Selvaraj RK

01/09/2023

10/02/2023

70:30 Rule.

Home loan monthly repayment consists of 2 parts, interest and capital amount.

Usually, the ratio is 70:30.

70% of the replayment goes to interest amount or financing charges. This is the amount bank earns from you. And the balance 30% will go to capital, which will reduce your actual loan amount that you borrowed.

So for investment property, its important to get a rental that atleast cover your 70% interest portion. Technically, interest portion will be paid by tenant. The 30% that you fork out from your pocket, can be treated as a forced savings. You will get it back when sell your property.

There are ways to increase your rental yield, you can even enjoy positive cashflow.

Look out for good deals in the market.

07/02/2023

GRR AGAIN??

An ex-colleague enquired me on one of his short listed property in Klang Valley for investment purpose. The spec was good, but I told him not to proceed for these 2 reasons.

1. It came with guaranteed rental return for 5 years. This is a big NO. Why would a developer wants to pay you instead earn itself? To my knowledge, not a single developer has fulfilled the full payment term on this so called ‘guaranteed’ rental option.

2. Secondly, the property is located in a single job industry. It is a risk if anything goes wrong with it. Example, Covid affected tourism industry. Imagine if the location only has jobs related to tourism industry.

A good property will always have demand for rental. Pick a property where it can cover atleast 70% of montly loan payment. Obviously, positive cash flow is better.

Multiple rental option is another important factor. Ideally, the cost of financing should cover by whole house rental. You can also rent by room for a better rental yield.

As summary, be wise when choosing a investment property. If it doesnt make sense, skip and hunt for the next one.

16/01/2023

BANKS LIKE PREDICTABLE INCOME!

Comparing between a self employed vs an employee, guess who has the advantage on loan eligibility?

Yes, an employee.. simply because he/she get to paid every month on the dot. And if the empoyee works in a reputable company, thats added advantage.

For self employed or small business owner.. please register your business in SSM. Maintain a company current account. Perform all transactions through that accout, audit it and pay your income tax yearly. Repeat for a minimum of 2 years..

Banks will start to recognize your income and most likely you will be able to secure a home loan in future.

13/01/2023

DONT QUIT YOUR JOB, EVEN IF YOU HATE IT!

I am a full time employee.

I dont love my job, but I like working because..

It pays me salary that enable me to acquire assets…

That can secure my retirement, my child’s education and probably quit my job one day (if I want to).

09/01/2023

WILL PROPERTY PRICE DROP?

While driving back home after work last week, I came across an interesting topic in one of our national radio station. Its about property price. A caller complained to the radio DJ that the property prices are too high, and he is unable to get one for himself.

He asked, when property price will drop?

I bought my first property back in 2006. Todate the property price has only gone up. And i never came across any property that dropped its value.

There are many reasons that influence the property price. To name a few, land scarcity, supply and demand factor, job hotspots, infrastructure, amenities, connectivity and many more.

So instead of complaining.. create more oppurtunities to own a home. Increase income to afford higher loan and payment. Be smart, look for good deals either in primary or subsale market.

Hope you will be a property owner in 2023! All the best.

05/10/2022

Success is a function of brain and efforts.

Effort is a function of time.

Time is a function of routine.

The hardest bit is to suit your routine with the ever changing requirements.

Change your routine & you’ll have a higher change to succeed.

17/09/2022

HIGH RISK = HIGH RETURN???

Is it really true that all high risk investments equals to high return?

The actual truth is, high risk is POTENTIAL to make high return. But not necessarily provide high profit.

If you ‘accidently’ enter into a high risk scam, then you may loose everything. Or even you invest in a legit high risk investment, its the same story.

So high risk = high return is over rated.

Be wise when it comes to investment. It takes years to build up savings but can vanish in a matter of days if you invest in the wrong tool or product.

Importantly, equip with knowledge and information. As I always mentioned, learn before earn. Leverage on others expertise.

Personally, I rather invest in low and medium risk investments to provide a stable return from medium to long term.

Protect your capital first.

Agree?

11/06/2022

TO RENT OR TO OWN?

Few days ago, I had a discussion about this topic with my neighbourhood badminton buddies.

I live in a new neighbourhood, it has just reached about 90% occupancy after about 4 years of VP. And we noticed lately about 10% to 20% of houses here are occupied by tenants.

Rental rate for landed is usually very low, same goes to my neighbour hood here. The tenants are just paying about 30% to 40% of what the owners pay to the bank monthly.

So is it worth to buy the property or just rent it as the tenants in my neighbourhood?

After all, the tenant enjoy the same facilities as the owners.

Rule of thumb..

If you require to pay more than 50% of rental rate vs the monthly payment to own the property, you rather buy it. In long term, you will gain from the equity and the capital appreciation. Otherwise, just rent it.

But not all will agree with me on the rental part. We asians, still very much keen to own atleast 1 property in our lifetime. Thats not wrong at all.

And if you really like a property and you can afford it, just go ahead. After all, thats the place where you will spend most of the time with your loved ones.

Buy base on personal need. But if you dont have a strong reason to own a property, you rather rent and buy an investment property that can potentially increase your wealth in the long run.

I personally know few people who has multiple investment properties but chose to stay in a rented condo. It doest make them feel any inferior. In fact, their networth and cash flow are much better compared to those who pay the bank monthly for ownstay property.

The fun part is… all of their properties are paid by tenants and it has sufficient cash flow to even pay the rented unit for ownstay.

All these are for real, when you have the unfair advantage.



***nice weather for a cup of tea 😀

22/04/2022

ARE MALLS STILL A BOOSTER FOR PROPERTY INVESTMENT?

There are 2 malls nearby where I am living. One I would say a neighbourhood mall. No much shops apart from a supermarket.

The other one sligthly bigger, where there are shops, reataurants and also a supermarket.

For my daily groceries, I would rather go to the smaller marts. Its easy access and I could get things done faster.

So did I bought a house here because of the mall?

Definitely no. It is just good to have.

If I could rank my preferred booster, this is the list.

1. MRT or LRT station
2. A good school
3. Medical centers
4. Petrol stations
5. Then probably a mall

Banks are no more a booster. I rarely visit a branch to do my banking stuff nowdays. The most is to withdraw, so I just need an ATM for this.

18/04/2022

LRT IMPACT TO PROPERTY

Not all LRT line will boost up property value. It depends on the connectivity of LRT line.

If it connects to better job hotspots, then its potentially will increase the value of properties surrounding it.

My personal experience, I used to rent an apartment near LRT Sentul. It is just 5 minutes walking distance to the station. I could reach my office in less than 20minutes. It connects directly to KL city centre. Super convenient.

I still recall how hard it was to secure a unit.

I had to compete with many other tenants. I only managed to get the property after missed almost 5 units. It was grabbed by others the moment its vacant.

For those just starting to work, I highly recommend to rent a unit or room near a train station. It will safe you a lot of money and time. You dont even need a car for yourself. Rather, keep aside the saved money for investment.

18/04/2022

LOCATION x 3!!

When I first started learning on property investment, this was the mantra majority of property gurus preached on.

But to think about, it is not exactly true.

KLCC properties was one of the worst performance during our last property bull run. Tier 2 properties such as Kerinchi, Sentul did far better.

So the fact is, LOCATION is not the only criteria to look for in property investing.

There are 7 criterias that relevant to today’s market. Just search in youtube on this, by Faizul Ridzuan. I also have elaborated it in my previous post. You can check it out.

So the next time anyone tells you the same mantra again, its just not true.