Real estate investment Q&A #2

Question #10 – Life insurance as a source of start-up capital
In “Where to find sources of start-up capital?” … your insurance policies that have a cash value are an excellent source of capital. Once you have determined how much cash or loan value you have in these policies, find out how much interest you will have to pay to borrow that money. You can check with your insurance agency or ask expert to find out more about this option.

Answer #10 (contributed by KCLau):
If it is an investment-linked policy, you can redeem the unit (just like unit trust). Of course there are terms and regulations that require minimum unit left in the policy in order to keep it in force.

If it is a traditional policy, the cash value is available for loan. Currently the loan interest is 7% (not low actually).

Question #11– Is now a good time for rental properties?
“Credit is tight, Approval of loan are low, …”
Persons who wish to own a house are forced to rent one. Thus, there is a need in rental market during this recession. But, properties have no market, value is going down, this affects rental.
Good timing for income producing properties?

Answer #11:
We found out that although the property values have been going down after Sep 2008, rental market is not much affected, yet. We believe the rent will not drop as fast as the property value, and thus give us more and more opportunities to find properties with high rental yield.

In other words, the gap between the selling price and the expected rental income of a property is becoming smaller now. But here we are only talking about residential properties because people still need a place to stay in hard time.

Question #12 – Lido Boulevard
I was told Lido Boulevard is a good investment. Can i have any feedback on this project?

Answer #12:
In Jan 2008, the developer, Central Malaysian Properties Sdn Bhd (CMP) said the project “is set to commence in March 2008“.
In June 2008, again, the developer said it “will start work in September 2008“.
So sorry that most of the time we just have no faith in most new development projects in Malaysia, especially those who claimed to be “one of the biggest private finance initiatives” in this uncertain period of time.

Question #13 – Tebrau City Residences, Desa Tebrau
How do you think about Tebrau City Residences, Desa Tebrau? Shopping malls around there create much value. Developer is .

I’m looking to buy a unit @ Tebrau City Residences…

Do you have any views on that? I happen to think that the rental yield will be good as it is situated in the IDR and also has 3 huge hypermarts surrounding it….

The developers are also hinting of a 5* hotel being built behind it.

Any ideas or hints??

Answer #13:
Though we don’t know much about this project and its developer, the location is definitely premium. We also learn that the price of most properties such as the apartments under this project is considered affordable for the quality they deliver.

As we are expecting manufacturing, retail and service industries to be hard-hit by recession in the coming quarters or years, we are reserved about the short-term yield that the area may deliver. However, there is one thing for sure: when the economy starts to recover, which it will eventually, the properties in such premium location will be the first to enjoy the fruits.

Question #14 – Lagenda Tasek
What do you guys think of Lagenda Tasek by IJM?

Answer #14:
IJM is quite a prominent developer in Malaysia. However, with the economy situation right now, the risk of buying property from new project has increased due to the potential financing problem with both developers and buyers.

We find the location of Lagenda Tasek a bit inconvenient though it is located beside Jalan Skudai and adjoining to Larkin. Unless there will be some improvement of the traffic system there, otherwise future residents of the estate may find it a hassle to get in and out from there.

Other than that, we also find Lagenda Tasek a bit ambitious with the number of units just like IJM’s Suria Mas apartment in Larkin. Maybe that’s the reason why they can be priced as the “affordable” apartments in the area.


About The Author


Coming from a humble little town named Tangkak in north Johor state of Malaysia, I am so lucky to have chances to learn and work both in Johor Bahru and Singapore - a conurbation with 6.49 million still fast growing population - since year 1996. Hope now I can have a chance to contribute back to the community by sharing what I see, what I know and what I learn in this wonderful place.

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