Property Investment 101: Home Loan Calculator and Comparison

Which site offer home loan calculator?

There are many sites offering the calculation. I think this one by
loanstreet.com (click here to go there)
 is straightforward and simple to use and refer. Do take a look at below:

I keyed in RM500,000 as the property price. I put in margin of finance as 90%. Of course I would love for it to be even higher. If it’s for my own loan, then the margin will drop to 70% as this is the guideline from Bank Negara Malaysia for anyone buying the 3rd property onwards.

Tenure is 30 years. This is for all the young people out there. I am 46 years old this year and can only quality ofr 24 years for the loan I think. Meanwhile the interest, I put 3.85% which I think should be around this number for now. Today it’s 17th March 2023. In case you are reading this article many months later, so you know why the rate then is different from the rate I entered today.

The Monthly Installment is RM2,109.64

Comparing the overall home loan repayment and other details?

If you see in the image above, you just need to click the “View Interest Rate” button in order to see how are banks compared to one another. It’s very friendly. Just need to note that loanstreet may not necessary have all the banks in the whole Malaysia yeah. They may have a lot of these banks. So, I also tried to click it and found a long list of results. For an easier reference, I just cut and paste two of the major banks in Malaysia.

These two banks include the bank which I applied for my very first credit card; Maybank and the bank which managed to convince me to be their Preferred customer probably over 10 years ago when I was still based in Penang; CIMB. I have been based in the Klang Valley for the last 9 years. Yes, I love Klang Valley a lot. My daughter was born in Penang and my son was born here.

Home Loan Calculator: CIMB vs Maybank?

I have home loans with both these banks. I am a CIMB Preferred customer for many years, so you know which bank I prefer more. Haha. Sorry, no links within this article to sign up anything with CIMB bank yeah. This article is not a sponsored article. Hopefully one of their top management may be interested to engage kopiandproperty.com after they see this informational article.

The Top 2 largest banks in Malaysia returns the below results. Compared side by side, the monthly repayment is the same, the rate they charge is the same but the maximum margin that we will get from CIMB is higher than Maybank. There is one downside though, the Lock-In period for CIMB is 5 years versus Maybank which is 3 years.

Lock-In period is the time which you are not allowed to sell your house or you will be be given a penalty. Thus, the shorter the better if you are not so certain about what you intend to do with the property. Meanwhile if it’s going to be a home sweet home for a long time, then of course a higher financing % is better yeah. Just stretch it for lower repayment.

Here is the home loan calculator site again:
https://loanstreet.com.my/calculator/home-loan-legal-fees-stamp-duty-calculator

Happy using and choosing.

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Property Investment 101:  Home price cannot keep rising non-stop lah

Even in the advanced property markets, prices need a breather

Actually the line which attracted me in the article was the final line. It says, “A public housing unit was resold for a record S$1.5 million (US$1.1 million) in June.” Wow… S$1.5 million for a public housing unit yeah. I checked with my good friend in Singapore and she said this is applicable only to the units in great location and superb views too. Nevertheless, I am very sure her unit would become 7 figures in the future, if not yet for now.

Let’s look at the property market in one advanced country. Yea, the one which was mentioned by a comedian who’s not even a citizen from that country. Haha.

Article in freemalaysiatoday.com
   Morgan Stanley analysts Wilson Ng and Derek Chang wrote in a note on Monday, “We believe the recent moderation in prices was driven by the latest round of property cooling measures in April, and we expect prices to edge up for the rest of the year,”

Price momentum may finally be easing after a buoyant run that saw the city-state’s red-hot property market defy a global slowdown from London to Shanghai. To keep a lid on apartment prices, the government doubled stamp duties for foreign buyers in April to 60% — the highest among major markets. It also raised levies for second-home buyers.

Singapore home prices fell for the first time in three years in the second quarter, suggesting the market is cooling on the back of the latest property curbs.

Singapore’s property frenzy has also reached the market for public homes. An index of Housing & Development Board resale prices reached a new high in the second quarter, rising 1.4% from the previous three months. That’s the 13th straight quarter of gains. Do read here for the full article with more details:
Article in freemalaysiatoday.com

How high can it go to?

No one can tell you the answer to this question. Whether for the property market, for the stock market or even whatever type of investments which we want to do, no one can tell you how high it could go. At the same time, no one can predict for sure how low it can go as well. We buy when we feel the price is right. We know when the price is right by knowing what we actually buy.

Landed properties in Penang island was once upon a time 5 figures. Today, it’s six figures. My first condo in the Klang Valley was RM188,000 and many years later I sold it for RM460,000. That bowl of laksa used to be 10 sen. Today, it’s easily RM6-7. In the future, all these numbers we are talking about would remain just a historical number because it will continue to reach new highs. Just need to remember one major reason is also because the value of money is reducing, so price goes up to compensate for it. It’s also called inflation too. 🙂

All the best in your investments.

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Property Investment 101: More space is not necessarily more usable space

Actual conversation about additional 6ft x 6=70ft space (land with grass)

Ms. N:  My husband says that he likes to do some gardening.

Me: That’s nice. I love gardening too, just that these days, time is not enough.

Ms N: Yea, sometimes when he is busy, his plants will be in a mess.

Me: Just need to be aware that the payment for this gardening hobby is quite big yeah.  Just need to make sure it’s really something your husband really loves.

Ms. N: Oh, really?

Me: Yea, coz that extra patch of grassy land will be priced into the house price. That’s why semi-detached home is definitely more expensive than a terrace home but the actual built-up does not necesarily reflect the same yeah. Sometimes, the double-storey terrace may have a bigger built up than a semi-detached unit or it may be almost the same too. Developer will not give that extra piece of land to you for free yeah. They could actually use the land to build more units too.

Ms. N: Thanks for the reminder. Let me tell him this fact first.

Another week later, Ms. N and her husband viewed a few more units and decided to buy a double-storey terraced unit instead.

Landed home these days and landed home a long time ago are different yeah

A long time ago, there are no townships where the developer has a masterplan. Where the total development would include lakes and parks for the residents, huge and nice playgrounds for the children, club house for residents with 12 badminton courts and more or even wide inner lanes so that when both sides park their cars outside the house, the road is still fully USABLE!

This is why that extra patch of grass does not mean you actually need it because if we need to take a stroll, then the park outside will be way better than walking inside the house. If we need to give children an enjoyable time, then it’s better to go to the clubhouse with an olympic sized swimming pool instead of buying a small pool, pump it up and then put it inside the car porch for the kids. The lifestyle these days are different actually.

For a double storey landed homes of some time ago, the room on the ground floor is usually small and reserved for the maid yeah. These days, the room on the ground floor is usually big, with own bathroom and is definitely aimed at the parents of the couple. All these are changes that we need to be aware of. Sometimes, the room on the ground floor may also be furnished like a home office too. How will the future be changing I am not too sure but it will not be going back to the small room reserved for the maid in the future.

What about in the future then?

In the future, trends may change. I would not want to predict too much. However, if you ask me, a master-planned development will be a very good one to buy into versus just an ad-hoc project unless of course this ad-hoc project happened to be close or nearby a very good master-planned development yeah. As for master-planned development, research more, go online and understand more versus just listening to the sales person yeah. Some may promise a lot but may not be able to deliver all. While there’s no such thing as a guarantee, when we are buying a property of many hundreds of thousands, we may prefer to buy from the ones who have done it before.

Happy deciding.

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Property Investment 101: 7 reasons it does not need to be a new property

A close friend who’s a senior manager in a US MNC asked me about purchasing a property as she wanted to advise her staff who’s looking at new properties and mentioned to her that the prices are beyond his budget. She said her staff showed her many property brochures and the prices and told her that all these properties are priced beyond his salary.

I told my close friend that it does no tneed to be a new property because from what she told me, ther staff seems to be focused on only new properties from the developers. Sometimes, it is also possible that we only look at places very near to our working place. That would also mean that prices may be higher since everyone working nearby would want to stay at the same place too. Moving just 5-10 minutes further away would reveal lower prices. Here are 7 other reasons why it does not necessarily need to be a new property.

