Financial freedom, not about how much you earn.

What is the key factor to achieving financial freedom? Does it mean we are nearer to the goal when we earn more?

90% of the people ( especially generation nowadays) does not know this, but earning a higher income does not mean you are now closer to financial freedom.

In fact, more people tend to spend much more when they have a higher income, and a higher chance to be in debt. As they earn more , they feel the need to improve their life as they worked so hard for it. Buying luxury home, luxury cars and shop a lot more luxury items be it cosmetics,clothes, or entertainment stuffs. There are quite a high amount of people that earns a high income owes the bank more than those who does not earn a high income.

Financial freedom is nothing but a murky concept. It can be different for everyone. Some could feel they achieved financial freedom when they earned 100k while some aim for 1million. Truth is, financial freedom is not a number to achieve, but a lifestyle to aim for, that you could have enough income to maintain your current lifestyle without compromising it even you stopped working. The money is passive and will be in your account every month without you working.

It is a custom, a habit, that we should always make sure that we save up, spend more on assets instead of liabilities and must not spend more than we earn. Maintaining a positive cash flow with no large debts.

When your passive income is more than your monthly spending, you are moving forward towards financial freedom. And that is really awesome. You are probably in the special, extincting 5% of the world population if you can do this. (which are the rich man population.)

Everyone have to understand that to achieve financial freedom, it is not to work hard to increase our active income ( salary) but to alter our system of spending and saving. We have to make up the right mind and idea to start moving towards financial freedom. Invest more on assets and not liabilities.
Invest on the idea of investing and not spending.

Happy learning and be awesome together!

W.

Buying a property - Inspecting a condo

Buying property does not just merely buying from new projects. Sub-sale condos are also very common in Malaysia. People who wouldn't want to wait for the new projects can opt for those fully renovated/furnished houses. Most of the time, it is also a risk for buying sub-sale properties as it could have leaking roof, corrupted walls or infested with termites. It could cost us more to repair them compared to buying a new unit.  If we are really considering a secondary condo unit, what should be some of the considerations? Here are 12 inspection tips shared by charles from kopiandproperty.com.my

1) External paint. If the external paint for the condo is totally worn out, I would think thrice. Reason being, repainting the whole condo takes a huge chunk of the reserves from the management fund and not all condos may be able to absorb that or they may resort to a cheap paint job instead which meant repainting is needed just a few years later. A good paint job lasts easily 8-10 years if not more.

2) Facilities. Check the conditions of all the common facilities. Normal wear and tear is expected but if we see the sign ‘ROSAK’ in every single facility that we inspect, I think we have our answers. There’s no need to view the property.

3) Environment. Walk around. Do we feel comfortable? Is the guard house in bad condition without even a proper fan or ventilation system? Are the guards looking old and frail? Are there rubbishes in the compound? Are there way too many foreigners walking here and there? Do note that we have to stay there for a long time. If we do not feel comfortable even from the beginning, how are we going to stay there for years?

4) The corridor leading to the house. Is it dark, without proper lighting? Is the unit at the end of a very long and dark corridor? Yes, in our mind now must be a horror movie setting. If we think perhaps it’s just that floor, then try a few more floors. If just that particular floor, perhaps it’s temporary. If it’s dark all the time, are we sure we want our wife or kids to walk home by themselves through the dark corridor everyday?

5) First impression of the unit. Ceilings should be at minimum 9.5 feet for a proper condo. Anything lower, even if the project is known as a condo, I would only think of it as an apartment and will only pay an apartment price for it.

6) Flooring. Are there signs of cracks? Is it too old fashioned? This is not a deal-breaker. When we find cracks, ask for a discount. Whether we decide to change the tiles or not is another matter altogether.

7) Leaking signs on ceiling. Check for any leaking signs on all ceilings. These can be fixed but it will not be easy. Yes, I have personally fixed 2 different condo units for which the ceiling was showing water leakage signs. Somehow, I managed to talk nicely to the two different owners upstairs.

8) Built in cabinets / closets. Are they in good condition? If it’s in bad condition, better ask for discount as we need to redo them. Even when it’s in a good condition, decide if we like the design or not. Preference is a subjective matter.

9) View from the balcony, if there is one. If the balcony is facing the wall of another block, it is likely to affect our emotions in the long run. If it’s facing a bald hill, there may be potential safety hazard when it rains heavily.

10) Drying area. Unless you are buying a drying machine, ask where will you be drying your clothes. It’s best if there’s sunshine. If there are none, perhaps drying machine is a better choice than to have clothes which smell. It does not matter that the sun shines into the living room. That can be solved with a good curtain.

11) Room layout / arrangement. Is the master-room too small? Are there way too many unnecessary corners? Can we shower comfortably where size is concerned? Is the layout to our liking? Remember, we would be using it every single day.

12) Cooking arrangement. For those intending to cook, can we cook freely without making our home oily, smelly, and dirty? Are there separate wet and dry kitchen areas?

When we buy units from new projects, it could be risky as well since we could not view the unit before buying ( just pray for the developer to be good and responsible ). For secondary market we have the advantage of viewing the unit first before buying. Any unsatisfied points and we can move on to the next unit. We paid for it, we should get whatever the value we paid for. 

