Category: Property Investment

Investment Properties Criteria – Shah Alam Area

I have few properties and mostly of them at Kota Damansara. Kota Damansara is leasehold area so all my properties in Kota Damansara are leasehold.

Now, I want to find potential freehold properties nearby my house.

My Property’s selection criteria as follows:-

  1. Nearby house within 30mn drive
  2. Price range for B40 refer to previous post
  3. Freehold
  4. Neighborhood is well maintained
  5. Nearby jobs opportunities
  6. Low rise apartment not more than 5 levels
  7. High occupancy
  8. Level: 1st or 2nd
  9. Parking at least 1, better still ample parking
  10. Size around 800 sqft

My Watch List

NoNameSectionAddressLatlong
1SerojaBukit JelutongJalan Arca U8/80, U 8, Shah Alam, Selangor3.110105, 101.537065
2DelimaBukit JelutongJalan Arca U8/80, U8 Shah Alam, Shah Alam, Selangor3.110722, 101.536139
3Sri IxoraShah AlamTaman Bunga Negara, Seksyen 273.027259, 101.567949
4Alora / MediterraneanShah AlamJalan Damai 25/603.030146, 101.538405
5Sri AngkasaShah AlamSeksyen 28 Alam Megah Shah Alam3.004857, 101.567455
6Sri KemuningShah AlamJalan Anggerik Aranda 31/42, Kota Kemuning, 40460 Seksyen 31, Shah Alam, Selangor2.991299, 101.549183
7Pangsapuri JayaTTDI JayaJalan Ilham U2/14, Seksyen U2, Taman TTDI Jaya3.099714, 101.556064
8Mutiara SubangShah AlamJalan Utarid U5/6 Seksyen U53.182917, 101.536082

 

Bank Negara Reduces OPR by 25 Points On May 2019 & Which Banks Follows

The Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to reduce the Overnight Policy Rate (OPR) to 3% at its meeting on Tuesday 07/05/2019. This was the first time since July 2016,

It said the ceiling and floor rates of the corridor for the OPR are correspondingly reduced to 3.25% and 2.75% respectively.

I would like to see and monitor which banks follows accordingly, so it would be easier to decide which bank is suitable for property loans.
NoBankLoan RateFixed DepositLatest Base RateLatest BLR/BFRAnnounced
1Maybank-0.20%-0.20%3.05%6.70%08/05/2019
2CIMB-0.25%-0.25%4.00%6.85%11/05/2019
3OCBC-0.25%-0.25%3.83%6.76%12/05/2019
4RHB-0.20%-0.20%3.80%6.75%13/05/2019
5Bank Islam-0.26%-0.26%3.77%6.72%10/05/2019
6Affin Bank-0.25%-0.25%3.95%6.81%10/05/2019
7BSN-0.25%-0.25%3.85%6.60%13/05/2019
8Ambank-0.25%-0.25%3.85%6.70%15/05/2019
9Public Bank-0.25%-0.25%3.52%6.72%10/05/2019
10Hong Leong Bank-0.25%-0.25%3.88%6.89%15/052019
11HSBC-0.23%-0.23%3.66%6.76%14/05/2019
12Al Rajhi-0.25%-0.25%4.10%7.00%13/05/2019
13Standard Chartered-0.25%-0.25%3.52%6.70%18/05/2019
Reference:

Windmill Upon Hills Genting Furniture & Fittings for Lifestyle Unit

This Saturday, I went to Atria OSK Property Showroom. I asked the receptionist about the furniture and fittings provided for my Type B – Lifestyle unit.

He gladly printed me the furniture and fittings for my unit.

I didn’t know that OSK provided curtain/blind for my unit.

At same time, the receptionist informed me expected Vacant Possession is  by June 2019.

windmill upon hills furniture and fittings
windmill upon hills furniture and fittings

While at the OSK Property Showroom, I took the opportunity to take photos of Windmill Upon Hills mock up.

windmill upon hills genting
windmill upon hills genting
windmill upon hills genting
windmill upon hills genting
windmill upon hills genting
windmill upon hills genting
windmill upon hills genting
windmill upon hills genting

Property Strata Title Transfer Process

Last Saturday, I went to sign Form 14A to transfer master title of my apartment from PKNS (developer) to my name.

So I asked the appointed lawyer on the process. She diligently explained it to me the process, estimated timeline and estimated fee.

scrible that my lawyer did to explain the strata title change process
scribble that my lawyer did to explain the strata title change process

I redraw the scribble on paper for me to understand more the process. Here is the outcome.

strata title transfer process
strata title transfer process

Overall process to transfer the strata title will take around 17 months.
There are 2 payments to be made. One is during the POT and second during the POC.

What are POC & POT are explained below.

windmill genting highlands 6 pax 2 rooms with balcony
Advertisement ~ Genting Highlands ~ 6 pax ~ 2 rooms with balcony

There are 2 major processes:

  1.  Perfection of Transfer (POT) – to insert owner name into the strata title.  Estimated timeline is 9 – 10 months. The fee is calculated based on S&P price.
  2.  Perfection of Charge (POC) – to insert bank name into the strata title if the property still has loan on it. Estimated timeline is 4-5 months. The fee is calculated based on loan amount.