#1 – Touch, Feel and See Matters

Okay, when it comes to new properties, one can also touch, feel and see it at the developers’ gallery. Let’s understand that every developer would tell you that this is a show-unit and that it is as close as the actual unit would be when completed. No one is able to hold them accountable even if one were to take a super detailed video. However, if we are buying from the secondary market, there is no need to guess. We can drive around the area, we can touch, feel and see exactly what we are buying too. In other words, what we buy is really what we get.

#2 – Urgent Matters

Assuming one wants to move into the property as quickly as possible, then the secondary market will definitely offer a faster schedule. The unit is ready and will  not take the next few years to complete for new properties. Even for leasehold properties, documentation should just take up to 6 months and one could move into the new property and start enjoying and perhaps even saving on rental since the monthly repayment is now going into an asset.

#3 – Choice Matters

Every year, there are maybe up to 400,000 property transactions. Roughly 20% of these are for new properties and the remaining is for secondary properties. Think logically, which would provide to potential buyers many times more choices? Not to mention variety because usually new properties are built based on trend and it will not offer some types of not-in-trend properties.

For example? Larger sized units. These days, due to the need to cater to the price, the units would become smaller. For high-rise, anything above 1,500 sq ft is not so common. Meanwhile for landed properties, it is more likely to be 18 x70 or 20 x 70 versus 22 x 70 or even 24 x 70. I am speaking only about terrace homes.

#4 – No Renovation Matters

A new unit usually comes empty. Buyer would need to engage renovation people to renovate the place. This will usually be another huge chunk of expenses. People usually say renovation cost is around 20 percent of the property price. Thus, a RM500,000 new property would mean another RM100,000 for renovations. Many may not have this money and may sink deeper into debt when this is the case. Sometimes, we forget that buying new means we also need to include renovation costs too.

#5 – Got Renovation Matters

A secondary unit which has been occupied for some years would most likely have renovations done. It is really possible to gain from these renovations unless you hate the renovations completely. Then again, if you hate the renovations completely, please buy some other unit because tearing down renovations would cost a lot of money too. If we assume we can accept the renovations with minor modifications, then we are saving up to 20 percent ot the new property price. Again, this is a lot of money too.

#6 – Discount Matters

It is common for people to say that with new properties, one would have hefty discounts from developers. Always, always and I repeat always be wary if the discount offered is very high. For example, 20 percent or higher. This means two potential things. The initial price was just too high. Or the developer may cut corners in order to be able to construct the property with a super high discount. UNLESS the development is ready and the developer just wanted to sell off all their units and move on to their next development.

Meanwhile, most of the time, a secondary property within the same area as a newly launched property, you will already see some discount in the price when compared side-by-side. The reason is an emotional one too. That secondary property does not give the new feeling anymore. It may have some stains in the kitchen, some of its paints are peeling etc. There would be some costs to spruce up these shortcomings but the cost is likely to be lower versus the new property’s price which is usually priced for the future as the home will likely be ready only 2-3 years down the road.

#7 – For rental matters

/Some told me they wanted to buy a property because they want to be a landlord. They want to earn rental income. If this is the case, then I wonder why would they buy a new property and then delay this rental income dream for a few years? If it’s truly for rental purpose, find a property whether new ot secondary and find out if renting out is easy. If the whole neighbourhood is easy to rent out, then buying a secondary property meant that one’s journey to earn rental income starts quickly without further delay.

Conclusion

There are many great reasons to buy a new property yeah. Emotionally, you will feel super happy seeing new things. This is why a new smartphone excites you more than your old one. The same thing applies to the new car, the new handbag and new everything. Nope, I never said a new partner. For a partner, find one who would love you and cherish you. It should not change just because you have been married for over 20 years okay.

Another reason for new property is that it will be based on the latest design. For example, broadband ready or even charging stations for electric cars or even very caring to the environment and more. It is not enough for these few lines yeah. I will have to write an article dedicated to just new properties. Personally, my first property is from the secondary market (Relau, Penang), second one was new (Sungai Ara, Penang), third one was from secondary market (Kelana Jaya), fourth one was new (Kota Kinabalu) and I think you get the picture. Over the years, I found that both have their advantages and we just need to buy accordingly.

Last but not least, kopiandproperty.com does not sell any properties for developers. We have been approached many times but the answer remains the same. We provide reviews but any selling is up to the developer and the buyer. Thus, any choice is a good choice as long as it meets the requirement so fthe potential buyer. This is why we are neutral and feels that both new property and secondary properties have their own advantages and disadvantages too. Happy deciding.

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Wow! Organic search 1st page for ‘Property Investment 101’

Thank you to all the readers of kopiandproperty.com  I have an amazing news to share with everyone.

Date: 28th March 2023. kopiandproperty.com is on first page of google search WITHOUT paying. Yes, it’s organic. Out of 111,000,000 results for ‘property investment 101’ google thinks this is one site people should take a look at for this search phrase. As this is dynamic and will change daily, please do search and let me know your result too.

This result will make me work harder. 🙂    An article a day, keeps everyone updated all the way.

I have also done a short video too.

https://kopiandproperty.com/wp-content/uploads/2023/03/VID-20230308-WA0016.mp4

Thank you again.

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Property Investment 101: Nearly 1 in every 10 property is above RM5.75 million?

We are lucky, it’s not in the Klang Valley…

Read on about the title and then the whole article. This news is applicable in London. Just in case there are some foolish comments about we earn ringgit, how to compare to London properties, then statistically speaking, median salary for a Londoner is…  as follows:

Just need to imagine a working adult earning
£
42,000 per YEAR and then look at the property market and whoa… nearly 1 out of 10 properties are
£
100,000 or higher. (now you understand yeah. earn RM buy RM loh, earn
£
 but in
£
 loh.) They are not necessarily having a better time than us even if they earn
£
.

Meanwhile this is the article about the RM5.75 million property

“Research shows almost one in 10 London homes are now worth £1 million (RM5.75 million) or more, but the number of new property millionaires is growing fastest in other parts of the UK.”
Full article in eveningstandard.co.uk here.
 Additional statements from the article includes these two as well. “Estate agents
Savills
 said 342,949 residential properties in the capital sold for £1 million or more at the end of 2022 – up three per cent from the previous year.”  Last but not least this: “the reality across inner London, in particular, is that £1 million will see you limited to a flat, or a terraced home at a push.”

Nope, London FLATS are not the only ones at over a million yeah

Info source:
https://www.todayonline.com/singapore/record-4-room-resale-flats-2143666

This is why this famous property quote will be true somehow, someday in most property markets

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” – Andrew Carnegie, billionaire industrialist.

More often than not, this is driven up slowly or occasionally fast by inflation numbers. In other words, value of money moves down, price moves up to compensate for the lower value of money. This is why property is always seen as a natural hedge against inflation. It’s not the only hedge yeah. It’s a natural one.

Value of money becomes smaller. Companies pay you higher salary so that you can at least maintain your lifestyle of last year. With a higher salary, you can afford higher prices of many things and when everything increases in price, then the cost of building a property increased. Thus, the property price will increase. This is why when everything moves up, property prices would just follow. You have a property, you follow this increase. You do not have a property, just work harder to keep up.

I do not want that RM1 million day to come for 1 out of 10 properties in the Klang Valley yeah

Gradual increase, please. That’s what I really want and hope for. Enough of all these unnecessary speculations in the property market. In fact I do not even want the property price to rise following inflation rate. I hope it rises maybe half the inflation rate? That would ensure it’s going to be gradual and continuous and that’s all I needed and hope for. This will help more Malaysians have a chance to own a property yeah. Happy property hunting. Yes, it’s all about property investment 101.

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Property Investment 101: Property Investment is no longer the best, right?

I do wonder if property investment was ever the best before this?

I love properties because I could touch it. I will always remember vividly the first time ever I bought a property. It’s a small 730 sq ft apartment but I felt so proud. My wife felt so proud too. Haha. Now, whether property investment is the best or not, I have no idea yeah. I am invested in the stock market which I also love. I have been investing into mutual funds for a very long time and is a ‘Gold status member’ (go think which brand).