Happy learning and investing together!

W.

Buying a property - Considerations

Everyone have their own reason on picking the properties that they wish to buy. The same block of property might be close to work for you, but far for others. Determine the considerations well before deciding on which location to buy. For me, I will look for properties near to my parent's house. I would rather travel a longer distance everyday to work so that I can enjoy the great foods by my mum. So, what are the general considerations to make before buying a property then? Do remember that those are just part of it and you may have more considerations to make!

1)  Convenience.  
Buying a property that is cheap but far away from the facilities needed are actually quite problematic. Imagine you have to travel 1 hour everyday to work, driving 30 minutes just to find a convenience store and buy some drinks, no foods nearby when you are hungry. By convenience, it would actually meant a location which has the most of all that you need within 15 minutes. Foods,schools,hospitals,supermarkets, government workplace (my place has the immigration office and KWSP nearby), banks will also be an added advantage when you try to sell the property later on. The convenience of getting to your workplace shall be a last consideration as you might be changing jobs later on, buying a new property whenever you change a new job is kinda..... well you know what I meant.

2) Neighbourhood. 

Landed or not, drive around that area first and survey before you buy the property. Usually Malaysians will label certain area as "Malay Kampung"  , " Cina tempat" or "Indian area" ( not to be a racist , its just that certain ethnics love to stay together, they feel closer) so check well or else you might be awkward joining in their group ( but of course they can be lovely neighbours too! )

If you can see some suspicious motorcyclists moving around or the housing area is too creepy (broken streetlamps, bad shape of playgrounds, no police patrols the area) then don't consider the house. It is important as you might have to live here with your families for the next 30 years. Protect your family members. Cheaper does not mean everything. 

*A good reminder from kopiandproperty.com , check the drains! make sure its not clogged or the area will be full of mosquitoes! (aedes might be included!)

3) Connectivity. 

Buying a house in some "ulu-ulu" places will be a headache. Butterworth is really a good place to stay in. Move out of the area and you'll be on the expressway 5 minutes away from the Penang Bridge. That is really convenience to go and forth between island and mainland. For now, you can even look for property with future MRT/LRT/Monorail routes nearby as their prices would definitely appreciate further. To see what I mean, you can search online for the prices of property next to a public transport station. They usually have a premium of 10-20% higher than common houses.

4) Condition of the property
If the seller is giving you the price tag, check out whether the house is worth the price. Are the house new? renovated? or unfurnished?  Does it have problems of water leakage before? Are the external paints peeling out? Do you have to renovate it again once you bought it?

Although sometimes the property is not worth price , but there is no need to argue with the seller over it. Just do the calculation for him/her. Painting the wall, changing the window panels, old fans, floortiles , kitchen sinks can easily reach out to RM20K and above. Ask for a discount politely. 

5) Property price.  
If you are not sure whether the seller is giving you a market price, premium price or discounted price, ask for a professional help. Look for registered property valuer and determine whether the property is worth the price. Of course they will take a certain fees but it will definitely worth it if you are buying a 500k worth house with a price of 450k right? The professional can also tell more easily whether the seller are in desperate need of financial aid so that you can pick up the "durian runtuh"

Find professional valuers at iproperty.com.my

6) Developments nearby

If you are buying a seaview condos for the beautiful sunset, you don;t want a high-rise building to block your view after 2 years right? You paid a premium for the sunsets! Ask the real estate agent whether there are any other land developments nearby. Ask what will be built around here if its a vacant land. 

But thinking at the brightside, if it doesnt affect you much, the development of nearby area would possibly bring up the prices of your property as well. As the area develop, more people will move in , causing house demand to rise. This is also a good consideration to make before buying a house. Move in an area before it becomes fully developed and price is on the climax. Imagine buying a house around KLCC now. It can easily cost more than double for the same type of property in Penang mainland. 

There are a lot more considerations to make when everyone is buying their own properties. If you are a first-time buyers, it is of utmost importance for you to know all of those before you buy one. If your first buy is not good, you might be scared to get your second house in the future. And that is bad if you want to increase your net worth and investing well for financial freedom. Continue to read this blog and let us learn to invest together!

W.

Buying property – How Much Am I Able To Borrow

How much will you be able to loan from the banks? It is so important that it can decide what type of property you can buy. (Unless you are cash buyer then i nothing say lah). Know your maximum loan affordability first so that you will not waste your time for checking,choosing,signing and getting disappointment at the last moment as the bank does not approve your desired amount of loans. 

Salary does play a major role in deciding the amount of loan you are able to borrow as that will be how easily you can pay back the loan, but there are also more factors that could affect your eligibility for the loans!


Below are the factors listed in an article [How much you can borrow] from www.loanstreet.com.my

1. Your Debt Servicing Ratio (DSR) – DSR is a percentage of the debts you are servicing over the income you earn (DSR= commitment/income). Different banks will have different methods of determining your DSR despite it being based on the same information that you provide. To find out more on your DSR, you can read the article How Much You Can Borrow Based On Your DSR.