Required Documents

  1. S&P document
  2. DOA (deeds of assignment)
  3. Quit rents payment
  4. Owner’s IC

Required Clarification From Lawyer

After doing the process flow, I noticed few things that I don’t understand as listed below. I will get more clarification from the lawyer and will update my post accordingly.

  1.  From the process flow diagram – (7) / (8) bank direct to LHDN or via lawyer?
  2. From the process flow diagram – (9)/(10) LHDN direct to PTG or via Lawyer?
  3. From the process flow diagram – (9) what is adjudication for?
  4. Can use lawyer appointed by developer for bank to complete the POC?
  5. Fee calculation for POC & POT

Definitions:

POT: Perfection of Transfer
A process to insert owner name into the strata title.

POC: Perfection of Charge
A process to insert bank into the strata title if the property still has loan.

DRR: Deed of Receipt & Reassignment Process
A process to remove bank’s mortgage from the strata title

 

CIMB Home Loan Reduce Principal via CIMB Clicks

I wanted to reduce my CIMB Home Loan so I called CIMB call centre on how to do it. It was really surprising how easy it is.

Just login to your CIMB Clicks account. You will see your home loan at the dashboard.

1) As usual, when you want to pay for your Home Loan, you click:

Pay & Transfer -> Pay Loans & Cards.

CIMB Home Loan Reduce Principal via CIMB Clicks
CIMB Home Loan Reduce Principal via CIMB Clicks

2) Then select, your home loan account. At bottom on payment option, you choose Reduce Loan Principal.

CIMB Home Loan Reduce Principal via CIMB Clicks
CIMB Home Loan Reduce Principal via CIMB Clicks

3) After the transfer, go immediately to your CIMB Clicks dashboard, the home loan principal will be reduced immediately based on your transfer amount.

 

 

My Target Property Investment Criteria

I really love invest in properties. I started to study property investment in 2008. That time, my wife and I had high debt. I was asking myself how to make money work for themselves.

So I read lots of books about investment. I found 2 major kinds of investment.

  1. Property Investment
  2. Stocks Investment

At first, I started to invest in stocks as the capital requirement was quite small and easier for me to enter into it and easy exit as well.

While doing my stocks investment, I read more than 10 books about properties investment. I did lots of theoretical studies but I didn’t take any action because I was really afraid to venture into it.

I fear property investments because:

1) How do I know the property can be rented out easily?

2) How do I know the tenant is good paymaster & will do good take care of my property?

3) What happens if I can’t rent out fast? Can I cover the loan monthly installment.

4) If anything broken, how much the cost? Can I cover it?

5) Afraid of unforeseen cost to buy a property such as legal cost, valuation cost, stamp duty etc? (Most of books I found are suitable from US, hardly to find Malaysian book which covers these costs)

After awhile doing stocks investment, I feel bored cause it is like watching screen of price movement without much excitement.

I made a leap of faith by going to the ground and did heavy study on properties within my home.

I check occupancy rate of a property, what kind of rental price demand, condition of properties etc by visiting lots of them.

When I bought my first property it was a run down unit with lots of repair to be done.

My hand was shaking when I signed my first property investment S&P. I didn’t have money to cover some of the legal cost.  I had to cut my food and other spending to cover my legal cost.

Alhamdulillah, now I have 5 rental properties. If not because of the 30% down payment requirement, I would have more than 10 rental properties by now. :-).

Below are my list of criteria for property investment.

  1. Driving time: 30mn from my house
  2. The area offers lots of jobs opportunity or nearby to business district area such as KL.
  3. Occupancy rate must be above 90%. (Check whether lots of people stay that area at night by looking at the light or parking. If full of cars mean it is good)
  4. Property type is low rise walk up apartment & non furnished (low rise so less competition, walk up because in Malaysia it is known lift is not well maintain, it must be first or second floor only. Ground floor is not preferred because no privacy. Higher floor more competition from first 2 floors)
  5. Joint Management Board (JMB) must be well established to ensure strong management in maintaining the apartment.
  6. Area must be clean. Clean area attracts quality tenant.
  7. Any competition with similar built up and price

Genting Highland Pahang AirBnb Occupancy Rate

I bought one condominium at Windmill Upon Hills last year. I want to do AirBnb.

Interesting Places in Genting Highland

  • 20th Century Fox Theme Park
  • Genting Premier Outlets
  • Strawberry Farms
  • Colmar Tropicale
  • Organic Farm
  • Zouk

and few more.

Now my next concern what would be the occupancy rate of Genting Highland AirBnb.
To do that, I compare with Midhill condominium as it is already completed and similar concept with Windmill Upon Hills and owners already rent them out as AirBnb units.