As for answering the question about the best investment, well, let’s just look at charts.
All are from tradingeconomics.com
There’s Malaysia. Followed by Singapore, Australia, Thailand, Japan and the United Kingdom. Let’s state the most obvious one first. All these property markets have shown an increasing price trend when we stretch it over a long period of time of many years.

Hopefully there are nough numbers for an answer as above

So you see, whether property is the best investment or not is really secondary. If we bought the right property and we held on to it for sufficient time, we could see that our assets will appreciate. That’s what matters because while inflation is making us worried, the house prices is balancing that back.

Will house prices continue to rise like some period within the charts; fast and furious? I personally do not think the prices would rise so fast these days. In fact what I think will happen is that inflation would be one key reason for rising prices.

Happy deciding and don’t think too much about which is the best. If it’s good, then it’s good. Cheers.

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Property Investment 101: Are you sure prices would move upwards?

When asked this same question for too many times

I have been asked this question many times. Maybe someone hope that if they ask me enough times, my answer to them may be a different one? Haha. “How sure am I that the home price will continue rising?” As usual, my answer is just look at all the more advanced countries than Malaysia. Stop thinking of Malaysia as a centre of the world for property. We are not. Not even close to that status. Most of our transactions are from Malaysians. As for answering the question about the potential for home prices to keep rising, let’s not write. Let’s just look at charts after charts.
All are from tradingeconomics.com

There’s Malaysia. Followed by Singapore, Australia, Thailand, Japan and the United Kingdom. Let’s state the most obvious one first. All these property markets have shown an increasing price trend when we stretch it over a long period of time of many years.

Hopefully there are nough numbers for an answer as above

Will house prices rise like most of the charts; fast and furious? I personally do not think the prices would rise so fast these days. In fact what I think will happen is that inflation would be one key reason for rising prices. It does not need to rely on just selling price by the owners. So, if you intend to sell your property, here’s an article for reference:
6 reasons to sell your property

Happy reading!

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Property Investment 101: Property price cannot keep rising lah. I agree.

Before we start today’s blog, here’s a chart from
visualcapitalist.com yeah.
 This is nominal housing price changes. In other words, it is not adjusted for inflation. Yea, it seems scary for me too. Double digits in many countries. Especially in Europe. However there are also negative numbers too. Look at Hong Kong and China or even Australia and New Zealand too.

Source:
https://www.visualcapitalist.com/the-growth-in-house-prices-by-country/

After this, we look at the real housing prices which is already adjusted for inflation. Please refer below. Suddenly the numbers go lower. This tells us something very real yeah. Inflation is one major reason why everything increases in price. This includes its effects onthe price of housing too. For some countries, we see that the drop is even more evident. The reason is because maybe the inflation is even below zero yeah. Just do not try and wish it will be below zero forever. Soon, financial crisis will come yeah. Inflation has to be moderate. Cannot be below negative for many years or even too high for a few years. Both are not good signs.

Source:
https://www.visualcapitalist.com/the-growth-in-house-prices-by-country/

My view is very simple. Please just increase moderately.

We want to earn more money every year. Whether we are working professionals or we run a business, the wish is for every year to be a better year than the year before. As a property owner, I wish that property price will continue to increase every year but I do not want it to increase faster than even the inflation rate. A moderate increase, even 1-2 percent every year is perfectly fine for me. Just continue to do that over the 30 years that I have to pay for the property and it will be just fine for me.

If inflation percentage is higher than the salary increment percentage, then why buy property?

I know some say that if inflation is higher than the property price increase, then there’s no point in buying a property! Haha. Must be some personal finance expert who does not like property investment.

Are you saying that our expenses per year is like the price of a home? Take a look at the below yeah. I assume someone earning RM5,000 per month and spending every single cent every year.

RM5,000 x 12 months = RM60,000 and this someone spends EVERY CENT he earns. Plus an inflation of 3%, that’s RM60,000 x 3% = RM1,800 which is because of inflation. Means every single thing he bought in the whole year are affected by inflation. If he does not receive an increment which is above RM1,800 per year, then he is worse off than the year before.

Now let’s look at the house price and an increase of 1-2% yeah.

RM400,000 home x 1% increase in inflation = RM4,000

RM400,000 home x 2% increase in inflation = RM8,000

I hope everyone understands from this simple calculation why property is the best hedge against inflation yeah. Cheers.

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Property Investment 101: Property price update. Going up or coming down?

The below scenario will not change then, now and forever

Typical Homeowner: I want to sell as high as I could. My property is a very good property.

Typical Homebuyer: Please sell me at a lower price. Market is slow, I want better prices before I buy.

Homeowner with an overpriced property:  If I sell at this price, I will lose money. If I do not sell, then I have to keep paying the monthly mortgage. Property investment is such a bad investment.

Homeowner with an in-demand property:  I prefer to have that extra RM50,000 even if I know if I reduce it by RM50,000 I could sell quickly. Let’s look at some of the offers first.

The right mindset, maybe?

Homeowner need to focus on what they intend to do with the money once they sold the property. If it could be used to generate further returns, then delaying this also mean ‘losses’ too and not just whether the price is higher or lower.

Homebuyer would need to focus on what they really need. By the way, just because the area is loved by all has no meaning to everyone else whose office may not be nearby or that the price is just too high. Paying monthly mortgage means only part of the payment is ‘lost’ to interest. Paying rental means the WHOLE payment is ‘lost’ forever. There are no gains at all.

Now, let’s look at some latest property price update

First up, Sydney in Australia. Seems like prices are climbing again after 13 months.

Source:
https://www.bloomberg.com/news/articles/2023-02-28/sydney-s-property-prices-climb-for-the-first-time-in-13-months

Meanwhile UK house price is falling at fastest rate since 2012.

Source:
https://www.theguardian.com/business/2023/mar/01/uk-house-prices-fall-at-fastest-annual-rate-since-2012

Meanwhile in Malaysia, this is being reported. It seems that prices are rising and yet demand from buyers remain weak? Okay, means what yeah. Means going up or actually coming down? Well, as usual, the situation which I explained above is still happening yeah. Homeowners always want higher prices and potential buyers always want lower prices.

Source:
https://www.nst.com.my/property/2023/03/885445/residential-property-asking-prices-will-rise-buyer-demand-still-weak

As per the article, data analysis showed that home prices being demanded by owners will be rising BUT demand for the properties remains weak. By the way, if we think this means prices are going down, then think again yeah. For certain neighbourhoods, prices will rise and demand will have to surrender to the higher prices being demanded. In some other areas, whether prices rise or fall, demand will still be low and that means prices will remain subdued unless the whole property market rises which will lift all prices. I personally do not see that happening in 2023 but I also hope I am wrong for my sake. Haha.

Happy buying or selling depending on which side you are on. I am on both sides.

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Property Investment 101: Property price will drop when we have many affordable properties, right?

That question on property price

“Charles, we have too many affordable apartments being built today. This will soon collapse the market.” I still remember this statement from a friend (not a good friend, not a close friend, just a friend) many years ago. Well it was before Covid’s arrival. It was at a time when every developer were telling the world that their affordable project is the best affordable one. Somehow, it scared my friend who thought that property price will collapse when there are too many affordable apartments being built.

Dilemma for me too

By the way, I am an owner. I hope prices continue rising. I am also a potential buyer. I also hope prices would drop so that I could buy more. What a dilemma, right? This is why I smile when property developers issue press releases saying that property prices will rise and I also smile when there are good opportunities appearing because of the current market circumstances. You see, I love to smile. Haha. If only property investment could take the easy way; following the inflation. If inflation stays flat, property price should stay flat and so on. Somehow, some owners want property prices to rise as if there’s no tomorrow. Somehow some potential buyers hope property prices would drop to a level they think they want to buy. When asked what’s the price they want to buy, most do not have an answer…

What if hundreds of thousands of affordable homes were built?

Anyway, there are ALWAYS announcements about many thousands of new affordable homes or even hundreds of thousands of new affordable units when we stretch over a few years which will be built here in the Klang Valley. We have a huge population growth due to migration from smaller towns here in Malaysia. Let’s see whether the prices will be affected should there be hundreds or thousands or even tens of thousands of units being built yeah. Just 4 easy questions in fact.

#1 Are the target markets the same?