2. Risk Profile – Other than your credit records, banks would assess your creditworthiness based on many things which could include your job stability, spending habits and etc. The likelihood of defaulting which is your inability to pay off your debts or service it (pay interest) is an important factor when you’re borrowing a mortgage loan.

3. Value Of The Property – Properties that are on the market can be overpriced and so banks need property valuators to confirm that the property you are applying a loan for is worth the money that you are paying for. This is done because in the event of your default, the banks would still be able to recoup the amount you borrowed by reselling it back into the market.

4. The Maximum Loan-to-Value (LTV) Ratio Or Margin Of Finance You Can Access. – Commonly, 90% LTV ratio can be anticipated on a Malaysian residential mortgage loan. But if you hold more than two existing housing loans then the LTV ratio on the following housing loan is lower and is capped at 70%. Meanwhile, LTV ratios are even lower for foreigners as these are restrictions to those that have less attachments to Malaysia.

5. Age – Loan repayments period is usually up to 35 years from the first day of your loan or until you’ve reached 65/70 years of age (depending on the bank), whichever occurs first. A younger person (e.g. 21-25 years old) might have a higher chance of getting the house loan approved compared to somebody in their 60s.

6. Number Of Dependants – The number of dependants affects your eligibility because they will be spending portions of your income. It will also affect your capabilities to pay off your housing loans. If you’re a husband that has a housewife and five children dependent solely on your salary it may raise a concern with banks.

7. Your Joint Applicant(s) – The housing loan which is supposed to be borne by you and your joint applicant(s), thus banks will access them to judge your joint creditworthiness before approving the loan. Your relationship with the co-applicant may also matter, it is less likely for parents and children or spouses to have disputes compared to other type of relationships such as siblings or friends.

8. Nature Of Business Or Profession – This information will help banks determine whether your have a stable income. People with full time, fixed salary paying jobs are considered as more stable. As opposed to those who own their own business, which is considered less stable as there is no job security and as their income is not fixed.

9. Past Relationships With Banks – Applicants who are loyal customers of the bank they are applying to may have an added advantage. But if you’re not, it’s not a concern as long as you do not have significant conflicts with any of the banks (e.g. CTOS or blacklisted from banks).


Although those factors decides the loan amount that you can borrow, it usually does not include the payment for documentation fees such as S&P agreement signing or stamp duties. Do remember to consider the extra amount of cash you need to prepare when purchasing a house.
If you are not sure of the estimated amount , look here :
[ Buying Property - Legal fees & stamp duties ]
[ Buying Property - Renovation ]

Happy investing and stay informed!

W.

Buying property – Renovation

Besides the usual down payment, stamp duty and the lawyer’s fee, home buyer must also realize that there will be other extra charges as well. If you are buying a new or unfurnished properties, chances are you have to prepare at least another RM30,000 for renovation and furnishing purposes.

If you bought it for self-stay , you will need those electrical appliances and furnitures.
If you bought it to rent to others, the renters will only rent it if it has basic furnishing and renovation. They wouldn't want to sleep on the floor or pay to furnishes other's house right?

Adding the stamp duties and other fees like GST( 6% of 500k house means an extra 30k to pay!!), that extra amount could easily come to RM50,000 or higher. New buyers might feel surprised with the fees and could be upset on how to fork out that extra bit of money. You will need those money in full hard cash because no banks would loan for your renovations. Thus, it is important for you to read more and prepare for it before deciding on the property type that you can afford.

There is no need to pay a large amount of money just to renovate your house into a royal palace though, as it probably would not be taken into account by the buyers in future in case if you want to sell it off. *They will not be as valuable as the amount you paid for the renovation*

Getting a renovated/furnished house can be a great choice if you do not want to spend for renovations.

Although it may sound scary now, but buying a property is crucial to adding our net worth and having a safe place for our families. If you have the capability to buy properties, try to proceed with buying at least one as the value of houses will appreciate in the long term. If you made the decision, congratulations as you are now part of the minority which is ahead of 90% of your same generation peers. The only advice here would be to not over estimate your affordability and you will be fine!

If you do not want to pay for legal fees and GST, check out the packages offered here!
Take a look at [ Urban Suites ] & [ Golden Triangle 2]

Happy investing !

W.

Buying property – Lawyers fee & stamp duty

After paying the downpayment for the property, will there be any other fees we need to pay firsthand? The answer is yes, and it is going to be quite an amount. The lawyer’s fee. The fee that you are going to pay depends on the price of the property that you are buying. Factor this in as it could cost near to 5 - 10k (including other fees, which I will talk about in my next post.).

Below are Legal fees & Stamp Duty calculation tables ( Source from www.elawyer.com )

* Do note that those rates are constant and usually are the same for all firms. How do we choose which lawyer firms to appoint then? The difference would be the process fee stated by the firms. And most importantly, some lawyers tend to delay your signing & processing duration, which can lead to one month delay and that is risky for loan procedure as the banks could misunderstand that you are having problems with your financial status.  Which is why, once you found a good lawyer firm, be good friend and stick with it for your next property purchasing!


