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.