For product A to impact product B’s pricing, then product A would have to appeal to buyers of Product B as well. Else, no one who loves Product B would even look at Product A and vice-versa. I have never seen anyone looking to buy a new Volvo XC40 be affected by the pricing of a Perodua Ativa. At the same time, a buyer of Perodua Ativa is not going to be impacted too much no matter what special gift or discount which a Volvo XC40 would be providing because one Volvo XC40 is equivalent to around 7 Perodua Ativas!

When there is competition, then there will be a pressure on pricing. Coming back to property. There are certainly differences between these simple and new flats versus the many apartments priced from RM400k and has facilities. There’s also a difference between condominiums in popular areas versus further away ones. They are unlikely to be appeal to the same group of buyers.

#2 Are there really people buying properties today? I thought it’s already super quiet!

Let’s not debate on this one. Some would say it’s very bad (those who has yet to buy and does not wish to buy). Some would say that it’s super good and better buy fast. (Those with REN tags trying to sell you a property). National Property Information Centre (NAPIC) has the below latest H1 2022 total transactions numbers.

Source:
https://napic.jpph.gov.my/portal

Just first half of the year, we had 116,178 residential property transactions. Period.

#3 Are there still people renting? (This means there is demand for property lah)

This one quite easy to see yeah. Ask all your new colleagues who has just joined if they are renting or paying mortgage. Many of them are renting. Most of the time, when people come to the Klang Valley to work, they do not immediately buy a place. They rent first. Whether they buy a place few years down the road or not, they will still need a place to stay and this is real demand for property.

Oh yeah, courtesy reminder to all who are renting. Assuming one is renting just one room for RM600 per month, that’s RM7,200 per year or RM72,000 for 10 years. RM72,000 is enough for 10% downpayment for any property priced all the way to RM720,000.

Meanwhile, if one were to rent one whole unit to have privacy, they may be paying RM1,500 for a small unit. That’s RM18,000 per year or RM180,000 per 10 years. This amount ‘lost’ to the homeowner could have been a downpayment for a new home and also buy a new Perodua / Proton with cash. Yeah, that’s why I am against renting unless one really earns way above everyone else.

#4 What about short-term demand?

Before Covid-19 arrived, Malaysia used to be visited by 26 million visitors per year. (Source:
https://www.tourism.gov.my/files/uploads/annual_report_2019.pdf
). Meanwhile in 2021, we received just 135,000. Yeah, that’s in thousand, not in millions anymore. Would tourists be visiting Malaysia again? You can say no, that’s your opinion. I would say by 2023, we will be back to 2019 levels and we will be breaking that number in 2024 easily unless of course the world goes into a recession and no one bothers to travel and prefers to stay home and watch Netflix…

Source:
https://www.statista.com

Take action regardless of what you believe

We could choose to continue renting if we are earning way above the rental we are paying. Everything would still be fine. We could choose to pay a mortgage and suffer a bit while our salary slowly builds up and at the same time, the property price moves up simply because of inflation effect. Do we want to see how much property price could rise if it is going up by just 1% every year? Simple calculation as below:

RM500,000 property x 1% increase = RM5,000 per year and this is roughly RM417 per month; rising.

If we are an assistant manager earning roughly RM5,000 per month and we got a typical 5% increment every year, that’s RM5,000 x 5% = RM250 extra per month.

If we have a property and has a job, then we are getting roughly RM417 + RM250 = RM667 per year; rising.

Just in case everyone wants to see if 1% is a valid number? Here’s the property price trend for Malaysia. We can see that except for that 1997/98 period, every year has been generally positive. So, 1% on average is a very probable number.

Source:
https://tradingeconomics.com/

Happy Deciding.  We do not need property investment to be rich yeah.  We just need property investment so that we do not become poor from giving our money to homeowners who become rich from our rental.

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Property Investment 101: Property prices falling everywhere. What’s the next action to take?

Advanced property market to provide a clue?

Malaysia property market is a small one. Ours is also not so advanced. People still think anywhere above 20km away from the city centre as VERY FAR. Haha. I always encourage everyone to take a look at the definition of suburbs in some advanced countries to understand that even 50km is not considered as ‘impossible’ and meanwhile 30km from the city centre is considered normal.

Since everyone define some property markets as more advanced, we should look to them for some clues? Now, since advanced property market are showing falling property prices, would this also affect the Malaysia property market? News here for reading and understanding. Here’s that article talking about bad news; property prices falling. Just remember to note that depending on how they measure, the results could be different.

Article in theguardian.com
 As per the article, here are the numbers. Houses in Stockholm has fallen 20 percent from their peak. Sydney prices are down by almost 14%. San Francisco is down by 15% and Auckland by almost 22%. Meanwhile Toronto has falled by 16%. Closer to us, Seoul has reported apartment prices which are down 24% since October 2021.

One major reason is because of the highest interest rate which has dampened buying interest. For example, the Bank of England has raised rates from 0.1% in late 2021 to 4% today. Meanwhole US average long-term mortgage rates are now above 6%. A year ago they were below 4%. Do read the full article here:
Article in theguardian.com

Malaysia property market’s price movement?

What about Malaysia’s property market? It’s an interesting trend to be frank. It looks like it’s falling but actually it’s not. Some say not yet. Whatever lah, if it’s above the zero line, it means it is still increasing and not falling yet. The property price increase is however on a downtrend yeah. From a double digit increase in 2011, 2012 and 2013, it has started to fall and fall and kept falling until it’s only super minimal at 0.6%. In other words, the property price is not falling

Your own conclusion?

If we bought a property because the priced increase 10 percent last year, we may have to be very careful for sudden price movement downwards. However, if we did not buy because the property price decreased 10 percent, we may have to be ready for potential loss in opportunity too. Property price movement is secondary because as long as there is inflation, value of money becomes smaller and prices move up naturally.

The property we buy is the primary reason to buy or not to buy. Choose a property with the qualities we want, we like and we need. Chances are someone is willing to buy it from us in the future for the same reasons. Else, we could stay in it for as long as want, save on the rental and make that home a home sweet home with our loved ones. Happy knowing.

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Property Investment 101: Property related charts by Rahim & Co

A good friend of mine has just left Rahim & Co and joined another organisation. However, just before he left, he sent me a comprehensive report from Rahim & Co which I think i want to share with more people. Thus, I have looked through them and chosen some relevant charts for us to understand the property market a little better versus just listening to our FB friends who may be speaking from what they heard in their FB pages. Haha. Below are all charts based on actual numbers.

How’s the economy? Are people able to find and keep jobs?

It’s a positive one for both actually. The economy is growing every quarter and the unemployment is also dropping every quarter to except if we compare to the years prior to emergence of Covid-19 and all the Movement Control Order (MCO)

Are property prices dropping?

Please note that house price index is based on actual transactions yeah. If someone wanted to sell at a higher price but he / she did not get a buyer who completed the transaction, then this is not included into the house price index yeah. If we use 2018 as the starting point, it is clear that prices on average is inching upwards except for Kuala Lumpur and Penang which has remained almost similar to 2018. The answer to whether property prices are dropping is a firm No. In other words, there are more transactions with a higher price versus a lower price than what the seller paid for earlier.

Impaired Loans Ratio would tell us about the financial health of the home loan borrowers

1.2% for impaired loan is very low, in case you like to compare this to the world. 1.2% means only 1.2% out of 100% of the loan is impared. Impaired means there is a potential for it to turn into bad debts. (may never be repaid)

Actual Transaction Numbers would show what’s really happening on the ground

The below is a comparison between 1H2021 to 1H2022. We can start with the Northern Region In Penang, tt’s a significant rise of close to 40 percent more transactions when 1H2022 is compared to 1H2021. In Kuala Lumpur it’s close to 30 percent while in Selangor, it’s 16 percent up. Johor is showing a 20 percent increase while both Sabah and Sarawak are showing very positive numbers too.

We will go into more details on some selected states after this. Happy understanding and we thank Rahim & Co for such a detailed report.

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Property Investment 101: Renting vs Buying. Dilemma, right?

I am asked this question at least once every 6 months

Latest was just today. 24th March 2023. At 13:55.