Back to the topic, this is how you can calculate the extra fees incurred, besides the purchasing price.

As an example, if you are buying a RM500,000 property,
First RM150,000 x 1% = RM1,500
Remaining RM350,000 x 0.7% = RM2,450
Total: RM3,950 for Legal Fees

First RM100,000 x 1% = RM1,000
Remaining RM400,000 x 2% = RM 8,000
Total : RM9,000 for Stamp Duty

Add them up = RM3950 + RM9000 = RM 12950 !

That is 13K extra that you need to consider in ! 
A large amount indeed for us commoners.
It often shocks people as they forgot to think about this. If you are unable to fork out this amount then the whole purchasing & signing agreement can be cancelled so be careful of it.

Good news is, the property market is soft now therefore quite a lot developers are sweetening their sales with free legal fees and others. 
Take a look at [ Urban Suites ] & [ Golden Triangle 2]

Happy investing!

W.

Approval of Penang Transportation Master Plan

Months ago, Penang executive council gave the green light to the ambitious Penang Transport Master Plan (PTMP) project’s delivery partner SRS Consortium Sdn Bhd to work on mitigating the traffic congestion by 2030. The total proposed cost is around RM46 billion and covers the cost of the railway and highway which also included three major roads and an undersea tunnel project.

Just few days ago, Penang government announced that a sum of RM17 billion from an estimated total cost of RM46 billion for the Penang Transport Master Plan (PTMP) project has been approved.

Penang Chief Minister, Lim Guan Eng says that “The TMP is an ambitious ‘big-bang’ approach towards facing the biggest challenge of both traffic congestion and public transport by adopting the approach of “moving people, not vehicles”.


How does PTMP change the property landscape in Penang?
Without any doubts, the highlight of the PTMP will be the LRT and monorails in Penang. As part of the state government’s effort to overcome traffic congestion, the LRT and monorail projects in Penang is approved. Penangites will now be able enjoy better public transport with this approval.

The railway scheme covers both the island and mainland, with one LRT and two monorail lines on the island, one LRT line across the sea linking both sides of Penang, and a bus rapid transit (BRT) system.

Local government exco member Chow Kon Yeow said the priority for the railway scheme will be the light rail transit (LRT) line linking Komtar in the city centre of George Town and the Penang International Airport in Bayan Lepas. This project, he said, would be Phase One of the railway scheme and treated as a priority project. The Phase One construction of the LRT is expected to start in 2018 and take 6 years to complete.

To look at the planned map for the LRT routes, click here.

What does it has to do with us? Well, it means those property on the routes of LRT/Monorail will further appreciate as they provide more public transport benefits. One can even give up buying cars and go to work by LRT/Monorails like KL people.

Penang is very much similar to Hong Kong. The land of Hong Kong has appreciated so much that even parking a car cost HKD 25 per hour! Park there for a day work and you will need to fork out HKD 250 ( ~RM130! ) just for the parking fee! I certainly hope it would not happen to our beloved Penang. Invest well before the time comes.

Happy investing and look at the proposed map!

W.

Reasons to get your housing loan rejected

Continuing yesterday's "tips to get your loan approved more easily" , today we are going to look at the reasons why loan application gets rejected. Although there are news saying that it is about 50% of applications of house loans getting rejected , but statistics have shown that in 2016, the Association of Banks in Malaysia actually has a approval rate of 73% on housing loans. This is definitely a good news for every home-buyers. So what makes you get into the other 27% of the majority?

Those applicants that failed to get the loan approve are due to the reasons as below:

• Debt service ratio (DSR) – Knowing the ratio of your debt to income is important and key in getting your loan approved. This is a formula used by banks to evaluate your affordability level. ( Formula : [Total Commitment + New Application] / Net Income ).   This has become the most common rejection reason for housing loan applications.  Different banks have a different DSR cut-off or capping (eg: 60%, 70%, or some even up to 80%).

• Stained credit score – Central Credit Reference Information System ( CCRIS ) report shows the records of the applicants. If the credit score is lower than expected by the lender, high chances are the application will get rejected. It is crucial for you to repay all your other mortgages on time (car loans, student loans, credit card debts) as they will stain your clean record and stay there for at least a year if you ever delayed the payment. 

• Bankruptcy – Once you go into bankruptcy, the record is going to stay in your CTOS permanently. And the lenders will give a frown at your loan application. Most banks are highly alerted once they get to know your "blacklisted" status, even after you are no longer bankrupt.

• Incomplete required documents or submit wrong documents - This is actually the 2nd popular reasons for getting the application rejected. Please check the required documents well and prepare everything. 

• Income insufficiency or instability - If you have been changing jobs in the recent years, there are chances that it could affect your score for the housing loans as they deem you to be unstable enough to repay the mortgage on time.

• Apply loan within the period of employment less than 6 months - same reason as above.

When you are having a large amount of debts or monthly commitments on hand, it is advisable to plan your finance well before you proceed to purchasing a house. Write it down in a proper paperwork so that you can show it to the banks that you are doing a good job in managing and reducing the debts. It boosts their confidence to approve your loan applications.