AirBnb Occupancy

I calculate how many days a unit is occupied in a month. A unit is occupied if on the day it is strike through.

genting highlands airbnb rooms availability
genting highlands airbnb rooms availability

Genting Highland AirBnb Occupancy Rate

Then I compiled few units and calculate average occupancy rate and I did it for few months.

statistics genting highland airbnb occupancy rate as of 4/11/2018
statistics genting highland airbnb occupancy rate as of 4/11/2018

Conclusion

Occupancy rate is still low around 35%, maybe 20th Century Theme is not yet opened.

It is way off from my estimation of 90% plus from my previous post Genting Rooms Occupancy Rate Estimation

I noticed there are agents who manage the AirBnB units (have same owners for different units) which is good for me as in long term I plan to outsource my AirBnb unit management.

Top Property Investment Books That I Recommend

Assets & Liabilities Concept

1. Rich Dad Poor Dad

This book is an eye opener for me as it made me understand the difference between assets and liabilities. It teaches us to increase our financial literacy. A lot of adults make wrong financial decision due to lack of financial knowledge and never been taught at school on personal finance.

This book triggered me to read other books on investment.

rich dad poor dad
rich dad poor dad

Manage Effectively Own Personal Finance Before Investing

Rich Dad Poor Dad made me wants to invest in real estate and stocks. However, I didn’t start investing directly as I think I need to manage well first my personal finance and to have the right behaviour to become financially free.

1. The Millionaire Next Door – Thomas J Stanley

The Millionaire Next Door is based on real survey on millionaire. It concludes most millionaire doesn’t spend their money extravagantly. They are frugal! I adopts few of behavior of millionaire into my lifestyle. Example, before reading this I was driving expensive car, now I just drive small non expensive but reliable that is no loan on it!.

the millionaire next door
the millionaire next door

2. Total Money Make Over – Dave Ramsey

Total Money Make Over, push me further on handling my personal finance. No debt and have emergency fund for rainy days. Only then start investing aggressively.

total money makeover
total money makeover

Investing In Real Estates

After I have my monthly budget, settle off certain of my debts. I started to invest in real estate. I scout around a lot of properties, evaluate based on given tips, add my on way of evaluation. Do the ROI calculation etc. I do that based on below books.

1. The Weekend Millionaire’s Secrets To Investing in Real Estate – Mike Summey & Roger Dawson

It taught me how to invest in real estate, how to come out with a deal and at same time how to negotiate. The steps mentioned are clear, pragmatic and realistic but of course not all can be applied in Malaysia. I read lots of property investment books this is one of my top choices.

the weekend millionaire secrets to investing in real estate
the weekend millionaire secrets to investing in real estate

2. How You Can Become A Multi Millionaire Real Estate Investor!

I read this book to understand what is the cost of legal fee on Sales & Purchase agreement, loan agreement and others where it is applicable in Malaysian properties investment. It taught me how to understand the process as well.

how you can become a multi millionaire real estate investor
how you can become a multi millionaire real estate investor

Malaysia Household B40 M40 T20 Target Tenants

My household studies objectives:

  1. Potential market size of targeted tenants.
  2. Estimate monthly rental value of targeted tenants.
  3. Derive properties price suitable for the targeted tenants.

To achieve the studies objectives, I need to have facts on

  1. Number of households in Malaysia and specifically for Selangor as I invests mostly in Selangor.
  2. Estimated income level of each household

Malaysia Income Level

Malaysia households are categorized into three major income groups.

  1. B40 – or bottom 40% with median income of RM3,000 (Y2016)
  2. M40 – or middle 40% with median income of RM6,275 (Y2016)
  3. T20 – or top 20%  with median income of RM13,148 (Y2016)

malaysia household b40 m40 t20 household income
malaysia household b40 m40 t20 household income

Number of Household In Malaysia

In 2010, number of household is around 6.35 millions. Lets say I estimate by 2018  the number of household is around 10 millions.

In 2016, 19.9% Malaysian population resides in Selangor. Hence number of households in Selangor is 10 millions x 19.9% = 1.99 millions.

malaysia number of household
malaysia number of household

malaysia population distribution
malaysia population distribution

 

Rental Affordability for Each Household Group & Targeted Property Price

Assumptions:

  1. All household group only willing to spend one third of their income for rental.
  2. Property price is estimated based on monthly loan equal to monthly rental affordability and calculated based on 4.5% interest, for 30 years tenure and with 10% deposit.

NoHousehold GroupMedian Income (RM)Malaysia Total NumberSelangor Total NumberRental Affordabilty (RM)Property Price (RM)
1B403,0004,000,000800,0001,000220,000
2M406,2754,000,000800,0002,100460,000
3T2013,1482,000,000200,0004,400900,000

Conclusions:

  1. I target mostly to B40 household group. Hence, I need to purchase properties within RM220,000 range.
  2. I don’t target M40 or T20 as they can afford to buy they own house, hence vacancy rate will be higher than targeting B40.

References:

All statistics are from Department of Statistics, Malaysia.