Do you also have these three questions?

How do I know whether it is a good investment? If you ask a real estate agent, I think the answer depends on what the real estate agent is selling. Surely the real estate agent would sell a property which is a good investment, right?  If you were to ask a property developer, the answer is of course the property which they are currently developing. If it’s not a good investment, why would they want to develop it and face the possibility of not able to finish selling the development?

If you ask me… who’s not an agent or affiliated to any developer, my brief answer is just don’t buy the wrong one. Frankly, most homes in most countries would experience an increase in price. If it follows the rate of inflation and the rate is 2% per year, the property price would rise by a whopping 20% after 10 years and we are not even calculating the accumulated increase. In other words, RM500,000 property would become RM600,000 10 years later if it follows just inflation rate. If you like to say RM100,000 in 10 years is not a lot of money, you may be right. There are many of my friends who could just save, save and save RM100,000 every 10 years. If you could also do the same, then save yeah. Don’t buy. 😛

Property holding power need to be strong

Quite true. Just need to remember that if the bank approved your home loan, they think your holding power is strong. If they believe you, then you should also believe yourself. All the banks would never approve any home loan which they think the borrower will run away after some time. I think they are as worried as the borrower. As for the holding power, usually it’s because of the monthly salary. In other words, if you believe you can hold on to your job, I think you can keep paying for the property. Else, if you lose your job, could you find another job? If the answer is no, then the holding power is not there. If the answer is yes, then yes you should have enough holding power to buy that property.

Renting vs Buying?

As a landlord, I want my tenant to keep paying me rental. If they have paid me rental for the past 30 years and they want to continue staying for another 30 years, I will tell them to continue paying the rental for the next 30 years. There is just no way that I could allow them to stay there for free just because they have paid me rental for 30 years yeah. It’s my home and I deserve to continue getting rental.

If you buy, then after paying it for 30 years, you can stay there for free for the next 30 years. Some would now tell me that if they buy, they will pay RM2,500 as home loan but if they rent, it’s just RM1,600. I think it’s best to take out the calculator and count RM2,500 x number of months and number of years and then you get the answer. As for RM1,600, just forecast how long our life expectancy is, then use that to get the answer to how much rental we will have to pay. Meanwhile at the end of the RM2,500 monthly payment, the property is yours and you could sell it for $$$. 🙂

Landed versus high-rise?

I have answered this too many times. I let NAPIC show you using a photo instead. Take a look at the image below and let me know if only the landed property would increase in price or actually all types of properties would increase in price? Actually it’s just a matter of who’s the top. That’s landed terrace. Who’s second? That’s the high-rise. Hope you have gotten your answer yeah.

Happy deciding my dear friend. Please do not ask me which property to buy. I have no answer for you. Just buy the one you feel comfortable to stay in.

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Property Investment 101: 6 reasons to sell your property

Not the best time to sell the property. Oh really?

Many friends love to ask if they should sell their property now? My answer has always been “do you have a reason to sell your property now?” They would then give some reasons such as, ‘if can sell at a good price, why not?’ Well, if can get a good price, then what’s stopping them to sell, right?

I am serious. If your reason to sell your property now is because you want to put that money into the bank, then maybe think thrice. FD rate is lower than even the inflation rate. Plus the fact that if you sell at a lower price by just RM10,000 that’s already the returns from a FD of RM400,000!

If the market is going to get worse very soon, it may be a little late to only think of selling the property now. Selling a property usually takes months to complete.

For this article we assume you are an owner who could still hold on or you could choose to sell and that selling is just an option versus someone who’s struggling to repay the mortgage every month. If you want to sell your property faster,
Here are 6 tips to sell your properties faster
. If you just need 6 reasons why you may want to sell your property now, then please do read on.

#1 – You really hate that property that you currently own.

Every time you see that property, you feel like vomitting. It’s just so unbearable. You do not wish to drive there because somehow you hate the design, hate the neighbourhood, had a bad experience renting that home out or somehow it has bad fengshui and you could feel something is wrong with it. If this is the reason, wait no more. Quickly engage a real estate negotiator (REN) and let someone else own that home and you take their money instead.

#2 – You want to invest the money into some other investments

If you found another investment which could yield a higher return versus this property which is not generating anything, better sell quickly. Depending on which book you read, any property which is not giving any positive returns is a liability and you should just sell it and move on. Anyway, if this is the advice, I think at least half of all the properties bought a just a few years ago would never have positive rental yields…

#3 You need the money to do whatever you like to do

Let’s just understand that sometimes, we just need the money to do something other than investing. It could be anything and it does not even need to be another investment. Maybe your wife and you want to visit that place you first met. However the flights are expensive, hotels are expensive and everything is expensive. Sell the home, take the money and you could use it for any purpose you like. As long as you need the money now and could not wait any longer, then by all means, sell your property now please. There is no EPF withdrawal yeah. Latest news here:
EPF as collateral for loan. No withdrawal

#4 Many prominent people said negative rental returns are bad

Your monthly mortgage is RM1,500. Your rental is meanwhile just RM1,300 and once you add up the maintenance fee, then it’s a negative of RM400 every month that you rented it out. If you sell, then you stop losing RM400 x 12 months which will come to RM4,800 per year. So, if you believe negative returns are bad, then take action; sell your property now. (I do not agree to these prominent people yeah. It’s not such a direct comparison)

Your mortgage includes both the principal and the payment yeah. If you ask me, as long as the rental can cover the interest, you are technically getting someone to pay the principal for you every month!

#5 No Real Property Gains Tax (RPGT)!

Everyone can sell ONE property which can be exempted from the real property gains tax (RPGT). Means every single sen you gained is yours. Nothing to the government. Zero. Nothing. That’s a lot of money too. Bought RM300,000. Sold RM500,000. Gross profit of RM200,000 and if you get hit by a 10% RPGT, that’s RM20,000! Yeah, it’s actually enough for a family of 4 to travel overseas (next year lah, not so soon).

#6 You have a really good offer.

It’s tough to get any offer close to the market price in the current market. So, if you have a good offer which is not just on the market price but maybe even above it, it may just be the time to take that offer. Just remember to check what’s the actual market transacted prices lah.
Buy with reference to transacted price is possible
 Do not just listen to your friends or look at market listings which does not mean it will ever get transacted.

Conclusion

So, if one of these 6 reasons happens to be one of your reasons, then yeah perhaps it’s time to sell your property now. Remember to get a good real estate negotiator (REN) yeah. They will not just make things easier but may even teach you what to do prior to selling your home which will make it sell faster too. Oh yeah, besides these 6 reasons, if you just like many, many, many more reason,
here’s a google search result for ‘the best time to sell your property.”

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Property Investment 101: Selling my property by myself or using a real estate negotiator?

I love properties. That’s why I focus on properties versus spending unnecessary time on the admin part, opening the door for viewing part, fixing issues of my tenant part and many other parts. I think RENs have played an important part in my property investment thus far and I am happy to write this article to support them.

Just 8 reasons why I prefer to use real estate negotiators

#1 – Good ones are really good

I was trying to sell a condo and was unable to sell it for RM440,000. Then one said, … SPEND MONEY!

He said, ‘fresh coat of paint would help.’ Well, he’s a professional. I am just a home seller. I followed his advice and voila… he sold the SAME condo with a fresh coat of paint for RM460,000. No idea how he did it but I am super happy to pay him the commission. Extra RM20,000 is worth every sen paid!

#2 – They have wider connection lah

Sometimes, we think we can save money by doing it by ourselves. I wanted to sell my condo in Sabah. I engaged a real estate negotiator and gave him exclusivity. He managed to sell my property in 2 weeks. They have their own connections and this is by far better than us trying to put on our FB lah, trying some website and skimping on REN commission fees etc. Waiting to sell for 6 months is a cost yeah. Better get the money faster to do something productive instead.

#3 They offer good advice and they make sure things happen

My Penang REN once told me that it would fetch a better premium with fully furnished condo. That was long time ago when people prefers to rent empty units. Well, he’s a professional. So, I followed his advice and has never had any issues in renting out the unit and has always been able to get amazing tenants too. Do you have any tenant who is paying rental on 1st of the month every month? I have. With the help from my amazing Penang REN.