If it helps, its worth it.Happy investing and stay happy!

W.

Tips to get loan approved... with better chances.

Having your loan rejected after paying for the deposit of the houses will definitely let you have a headache. Not to mention the sophisticated process of refunding and cancelling the houses that you eyed upon. Unless you are a cash buyer, we all rely heavily on the loan approval for our house purchasing.

Some might be confused why their loan is rejected , or only approved with a low margin % of loan. Here are the tips to help you increase your chances of getting the loan approved. (Not guaranteed though but better chances!)

1) Your Affordability
The banks will definitely require you to submit all the documents such as your payslip and monthly commitments as they will use it to evaluate your ability to return the loans. Check your own affordability with your current salary range before you decide to buy the house. You can also look for financial planners to get a better idea of your current financial status.



2) Don't change your job... too often
Believe me, the banks can search for almost everything on your records. If you happen to jump around companies and could not stay on the same place for more than a year, they will be more reluctant to approve your loan. Reason? You might not be able to find a job on time to repay the mortgages.


3) Have a clean credit record
DO NOT BE LATE to pay off your credit card debts or student loans. They will stain your CCRIS record which can be checked by all banking institutions. If you get blacklisted, even after you pay the debts, it needs one whole year to clean your records off the desk.

You can easily get your CCRIS report from Bank Negara Malaysia or online through CCRIS website.


4) Show them your treasure box
Show them copies of your savings, be it from stock investments or fixed deposits. The more the merrier. Income from your side hustles can also be used in this case. This will put confidence to the banks to approve your loan as you have a lower chances of defaulting on the loan.


5) Get your pre-approved loan offer first
It allow the buyers learn the maximum they can borrow and therefore have an idea of their price range before picking any properties. However, all buyers should be careful to estimate their own comfort level with a housing payment rather than immediately aiming for the top of their spending ability.

Also, it gives you a better standing to negotiate on the property prices as you had already proved that you obtained the loan approval and will be able to buy the house anytime you want.

Having the loan rejected after finding your love-house will give you a lot of heartache. Try to have a consultation with the banking institutions first before you start the home-buying process. Gather up the paperwork or recent bank statements to check with them whether the chances of loan approval are high. 

Happy investing and good luck with the applications!

W.

Are the property affordable for your salary range?

A lot of first time buyers and young adults could be confused that whether their salary could sustain the purchasing of a property in Penang. Some of them worry that the bank would not approve their application for loans while some overestimate their ability to pay the mortgage, which cause them to buy a property out of their affordability level and might lead to bankruptcy later on when they are not able to repay the mortgage on time.

You would not want this to happen as the bank might take back the house and you will lose the money and time you spent on that house.

In fact, there is a simple way for you to check whether you can afford the house or not.

First, list down all your monthly commitments now. (Car loans, Credit card debts, Student loans, Insurance payments, house loans.)

Assuming that you have a monthly salary of RM5000, times that amount by 70% ( 30% will be contributed as your daily allowance on foods,fuels,tols and others.)

RM5000 x 0.7 = RM 3500 are available for use

Checking back your commitments, if you have to pay say RM2500 every month for the student loans,credit cards, insurances or car loans.

Which means the leftover money would be RM3500 - RM2500 = RM1000 per month.

Gross estimation for 30years repayment mortgage would be :

100k of house require ~RM500 per month mortgage

200k house require ~RM1000 per month mortgage

300k house require ~RM1500 per month and so on.

Since you have RM1000 per month for leftover money, it means you can afford to buy a 200k house.

This is commonly the way that banks use to calculate the amount you can fork out each month for loan repayment. 

It is very risky for you to buy any property out of your affordability as it could tremendously affect your cash flows. Banks would also be more reluctant to approve your loan for that property as you have a higher chances of not being able to pay the mortgage on time.

Do the homework well and stay happy investing together!

W.

What phase is the property market in now?

Purchasing property can be a mischievous, but definitely rewarding, investment. The property market is influenced by supply and demand, approval rate of loan , and the health of the Malaysia economy, all of which are constantly fluctuating. Investor or home buyers, paying for a property , regardless of size or location, is a substantial investment, therefore it is important to understand the current trends affecting the market.

According from TheStar news, "The excess in supply of residential properties is expected to clear in three to four years, paving the way for a recovery in the property market, says housing industry experts.

The new National Information Property Centre (Napic) 2016 report shows that the incoming supply of residential properties has inflated to 94,124 units, compared to 82,837 units in 2015. 

Incoming supply refers to those properties undergoing construction work to be completed in three to four years. The incoming supply figure looks alarming at first glance. In actual fact, however, about half of the amount has been sold."

Read more at [Residential supply expected to recover in 3years.]

In the news, it is also mentioned that the number of unsold completed projects in Penang has doubled over the years adding on with the pressure of more new launched projects.
The residential supply has been overflowing and the demands are not that high due to the financial pressure for this few years ( especially the drop of Ringgit ). To the good news, the analysts did mention that if foreign funds does not move into the market, the pricing of the unsold houses will probably go into a correction in the next few years.

