I am considering of purchasing a service apartment near PJ area (Alam Idaman Service Apt) for RM252,396. They are offering 90% loan and 40 years repayment period. I am buying it as an investment and this is the first time I am buying a property. I am writing now to have a second opinion on whether it is a good buy.

As for the spread sheet on this post, buying 5 properties seem to have some risk which we should look into really carefully. If you are not full time property investor (like myself), we are prone to making mistake like choose wrong location to buy house, no experinece in picking good tenant, developer unable to delivere the property or CF is some where else but not in our hand. I believe most people here have a fulltime job and some extra cash decided to invest in property.

Also imagine the time we need to really look into good property to buy for rental and then the time we need to manage it. Bad tenant, renovation, repair the house after old tenant leave, etc….if we alredy have a full time job, how can we have enough time for managing 5 properties???Also even we manage to pull out some time from our 24 hr a day, i think it is undeniable we will have our full time job performance drop which will delay or even stop us from getting promoted. Full time job with a bad performance and bad feedback from our boss is a big cost for us.

I think on top of this spread sheet we should also have it compared (even qualitatively on each option) to time needed, associate risk, also to such detailed extent of drop in full time job performance and the risk of losing certain merit due to lack of focus in job.

Many of us are part time in this property investment. We have the will in it but lack of time and experinece. Also bear in mind if make a wrong decision the first time we invest we are afraid to move on any more in property investment. Is not to say it is not good, but how we can manage it without scarficing our full time job and most of all, right at the first attempt.

Thanks for your comments.

1. I treat this as a positive drive to keep investors aggresively improving their investment properties in order to make sure they are always competitive in the market. If they are not in a hurry to find tenant for their property, it could be a bad thing to the property itself and eventually a waste to economy.

2. As long as your investment property brings you cash flow, you don’t need to sell them away even though its price plunges. Dip of property price will just limit the amount of refinance, if you need one.

3. This risk is higher for new development projects. Damages caused by natural disasters should be covered by insurance company, that’s why every mortgage loan requires its borrower to acquire sufficient insurance for his/her property.

I would say interest rate hike should the biggest risk which is out of our control when you borrow from bank to invest in real estate. That’s the reason why I suggested investor to keep their monthly installment below 60% of their rental income. See “What risk you may face if you borrow too much and how to manage it?“.

Cheers

Frist of all, thanks for this website, it is very infomative.

I think your caculation makes sense only if we are assuming:

1. You can find tenants and rent out the place at expected price and without interruption.
2. The house price wouldn’t plunge.
3. No others events like build quality, developer default or natural disasters.

Otherwise, if this is a sure-win deal, then banks wouldn’t lend you money, they will buy the property themselves.

I was the silly questioner who embarrassed to ask such a stupid question here ,so i e-mailed the question to ONGKL.Very thanks for his reply.

I am not expected my question will show up here.Hahaha.

I like here very much ,alot of gem to learn, thanks for his unselfishness sharing.

Best Regards,

YONG.