#4 They are my best assistants and has the expertise

Penang case. It was 11pm at night. My tenant called and said the rain was heavy and one of the rooms was wet due to rain water seeping in. I told my real estate agent and he called the tenant and taught her what to do. the next day, he went to the unit with a contractor and helped to seal up the loose rubber seal or whatever. My tenant continued to be happy and always pay my rental on time. My real estate agent deserves the commission whether he is selling or renting out my units.

#5 They are legit lah

When you are dealing with a REN, they have a tag. They have an agency behind them. These are people who wants to make real estate industry their industry yeah. We just want to sell / rent our property, get someone legit to do it lah. Saving on commission is really not worth all the potential trouble lah. Okay, are there bad RENs? Of course. However, if someone wants to earn my respect and money and wants to be a real estate negotiator, then do it properly yeah. Stop telling me any other stories.

#6 I save time and effort

When there’s any issue with the condos (yes… I love condos), I just call my REN and he would attend to it. When there are any viewings etc, I do not even need to be there. I believe my REN is able to filter out the bad ones and only accept the qualified ones. Thus far,this has always been the case and I am happy to also say that if we want their best service, just give them exclusivity lah. My REN even ensures my units are cleaned and be ready for the next tenant too.

#7 They are humans, like us.

After I moved to the Greater KL, my friend asked me how am I going to sell my properties in Penang. Would I be using any free online advertisements? I told him that I am using the services of a REN. She remarked that if I do that, I would need to pay agent’s fee. I replied gladly, yes if they sell for me, I would pay selling fee.

I can write very well but if someone asked me to write to them for free, that’s the end of our friendship. (unless they are very good friends).

Be good to people. They will be good to us too.

#8 This is all about money!

If you treat your RENs well, they would think of you first when there are good opportunities. Some would simply offer you anything but the good ones especially those who has helped you over the years, they will give you just the good ones because they want to continue to have this relationship with you. This is why the right REN is all about money. Good money for him / her and amazing money related opportunities for you.

Happy deciding.

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Property Investment 101: It’s the tenant’s market. It’s also the buyer’s market.

I am desperate for tenant

If I have a home which I am not staying and yet I am paying, I would be desperately looking for a tenant to rent it from me. You see, every month that I could not rent it out, I would have to pay for it. If I could rent it out, even if I could not cover my monthly repayment, at least I do not have to bear the full repayment by myself. I am very sure there are homeowners who are in this situation.

I am desperate to find a home

If I do not find a place to stay, I would have to sleep under the bridge! If I sleep under the bridge, I am scared the water may swept me away! I do not want to sleep on the road because people may not see me and accidentally kicked me. I do not want to sleep in the public park because the grass will always be wet in the morning. I must quickly find a place to stay. No matter what the homeowner charges me, I will have to pay.

Which is more likely to happen?

Between the two desperate situations, which one is more likely to happen? Of course it is the one where the home owner is desperate for tenant. Right? Surely not many tenant would be so desperate that they are willing to pay any rental being asked by the homeowner. Just need to remember that on one side is someone who actually owns the unit and on the other side is someone who does not own any unit. Who would have the bargaining power in the long term? I did not say it’s the homeowner yeah. You decide yeah.

 A foolish homeowner when I was younger

I wanted to rent out my apartment of 730 sq ft because I have started paying for my 1,258 sq ft condo. I could not afford to pay for two at the same time. Typical rental is RM550 per month at that time but I wanted to rent it out at RM650 because my unit was fully furnished. Everything a household should have, it is there in my apartment unit. Even the bed frames and built in cabinets etc. One potential couple came to view the unit and in front of the agent said to me. “You know your rental of RM650 is very high. I have seen so many units at just RM500 or RM550.”

I did not look at them, I look at the agent who brought them. “It’s best that you bring them to the cheapest unit yeah. Really no point to bring them to view my RM650 unit if they have viewed cheaper units earlier.” The agent smile sheepishly. The couple left and the very next day, the agent called and said they would like to negotiate to RM600 per month. I said, okay. RM600 then. Since I was SO DESPERATE.

I just like to point out this fact. Most homeowners would love to rent out their unit as soon as possible. However, there is a reason why the bank approved their home loan for the second unit yeah. It meant they could afford to pay for both units at the same time. There is really no need to ‘offend’ any homeowner so openly. They may prefer to rent out at the price you asked BUT they will rent to others and not you.

This is why no matter what happens a homeowner is known as a LANDLORD

By the way, a tenant can find a cheaper place. In a market where the supply is many and the demand is few, the tenants can demand. In fact they can move if the homeowner dares to increase their rental. For all the tenants who believe they have the upperhand, I think they are right. Especially in some places where the number of units on offer is too many. Especially just after the Covid-19 when people have yet to move back into major cities in big numbers.

Do try going into any malls today. Do try driving during peak hours today. Do try going to the KLIA today. Do try looking at the passengers in the LRTs today. Happy understanding and all the best in always getting low rentals forever and paying for it forever, no matter how low it may be. It just could not be free…

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Property Investment 101: When rates rise, buying falls. Financial logic, really.

If Bank Negara Malaysia (BNM) increase the interest rate, would you still be buying a property?

Well, the answer depends. If you found a neighbour selling their home which is right next to your parents’ home and you want to be close to them because it’s now time to take care of them (since they have taken care of us for a very long time), then you would buy even if BNM increases the rates by 1 percent. Before you ask, but how much is this 1 percent increase? What if I could not afford this increase then? The calculation is right at the end of this article. In the mean time, take a look at what fluctuation in rate would do to the property transactions in the largest economy in the world. As at 2023, it is definitely still the United States yeah.

Article in nst.com.my
   Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate slid back to 6.60% from 6.73% last week. The average rate a year ago was 4.16%.

The average long-term rate hit 7.08% in the fall — a two-decade high — as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and quash persistent, four-decade high inflation.

The big rise in mortgage rates during the past year has roughed up the housing market, with sales of existing homes falling for 12 straight months to the slowest pace in more than a dozen years. January’s sales cratered by nearly 37% from a year earlier, the National Association of Realtors reported last month.

For all of 2022, NAR reported last month that existing U.S. home sales fell 17.8% from 2021, the weakest year for home sales since 2014 and the biggest annual decline since the housing crisis began in 2008.

Higher rates can add hundreds of a dollars a month in costs for homebuyers, on top of already high home prices. Please do read the full article here:
Article in nst.com.my

What’s the increase in amount for a 1% increase in rate?

Here’s the calculation. We assume this property would be in a smaller city / town in Malaysia and not within Kuala Lumpur yeah. We assume the property is RM500,000 and all the below. 30-year loan period. Downpayment of 10% and an interest rate of 4.5% rising to 5.5%. The difference between the 1% increase in rate is RM274. 97 per month. Is this amount a lot? Actually, if I did not stretch my home loan to the limit, I think this amount is still acceptable and that I would still be able to afford it. Do take a look at below.

Happy understanding. Do not stretch to your limit please. There is always a potential for rates to rise.

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Property Investment 101: When there’s a crisis, home prices will drop

What will happen to home prices when there’s a financial crisis?

When a home owner is worried about potential financial crisis, he is just worried. He does not suddenly decide to sell his property at a super huge discount unless of course the financial crisis has affected his financial standing. For example, loss of income or even a sudden need for cash. This is why not every property is up for sale even during a financial crisis. The good areas, with stable owners, we will find a couple of units up for sale and for these, it’s usually snapped up pretty quickly by people not affected by the financial crisis.

Take a look at what happened in 2008 mortgage crisis (no prizes for guessing which country caused this). Chart from
visualcapitalist.com
. Just need to look at the never ending rise year after year from the 1990s until that mortgage crisis. Please remember, there’s no such thing as there’s no limit to price increase. Then, it was negative from 2008 to probably 2011 / 2012. The home price rise has then be pretty stable versus the trend in the 90s. HOWEVER, it has now risen higher than just before the 2008 mortgage crisis yeah. I have no idea about what happens next. Your guess is as good as mine.