What would this mean?  

The supply of houses is too much compared to local demands, and the prices will reduce to ensure all the completed project units are being sold before launching more new projects. Definitely a good news for all of us, investors or not. The houses will become slightly more affordable and a good chance for you to step into the boat before it launches into the sky again.  

And what comes next after the price reduction? Appreciation! It is always a cycle, wait for the timing and invest with a good strategy!

The property market is now undeniably in a consolidation state where there are good opportunities there for people to invest. New projects with an advantageous location or connectivity and those delivered by reliable developers will continue to attract buyers as they tend to appreciate much in the long run.  

W.

Right strategy, Right Choice

“You can never go wrong investing in property as long as you know the strategy,” - Dato’ Sri Gavin Tee.

If we could not identify the correct strategy to kick-start our investment plans, it could cause us to take longer years to achieve the fruitful taste of compounding interests.

In terms of property, investors or home-buyers pick their choice of properties base on their needs and dreams. Be it terrace,flat,condo,bungalow or even a longhouse, what factors can they look for to prevent risk of getting a worthy house?

1) Look at the house developers
Do they have good reputations? Search for their company online. Check their record of qualities. Be alarmed if there are any past cases of delayed handling of key, leaking roofs after a few years, bad air flow designs and more. This is of utmost importance if we are a first time home buyer as we tend to expect a timely delivery of house key and move in. And we sure don't want to pay few hundred thousands and get a leaking roof a few years later. Do the homework first.

2) Location checking
There are some who bought the houses first and asks the agent afterward "why you did not told me about the graveyards nearby? why you did not notify that I could smell the filthy landfills up in the morning? " Do not expect developers and agents to explain everything to you. Start asking when you first looked at the house and they will answer everything you need to know.

Also, well-planned township in locations near to future MRT stations providing accessibility and connectivity with certain hot-spot areas will be a good choice. They attract long term buyer and tenant demand.

Take into account of the area's safety awareness level and facilities of the townships as well.

Especially if you expect the house to appreciate much in the future.

3) Price check on nearby buildings.

Given the current economic climate, it is a buyer’s market. They can look at different locations before deciding which to buy. Thus, developers become very competitive with their project packages and nett prices. As an investor or home-buyer, it is a precious moment to look for good buys in the market now and take advantage of the attractive packages, discounts and other incentives that are being offered. Definitely a must-do if you are looking for a sub-sale property as the market sentiment has already dropped to a quite negative point where people could let go their properties in a cheap price to meet the ends of their financial flow.


During tough times, buyers must focus more on the records and reputations of the developer to deliver the project on time with good satisfaction. It is crucial that they will also be able to follow up with the promises of amenities and facilities as well. A good management of the block will definitely increase the rate of price appreciation as time goes. Make sure that our money does not go to the wrong investment.

W.

Am I Eligible for Affordable Housing?

For those who wanted to look for cheaper houses and are first time buyers, there is no pain in trying this scheme offered by the government.

[ Perbadanan PR1MA Malaysia was established under the PR1MA Act 2012 to plan, develop, construct and maintain high-quality housing with lifestyle concepts for middle-income households in key urban centres.

Priced between RM100, 000 to RM400,000, PR1MA homes come in various types and sizes within an integrated community; sensibly designed to suit different household needs. PR1MA is earmarked for development in key strategic urban areas nationwide and is open to all eligible Malaysians. ]

Just go through the balloting process and hope for the best.
Some may think that usually those kind of program would only offer for locations in some "kampung" or "ulu-ulu" place where the property prices can hardly rise. 

Truth is, most of the PR1MA houses are actually part of the selling houses by developers. 
Developers can build 3 blocks of building and allocate one block specially for PR1MA houses.
Can you imagine your neighbour opposite the blocks bought the same type of house with you but maybe few hundred thousands pricier than what you paid for?

Here are some basic requirements to become homeowner PR1MA:
- must be a Malaysian citizen;
- single or married, aged 21 and above;
- individual or combined household income (husband and wife) between RM2, 500 to RM7, 500; and
- possesses no more than 1 property (either applicant or the spouse), if any.

Furthermore, the banks have also cooperated with government to ease the homebuyers in loan-financing issue. They introduced a new loan scheme specially for those having difficulties of paying their houses.

PR1MA Skim Pembiayaan Fleksibel (SPEF) 

 An exclusive scheme for PR1MA homebuyers only. 

The difference between this scheme and conventional bank loan scheme is that homebuyers are eligible to obtain higher end-financing amount with lower monthly instalments through "Stepped-up" financing, where monthly installments are reduced to a lower amount for the first 5 years and will increase to a higher amount for the consecutive years until expiration of the loan.

First 5 years: Interest only

Subsequent years: Interest and principal

Not to mention that it also allows you to pay the mortgage using your EPF second account.

Application for PR1MA houses in different locations have their own application date.

You can check them [Here]

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Service condo with Hotel concept?

