise or landed ones.
Fixed price.
 Price is fixed versus the many different prices when we buy from the secondary market.  Even if there are price differences with the view, the direction, the layout and other circumstances but generally, the price is more fixed.

Disadvantages of Primary Property (New / from the developer)

Initial furnishing cost.
Usually, when the unit is new, renovation is needed. In fact, the typical number when it comes to renovation is around 20% of the property price. This is not within the property price and thus is not part of the home loan. Thus, buyer will need to prepare this in advance too.
Possibility of abandonment
. While this possibility is not considered high, it is still happening. There are still developers who could not complete the project due to financial difficulties. Sometimes, it may also be a delay and this will mean the buyer will have to continue paying rental while waiting for the new home to be completed.
Not immediately available.
Okay, at this moment, this is not entirely true because there are projects which has been completed and there are still unsold units from the developer. However, generally a buyer would have to wait 3 years in order for the project to be completed. Even then, inspection rectification will take another few months followed by renovation which will take more months.

Conclusion

If you like mature neighbourhoods, it’s no longer possible to buy new landed homes. Perhaps high-rise units may be available.  If you prefer new townships with lots of amenities and super wide internal lanes for example, then new property would be the only way to go. Older neighbourhoods would have narrower internal lanes. As for all the other reasons, look back above. Then decide if this is indeed for you. Else, wait for the secondary property article tomorrow.

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Why buy Penang Property – my personal reasons

15 years in Penang. I worked with 3 different organisations based in Penang. My wife and I got married in Penang. My baby was born in Penang. From just Sunshine departmental store until today when Penang has Queensbay, Gurney Mall and Paragon Mall, Penang has continuously changed and if I may add, for the better. Without any doubt, there are lots of improvements I feel Penang and even Penangites must have for Penang to be the next international city but to be honest, the steps taken are in the right direction. Today, I share three reasons why I invest in Penang properties.

Affordability. Many are laughing. Are you sure? As I have said, this is personal opinion. Affordability is based on the salary that you have versus the property that you buy. Thus far, the range in prices of properties that I have bought ranges from RM123,000 to RM600,000. As you can guess, the cheapest was bought the earliest in my career life. However, based on the number of years that my wife and I have been working, we slowly built up our savings and bought the properties slowly. With sufficient homework done, the properties were able to give sufficient returns and I could move on to the next property.

Accessibility. I feel Penang should have the LRT. Nevertheless, you cannot find many places in the world where the beach and the shopping centre, the national park, a HUGE dam and even the most advanced manufacturing factories exist near / next to each other. You can have a great job but if you need to drive 2 hours to reach the nearest beach or be jammed for 30 minutes just to park your car in a departmental store, it’s not ideal. In Penang, no matter which part you buy, you are close to nature, modernity and of course great food. Accessibility to good jobs, shopping, nature and food. Jam is increasing though.

Potential capital appreciation. Penang is a very small state. In fact, the island itself is not even half the size of Singapore. Land space are thus limited and as urbanisation continues to happen where people from smaller towns finish their education and work in Penang, the need for properties grow. This meant the price too. With the second Penang bridge, the potential for mainland properties to increase in price increases too and this augurs well for the whole Penang because if everyone only want to stay inside the island, imagine what would happen to the price!?

These are the three main reasons why I love Penang properties and will continue to look for opportunities.

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Penang Property Potential

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Why buy property? Better save RM1 million instead

Inflation is real: RM50 today is smaller than yesterday

Surely everyone would have heard of RM50 10 years ago is more than RM50 today and RM50 10 years later will be lesser than RM50 today. Then they used a trolley to show that last time can buy while trolley and now can only buy a small trolley. I am very sure they are right. Question is, the ones who shared all those, are they also doing something about it? At least to counter the effects of inflation?

This is the same as property price. RM500,000 today may just be equivalent to RM300,000 10 years ago, maybe. RM800,000 10 years later may just be RM500,000 today.

Think and decide about that RM500,000 savings

In 2003, I bought my first property, an apartment for RM123,000. I sold it for RM238,000 many years later. I checked and the price is closer to RM300,000 today. When inflation continue to push up prices of everything, the price would continue to rise.

Source: propertyguru.com.my dates 18th October 2022

Could we save instead of buying a property then?

My question is a simple one. Could you save RM200,000 during that 10 years that property prices rose from RM300,000 to RM500,000?

If you could, then do not buy property lah. Save the time, effort. Just save up the money.

It’s the same question to those who say RM1,000,000 in the future is just like RM500,000 today. Could you save RM500,000 from now till that time when RM1,000,000 value drops to RM500,000?

If you could, then forget property investment yeah.

Why need RM500,000 or even RM1,000,000?

Malaysians may live to 75 or even 80. Life expectancy is going higher because of access to better healthcare etc. We retire at 60, assuming we are so healthy and the company wants us to continue until 60. Before 60, because we have a job, we can pay rental if we did not own a property. After 60… when salary stops… we STILL HAVE to pay rental yeah. At 60, do we still want to stay in a room versus a small place instead?

Rental for a small apartment – RM2,000. (At that time, this RM2,000 is more like RM1,200 of today…)

60 to 75 years old is 15 years and 15 years x 12 months is a total of 180 months.

180 months x RM2,000 is RM360,000. By the way, this is just for the rental and this also assumes that your owner is a very nice person and does not increase the rental at all for the next 15 years.

So, if we have RM500,000 then we can spend up to RM140,000 for food. (RM500,000 minus RM360,000 for rental)

How much is RM140,000 for 15 years? That’s RM25 per day… Oops…

No wonder I put RM1,000,000 right? Haha. Yea, with RM1,000,000 then after deducting RM360,000 for rental (which is very very conservative), one would have RM640,000 for food and whatever other things which you like to do.

Perhaps RM80 per day for meals? (by then this RM80 is probably just RM50?) It will thus be RM80 x 365 x 15 years = RM438,000.  If this is deducted from the remaining RM640,000 then we roughly have RM200,000 for us to do some travelling and even some other activities.

RM200,000 is an extra RM1,111 per month. So, save a few months and one can travel to some local destinations and if necessary, do one ASEAN trip every year?

Yes, this is why we need to save up RM1,000,000 if we do not wish to own at least one property.

Happy understanding.

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