Meanwhile, pre-crisis (this time it’s Covid) versus post-Covid, this is the current number. Briefly, median home prices have risen by around 42 percent within 3 years.

Property Investment must not be a gamble yeah

What about the situation in Malaysia then? Actually, prices did drop during the crisis yeah.  Take a closer look. Look for the 0.00% line.  That’s the line showing positive or negative price growth every year. It’s very clear that it was WAY BELOW ZERO in the 1997 / 1998 ASEAN Financial Crisis. Double digits even. Ever since then,it did see some higher than usual growth during the 2011 – 2013 period but after that, things have gotten quiet. Growing, yes but at a steady pace yeah.

Image source:
https://tradingeconomics.com/malaysia/house-price-index-yoy

Are you waiting for a crisis? Or are you just waiting for it to slowly rise?

A good friend in Penang told me when I was buying my 3rd property that very soon the crisis will come as house prices would become too high and unsustainable. He’s still staying at his same home. His salary is already in the T20 bracket a long time ago, so he will be just fine with or without any investments as long as he does not spend it all. He drives a typical car below RM100k despite being able to drive one twice the price or more. If you are also like him and you have the same thoughts, that’s perfectly fine!

If you have the same thoughts as him but does not earn his kind of income, start thinking about investments yeah. Crisis or no crisis, property or non-property, investments are the only way to grow our money faster than every month (salary) or every year (Fixed Deposit). Happy deciding. Just don’t wait too long and spend it all on cars… holidays… phones… and vacations too.

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Property Investment 2019 – What should we focus on?

If you are based in Melaka, hope to see you this Sunday (17th February 2019) . If you have thoughts about
Melaka property investment, hope to see you.
 If you just love Melaka and wants to enjoy a nice CNY event, please drop by yeah. Of course, if you happened to know Charles Tan and just wants to say Hi and have a cup of coffee while we discuss about property, please come!
Click here to register. (Refreshments are served!)

My upcoming talk for month of February will be in Melaka. It is within an Open House day for an established developer which has been building
homes for more than two decades; Setia Awan.
 I think it will be an interesting topic “Property Investment 2019: What should we focus on?”.Let’s get ourselves updated with whatever is happening nowadays. As for questions, feel free to drop by and let’s talk about it during the Q & A session after my sharing. The details are as follows: (Else, just refer to the image)

Date:  17th February 2019   Time: 2pm – 3pm.

Venue: Sri Melaka Residensi Sales Gallery.
(click for google map)

Click here to register. (Refreshments are served!) ?

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Property investment? 4 BAD reasons. Real ones, not for fun.

No need to ask if the founder of kopiandproperty.com loves property or not right. My blog is all about property. However, it’s not all good about property. Later I share 4 BAD points with you. I still love the stock market even if I have just become active again recently. I also trust the unit trusts too and has been buying it since … very long time ago. I also have one piece of RM600 Malaysian note. You have never ever seen such a note before? Image below:

Image source:
https://www.pmgnotes.com/news/article/6412/malaysia-60th-anniversary-notes/

So, now that you know that I do not just invest into one type of investment, let’s start about the 4 BAD things about property investment.

#1 – TIME    It takes a LONG time to choose the right one. Seriously, how many of us can just see one property and immediately buy? It could be a few hundred thousand ringgit yeah. It takes a LONG time to complete the transaction.  From the bank loans all the way to state consent for leasehold properties and even renovating it before moving in, it takes a lot of time.

#2 – ILLIQUID   If it’s the stock market, then it’s sell today and the money is in within a few days.  If it’s the unit trust, after you sell, the money could arrive by the very next day. In fact remember my RM600 bank note? I could sell and get money for it within the same day. Property is a different story. Selling a property may just take months and the whole transaction would take a few more months. By the time the money arrived, you may have forgotten why you need to sell in the first place.

#3 – High entry cost  – Even if the property is just RM500,000 one would need to have at least 15% of RM500,000 for down payment, lawyers fee, stamp duty and some very minor renovations or furnishings. If you are staying, then at least it’s more worthwhile to buy. If this is for investment, then please do understand that price appreciation can only happen after many years. Meanwhile you can start investing in stocks and unit trust with just hundreds of ringgit. (Not lower than this lah, else why are you investing…)

#4 – Rejection is painful – Based on the usual lifestyle of many people, especially the non-stop vacations as well as new smartphones every year, the rejection ratio for this group of home loan applicants will be high. Most of the time, all these expenses as well as the credit card repayments would have destroyed our Debt Service Ratio (DSR) making it very tough to buy a property for investment.

If you think we must not read the bad side but also the good side, then you should click to
follow kopiandproperty.com FB page.
 Plus read here for
10 reasons to invest into property or properties.
 For this article, I tell you just one. Your rental does NOT stop when you retire. Savvy? Assuming your rental is RM1,500 per month and you live till 80 and you retire at 60, this is the calculation.

20 years x 12 months x RM1,500 per month (we assume rental stays the same!) = RM360,000.  Looks like the same price as buying an affordable property today, right? Think about it then. Decision is yours, not mine.

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Property Investment and the decisions we can make or delay

We have heard way too many news about foreigners buying so much of Iskandar that the locals are losing out. Is this true? Actually, this is TRUE, at least for some periods of time.  In a report by IRDA (Iskandar Regional Development Authority), in 2007, the foreign investment ratio was 45:55. In other words, foreigners did buy more than the locals. Recently, however that ratio has changed and is now in favour of local buyers, at 65:35. In other words, locals buyers are nearly twice as many as foreigners. This is however not because of foreign investors dropping but more of local investors waking up to the fact that investing in Iskandar may be a good thing after all.

When we look to the ground, this is true anywhere. Typically, locals would be the ones who thinks that any new concept just would not work. In Sungai Ara, Penang for example, nearly every pure Penangite whom I spoke to said negative things about Sungai Ara. However, they are positive for places like Tanjung Bungah (rich man’s area), Greenlane or Gelugor (most convenient) or even Farlim (everyone stays there at some point of time in their life). I do not want to say which area is best but to say Sungai Ara is NOT a good place? Well, that was then, perhaps 2007. Today, Sungai Ara is seen to be attractive even if the other ‘more original’ Penang places remain to be more popular and thus higher price psf. Until today, typical price psf for condos in Sungai Ara is still around RM500-Rm550 depending on size. This is no longer the case in many other preferred areas. Thus, you can see that typically, the buyers of Sungai Ara condos were mostly non-Penangites. People like my brother, my brother in-law, my childhood friend, my father’s friend’s son and many more. In fact, just on top of my head I already know at least 30 families within my project who are NON Penangites, when we first bought into Sungai Ara. Today, I think it is no longer true.

If we look at Ipoh, when The Haven first started and sold as Malaysia’s best value Luxury condo, I can safely say nearly every Ipohan said the project is doomed to fail. The first group of buyers? Foreigners and KLites. Today, the majority of the buyers of newly launched condos are Ipohans. Why are the locals slower? Actually, change is not something easily acceptable by locals. They have lived there forever. Been there, done that mindset. They also have their parents’s home to stay in. Thus, typically they are slower off the block compared to migrants. Developers would build because they have done some research and feel that the projects can sell, thus they launch. Bigger developers typically have groups of loyal buyers following them, thus after a while, when the locals wake up, they would realise that there’s opportunity which they have missed for a while but should not miss for the future.

End of last year, after looking through properties in Cheras (near Leisure Mall), Ampang, Damansara Mutiara, Petaling Jaya, Kelana Jaya, I decided to buy Damansara Damai. Huh? Damansara Damai? The area next to Sri Damansara and Sungai Buloh? WHY ARE YOU BUYING SO FAR AWAY. I am still asked on this until today. These days, I just say, oh, I like the condo. Then they say, it’s JAMMED. I smiled, you mean there are places in KL which are not jammed? Anyway, I have also changed my lifestyle a little, going to gym early morning and thus, I get healthier and skipped all the jams. The savings? Good enough for me to still be able to afford another small condo in Kepong for rental. 🙂

Hope everyone understands, if you have your own reasons after doing your own calculations based on the knowledge you have from research and your experience, please proceed to buy. It is true, it may not be the best decision you may ever make. However, truth is, no one has been able to make the best decisions every time or even most of the time. We just need to make a good decision, that’s important. Delaying, more analysing, asking more questions and getting more answers and more actions means you do not make any decision, both best, good or bad. Think about it, if majority are always right, why only the minority who’s doing the right investment decisions in every country in this world today. Oh yeah, only 6% of Australians in Australia actually owns an investment property, today.

written on 4 April 2014

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40 years later – Malaysia property market in my personal view

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Survey: Property investment still attractive but recovery takes time.