In 2017, the housing market is expected to continue slow growth, due to concerns about the slowing economy and the ringgit's weak performance, among others. To fight with this phenomena, property developer has been trying their best to introduce better and more creative way to attract buyers and investors. Following is currently a new trend in the property market in Malaysia. Service Condo with Hotel Management system.

First ever in Jelutong, Penang. Price from RM3xxK onwards with 6 stars facilities.

The developer [Aspen Vintage] introduced a new concept for investors/buyers for this project with the theme of "luxurious hotel" , there will be a lobby on the ground floor and it is able to help owners to manage their house for Airbnb purposes (including cleaning, micro-managing the tenants and stuff , with some charging fee of course. But you can still choose to do it yourself. )

Its like you own a hotel room in one big hotel and you get paid every time someone chose to stay in it. Price is per day basis of course. Can you rent out your property as efficient as a hotel rent out its room? Give them a petty charging fee and you will be worry-free about looking for renters.

More benefits of the hotel management styled condo I mentioned?

Future LRT station is within walking distance , great news for tourist looking for homestay location.
Not to mention the Jelutong wet market nearby that would be a heaven for the tourists (homestay people like to cook their own foods)

More attraction points!
- 10% rebate for the total unit price ( which saves you ~40k if you opt for a 400k unit!)
- 6% GST absorbed by the developer = another saving of ~12k
- Free legal fee on loans,stamp duty and SPA signing except MoT = another saving of ~ 5k
- Legal for airbnb/homestay business , which means no saman! Weeeee!

More information in [ Urban Suites ]

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Leasehold? Freehold?

Some new investor or first home buyers could get confused about certain attributes of the property that they are going to purchase. Freehold and leasehold are one of them. Usually people will notice them through the difference in price of the two type of properties.

If you own a home freehold, it means that you own the building and the land that it stands on until the day that you sell it to someone else. A freehold property can be held by the owner indefinitely. It is one of the reason that advertisements often declare that the building is freehold as it will fetch a higher price. People living in it feel safer as they will not be kicked out when lease expires because it has no lease. *But if government decides to blow off your flat/condo to make way for further development, the status of freehold or not does not help you maintain your house there.

Leasehold is that you own the right to stay in that house for a certain period, but you do not own the building itself. Which mean after the lease expired (usually 99years after its built) , the landlord/government have the rights to take it back (which mean you lose your home). This explains why leasehold properties are usually cheaper than freeholds. If you plan to save on the purchasing price, some leasehold properties can be cheaper up to 20% compared to freehold properties on the same location. However, you will need to think about the selling price when you want to let go of that properties which can be only some ten years left on the lease. Because you yourself wont want to buy a property that is going to kick you out after some years right? Of course there are ways to hold your property - extend the lease or buy it from the landlord.

So before making an offer for leasehold property you’ll need to consider:

- How many years are left on the lease.
- How you’ll budget for service charges and related costs.
- How the length of the lease might affect getting a mortgage and the property resale value.

*If the lease is for less than 70 years, you might struggle to get a mortgage.

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Each Challenge Lies Opportunities

Even the 90s have seen the hard effect of economy slowdown in this few years where many struggles to meet their ends. This is clearly proven when people start to work for more than one job (or joining lots of money game) just to squeeze more juice out of their nuts.

Young Malaysian that starts to get out of their comfort zone and work will begin to hunt for suitable property as their first home. There are always queries by property buyers of when will be the best time to purchase a property. We always try to haul things best when it is in a big discount. What if I tell you that the property market is cheap now?

For some people out there that is worried about the possible economy meltdown in the next GE election or due to Trump's administration, you could be correct, but even catastrophe happens, everyone still need foods and shelters right? The temporary downturn will be reversed as the economy cycle is always on the run.  Truth is, even you kept the money instead of investing in property, just in case of economy breakdown, the currency will most probably crash as well, causing your RM 100 to be worth like RM10 in that situation ( which explains inflation as well.)

It could be quite risky if you might not be able to pay the mortgage on time, but have you ever thought that if the economy is stable and you got your 9-5 job working out smoothly for 10 years, will the property price be the same as now? Will your salary increase be able to cover the price hike? Will population of the world increase? Does it affect the price change of the property markets?
Remember, taking no risk at all is the highest risk.

Properties are a double-edged sword where it can cut and harm you, but it can also make you wealthy effortlessly. There are people who took the opportunities and bought certain stocks or properties in Penang Island and just live their life quietly as usual, until 10 years later they become millionaires out of the air. (as seen by some people)

"Knowledge is power and if we mastered such intelligence, anytime is a good time to purchase properties. Property investment is a long-term game, and investing into long-term markets will guarantee you great returns."
- Dato’ Sri Gavin Tee, the founder and president of SwhengTee International Real Estate Investors Club and the director of AGV Consulting Sdn.Bhd

Study, Learn and start Investing!

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Property prices might reached the bottom.

"Continuing to help Malaysians make more informed property decisions, PropertyGuru, the leading online property portal, launched its proprietary ‘PropertyGuru Market Index’ (PMI) exclusively for Malaysia today. PMI is a comprehensive, insightful quarterly overview of home pricing trends at a nationwide level, as well as the key property markets of Kuala Lumpur, Selangor, Johor and Penang." 

