“Rebate 88K, Free Legal Fees and Ownership Programme etc.”, heard these few common quotes? Yes, it’s about owning a piece of property. To start off owning a property – a shelter needs and is a good start of investing, especially for those recently settled down with a family, prefer not to stay with in-laws to be more independent and privacy. Property investment has always the sought after investment, the biggest ticket of mortgages and repayments ahead.
I started owning a medium-cost apartment way back when I was macho 25 years old, a sub-sale unit price at RM110,000 in Shah Alam. Sailing through a sub-sale never been easy; most transactions are not financiable at that time except for a 90% mortgage. The rest, i.e., legal fees, stamping fees, agent fees etc., must be payable from own pocket. Being my first attempt at a property purchase, I am not really ready to absorb, but the commitment has been made else my deposit of 5% will be forfeited. To cut things short, I completed the transaction and stayed on my hard earn property for few years. I finally sold the unit after 7 years and cash-out RM65K. Not too bad at that time, but right now, it’s valued about double my invested price already.
Moving on, can you imagine owning a resort-based property that is just below RM50,000? Yes, below RM50K, and somewhere in 2011, I accidentally bought a resort type of property somewhere in Port Dickson. I decided to buy that piece of property mainly because of its cheap price, management will help me rent it out, and I, as the legal owner, will get an annual FREE stay. I still own this piece of resort-based investment to date; on and off, I have my free stay there as weekend getaways. As I’m writing this, my resort-based property’s value has never increased, but annually I still have to serve the bill of Annual Maintenance Cost to keep my free stay afloat. Simply this is called a Timeshare Property Investment.
Location, Location, Location… common property expert’s keywords if you attend any property investment talk. Learning from the past, both my properties do not really generate me good returns. So I made a different target setting to explore some real good location opportunities. The golden location I choose was in Petaling Jaya, and this superb location comes with an expensive price tag… approximately RM1,000/sqft. As I have really nailed the good location, the price was secondary to me as I have prepared earlier, knowing this is a real big investment in my life, a half-a-million condominium. Vacant Possession in Jan 2019, I quickly turn it around and manage to rent it out in March 2019 with a decent rental to an expatriate family. After one and a-half-year passed, the tenant tendered resignation due to having to return to his home country. My property is in a total mess; I needed a total turn-around works to get it back to a decent rentable unit which cost me time and money spent. Stress unnecessarily, yet tenant happily leave it back to you, plus pressure in rushing with time-loss to hunt for a new tenant as well.
The moral of the story, property investment is a solid kind of investment indeed, but it also comes with unpredictable risk. There is no stress-free in this big-ticket investment; imagine that one will need to serve a monthly mortgage loan a few thousand per month, also maintenance fees, taxes etc. We will really sweat it out if the property keeps empty without a tenant, which will drag into financial problems. My personal opinion/advice to myself and for your reference is, let’s keep our life simple and only invest in what basic needs we really need, 1 unit decent lovely home will do and keep the additional “property investment” in a different form of stress-free investment which I think will be more ideal. I certainly do not against Property Investment where I do invest in. However, I believe we need to align our main objective of investing especially in big-ticket investment, to ensure we are well prepared for any uncertainties.
Being a financial consultant and with my personal property investing experiences, I share this valuable journey because it is part of my responsibility to bring to our attention that the sky is not always clear. It does rains sometimes. Having this thought in mind, I can help my clients plan a meaningful investing journey with peace of mind.
Farhan Lim
Wealth Adviser,
EVOL Consultancy
EVOL Consultancy - Enhancing Value Of Lives 