Whenever it comes to property investment, it’s best that we make our own decisions and not follow others blindly. However, before we make that decision, it’s always good to note what the majority are thinking about the property market. Let’s take a look at a recent article in The Sun Daily highlighting some conclusions from a survey of Asia Property Market by iProperty.com  Out of the 13,000 respondents, 40 percent were from Malaysia. Respondents include mostly property owners looking to purchase another property (39 percent) and first-time home buyers (26 percent) Another 15 percent is monitoring.

As per the survey, the industry outlook for H1 2016 for the Malaysian property market is in a recovery mode. Perhaps what the respondents are saying in brief is this; it’s not going to be suddenly positive. (my personal comments in
(bold)
.

1) all the cooling measures implemented thus far.
(yes, of course this discouraged people from simply buying. Read a bit more here:
PropertyGuru:Negative views on property market is up

2) people are still feeling the effects of GST
(I really do not think this is a major reason but perhaps I am the minority. Earlier article here:
Increase selling price due to GST? It depends on margin
)

3) political and economic issues
(politically, no comments. it’s already a either here or there situation today anyway. economically, Malaysia’s growth will still be good enough versus the world out there. Read here:
Moody’s: Fundamentally Malaysia still fine
)

4) the weakening ringgit;
(Agree that Ringgit is still weak. Agree also that Ringgit will continue to be affected by mostly external developments. However, most buyers of properties are Malaysians and they are buying in Ringgit anyway. Read here:
Ringgit down, thus property prices up
)

5) it’s tough to get housing loans to be approved.
(With so many negativity in the market, I think we should feel fortunate that BNM tightened all the guidelines since a few years back. One strong reason for property market to crash is when “everyone could borrow”. It happened once in 2008, let’s make sure it does not start with Malaysia this time….Earlier article about property sector as a risk to the economy here:
Property sector becoming a risk to economic growth
)

If you would like to read all the findings in more in-depth, it’s
here
.

Else, some other results analysis includes the following:

Singaporean’s interest in Malaysian properties, especially Iskandar increased due to weakening Ringgit.

It’s getting harder to save money with increasing household expenses and 22 percent may face difficulty in servicing their home loans.

Ringgit’s downtrend meant fewer Malaysians are thinking of investing overseas.

Insufficient number of affordable homes that they could buy
(SIGH)

Conclusion? Malaysians still believe property investment to be most attractive! (capital growth and stability)

According to iProperty’s CEO, Georg Chmiel, he expects some change around the second half of 2016, anticipating the market to “inch forward slowly and rise again in a year or two”.

Happy ‘monitoring.’

written on 14 Apr 2016

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Why our salary seldom rise as fast as property price

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Property investment is not all awesome. Here are 4 reasons why it is not.

Sometimes, we must not keep talking about just the good points, right? 🙂  Some friends asked me if property investment is the best investment above everything else. Let’s just say, it may the best for you and may not be the best for someone else. Perhaps it was best 20 years ago? Perhaps it may become even better
20 years later? (When bigger units become rare….?)

Anyhow, I still like property investment because there’s a lot of case studies for us to look at; advanced property markets. Remember though to always diversify and not put all our eggs in one basket. That’s going to be very dangerous. Let’s talk a bit about the disadvantages yeah.

Fast money not possible. Whether it’s to sell or to buy, lots of time is needed. Freehold is slightly faster but even that would still be easily months unless we are a cash buyer which meant slightly over one month for example. In other words, even if the market has a demand for it and we intend to flip it for a profit, it will still take months before we can see the money.

Maintenance payments. The older the property, the higher the
maintenance costs would be.

Whether it’s landed or high-rise, when it starts ageing, get ready to pay for maintenance. Leaking ceilings do not happen only to high-rise properties yeah. Rewiring the whole house is still recommended when you buy a property of over 10 years because it’s very troublesome to do a few years after we moved in. This is the same for all pipings too. As usual, even if the property is empty or not rented out, the maintenance fees would still have to be paid for the high-rise while for the landed, all the taxes must be paid yeah.

High entry point. I would say anyone can start
buying unit trust or even stocks in

the share market when they start working. It’s usually a minimum of 10 percent downpayment or 30 percent if you are buying the third property. (No comments on experts telling you that downpayment is not needed….) For property, it is getting ever harder year after year because we expect to buy the same property with the ‘many years ago’ price, today. Think about it, if the property we buy does not increase in price at all after many years, I think it’s much better to rent.

Returns are very subjective. Assuming we bought a RM500,000 property 5 years ago for our own stay and today it’s worth RM550,000 it meant that the rise in price is only RM50,000 or less than 2 percent on a compounded basis. Assuming the inflation to be 3 percent per annum, we have lost money!? Haha. Well, if we did not buy that property, what would have been the rental that we have to pay? This is a gain. Other ‘losses’ include interest within the monthly mortgage payments too. So, this is the reason why some would argue very convincingly that it’s money losing when it comes to property and there are also people who tell you that they have
gained a lot from property investments.

A few things are for sure. Lifestyle is changing which meant that perhaps smaller units can become the norm in future. With advancements in public transport, people may stay further away and stop driving? With GRAB becoming a huge influence, people may even choose to stay in smaller units within the city centre so as to be closer to their office. Urbanisation would continue to happen and cities would grow

bigger in both population and the number of properties.

A small percent of people would earn incomes within the top 5 percent of the country and would demand for lifestyle homes. One thing’s for sure even with all the disadvantages. People would still need a home to stay, whether they are buying or renting one. Just don’t but the wrong one. Happy thinking.

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written on 13 March 2018

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Property investment – back to basics

Passive income. If you buy a good property for RM250K to RM300K today, typically you can rent out for RM1,100-RM1,300. Depending on how old you are, this is sufficient to cover your mortgage and gives you a yield which is equivalent to FD, at worst. If I can, I would like to continue buying to rent. The reason being after a while, this becomes a passive income for you. The capital investment that you do would most probably be once, apart from the maintenance but the rental will only increase over time and the property will only increase in price over time. If you are able to rent out for a few years, you would notice that the rental yield becomes not just better but GOOD.

Family planning. Don’t tell me you want to buy a property for your kid in the future. Do it now. Chances are when they are old enough, you can either sell the house for their education or even give them the house as a gift. Even if a property is worth just RM300,000 today and rising with just the same rate as inflation, it will more than doubled when you sell it later. If you are staying in a landed property today, when you are older and your kids are no longer staying with you, it may be wiser to move to condo for easier maintenance, security and convenience. By then, your current landed property would be worth so much that after you sell and bought a condo, you would have enough for your retirement. Just do not gamble it away!

Great investment. Honestly, if I was richer or borrowed from my parents and bought double of the properties I bought and sold off everything today, I could now be sipping coffee and reading a book beside my swimming pool. Yes, it is true. However, it is ok, I may still retire earlier by 5-10 years perhaps than the official age of 56. You can save a lot of your income by not going to Starbucks so often, buying a Saga instead of Vios but if you take the ‘save your way to riches’ route, it will take you a very long time. Surely you will get there but it will be slow. You can also borrow huge amounts of money and drive up to Genting and perhaps you may win big or lose it all. With property investments though, the route is faster, more fun and ‘surer’ than many other investments because property is after all, a human need. That’s why they call it ‘home sweet home’, ‘home is where the heart is’ and when you feel tired after a full day of working you call your wife and said, ‘I wanna go home’.

There, back to three basic reasons why I love properties and perhaps the reasons for you to start loving properties too. Just be reminded, there is no super fast route in property investment. On and off, you may hit a jackpot but that is just pure luck. The fortunate thing is, ‘luck comes to those who work hard’. 🙂

written on 31 dec 2013

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