Starting from June, they launched this PMI system to allow us commoners to check the median prices and compare whether we are buying expensive property or not easily. As PropertyGuru can be considered as one of the largest real estate market in Malaysia, it is able to collect and analyse loads of information provided by buyers and sellers.
The surveys and reports done by them are much more trustable and they are able to deliver min-depth insights to all Malaysian home seekers.


The index serves as a great knowledge asset and trend indicator to all consumers helping them make informed property decisions. PMI is available to the public at:
http://www.propertyguru.com.my/marketindex

Judging by the figure shown above, property market prices has been declining since years ago until 2017 which seem that it comes to a steady state. This would be one of the sign that the price has already reached the bottom and could start increasing anytime soon. 

Also from the news at PropertyGuru, Kuala Lumpur, Selangor and Johor registered upward price movements with increases of 0.3 percent, 0.3 percent and 3.4 percent respectively. As for Penang,it’s index showed a decline in property prices by 0.7 percent– largely attributed to a reduction in prices and a tapered supply.

Just to be sincere, we shouldn't try to time the market for the best time to buy in. Fork out a sum of money and start paying the mortgage for a house. Believe me, with the exponentially-increasing world population, the property prices are going up by hook or by crook. Sooner or later Penang will be following the steps of Hong Kong where their land can be pricier than the golds. At the end of your mortgage years later, you will be thanking yourself for making this decision earlier. 

If you're looking for a property in Penang, might as well check out the new condo projects that are having a promotion right now!
[Urban Suites] and [Golden Triangle 2]

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Are you debt-free?

Most of the people get stressed when they look at their overdue bills and debts. They don't like the feeling of owing debts. They feel like they are working their asses off just to meet the bills every end of the month. They couldn't achieve their financial freedom with this mountain of debts.

Question is, are debts always a bad thing?

Taking our Malaysian PTPTN loan for tertiary education as example, the cost of getting a degree in public universities is around RM30K ~ RM40k (which is definitely a huge difference with private universities which can cost up to RM300K)  and you only get to start paying off the loan 6 months after you graduate from your university. And you know what, the payment is only RM100-300 per month for maybe 20years and with an interest rate of only 1% !!

Do you know what that means? If you put the amount of money in fixed deposit (which gives around 3.5% interest rate), you earn the excess 2.5% rate even you had to pay for the 1% interest rate. Assuming you had to pay it off in 20years, you could have accumulated a total of ~RM60K by just putting in fixed deposit bank account while the 1% interest is only ~RM7K extra , you can earn ~RM23K by just paying off your loan on time slowly instead of in one shot !

If you opt to pay off RM30K in one go, you can skip paying the 1% interest but what for the hassle? You could've earn the excess 2.5% while paying your loan on time! ( which mean you are not blacklisted, just in debts, you still can go for travel overseas.)

Not to mention that if you opt to pay off one shot after you graduate, I am quite sure that you would have used up your emergency fund or any savings that you kept for years. Although you are now debt-free, but you are actually exposed to more risk of financial crisis. You could be unable to pay for your unforeseen car maintenance or a leaking house because you do not have any savings left.
Of course those can wait until you earn some money, but what if the circumstances is that you got into an accident *touchwood* and you need a large sum of money to go for operation? Will your debt-free status save your life now?

Everyone loves to be debt-free including myself. But we will need to gauge our own ability well before we make any decisions that could ultimately expose ourselves to a higher risk of unforeseen circumstances.

That being said, if you have achieved your debt-free status while being able to comfortably cope with your life, congratulations! You are definitely few steps ahead than most of your peers.

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Property markets are actually very much dependent on the country's economy.

The state of the property market is very much dependent on the state of the country’s economy.
When the economy is sluggish, so is real estate.

Key factor that affects the value of real estate is the overall health of the economy. The health can be determined by measuring economic indicators such as the GDP (Gross Domestic Product of Malaysia in 2017 is expected to be higher), employment data, manufacturing activity, the prices of goods, etc.

When the country is being covered by scandals and bad reputations, the economic status are usually affected and the impact will be shown mostly on the depreciation of currency and trades. The same situation when you saw your favourite star got caught taking drugs and the sponsors stop every business relation with that fellow.

The depreciation of RM currency did not get better when Trump won the election for US president out of most expectation. Declining global oil price has also been a headache to the government as their revenues from oil and gas income have been under pressure for some time now due to falling global oil prices.

Although the growth momentum has been stable so far, global uncertainties, together with political developments and weaker domestic fundamentals, are weighing on the overall economic outlook. Most people are gloomy on the economic status of Malaysia due to the coming GE election but some believe that the worst is over and soon it will be turning green, especially the Penang markets that are getting more investors from China and Singapore.

Be more careful with your investments so that you do not lose your hard-earned cash. Invest in the right place and it will have a higher margin of safety so you do not take much more risk compared to others.

Stay tune to this blog for more info on Penang property market news!
You can just leave a message or pm me if you wish to know more about available housing projects in Penang!

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