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Buy within your means and comfort zone.
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Iskandar -- Now is the time to invest in or it's overhyped?
- Thread starter sgcount
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Buy within your means and comfort zone.
Buy for self stay.
Yup! Limited too. Either one or two available in a row of terraces.
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Buy..it's cheaper than sg self-storage rental.
Wahhhhh..... :( I'm just beginning to realize there are many other costs I have not factored in when calculating whether it's ok to invest in Iskandar (for myself based on my finances).
Quite substantial... especially if I'm not expecting to collect rent for the 1st few years. And also, I don't have DIBS benefit, so bank loan interest starts in a year or so. Rumours saying their interest rates may go up next year! Already so high.... can't imagine if it hits 4.5% or more.
Early buyers usu have to wait until e rental wave comes. I'm expecting next year rental will start picking up. This will be driven by stronger economy in Iskandar. The bigger wave will be when RTS is operational.
Condosingapore has already set up a corner for Iskandar. Many property agents r also marketing Iskandar properties.
The new property tax in Singapore makes owning mid to high end condo in Singapore more expensive. RM is also depreciating. Costs in both Singapore and Johor r rising rapidly. Singapore n Johor population r expanding.
It seems to be e perfect storm.
Thanks for sharing. This is the promising aspect. So key again here is the ability to hold mid- or preferably long-term....
Just hope interest rates won't go sky high. To get to 5-6% or more is really :O !! But I guess some bros here are likely rich enough to pay full in cash and are not affected by the high interest...
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This is an interesting scenario that I think it's worth exploring the possibility.
If we assume salary will double in 5 years, we are looking at an average of 15% increment annually. Now, I wonder if any employer will be this generous. But assuming the government is willing to do this (well, Budget 2012 saw the increase of civil servants' pay by up to 13%), the 1.4M civil servants will have their current pay of say RM50k doubled to RM100k. That means, from the RM45B that goes into the civil servants' coffers annually, the government will have to pay RM90B!
Now, Malaysia's 2012 GDP figures were USD300B, or roughly RM940B. At an average rate of 4.64% of GDP growth annually, we derive a GDP of RM1,180B in 5 years. So, the public servants' pay to GDP ratio balloons from 4.78% to 7.63%! In 5 years! I highly doubt any government can sustain this sort of pay growth.
And even if we assume the government becomes generous overnight, prices of goods and services will have to commensurately increase so that GDP will catch up. Annual inflation of a historic high of 15% will rear its ugly head. Not yielding in the rat race, banks will increase their BLR. At 15% increase annually, the 4.4% home loan rate becomes 8.9%! Our RM3k loan (assuming RM600k loan for 30 years) explodes 66% to a whopping RM5k monthly!
Back to property. Developers will be hit with increasing costs of labour, materials and land. They will raise the prices of their development accordingly. And guess what? In 5 years, property prices doubles in price!
So, you have correctly pointed out that we have to take "future price" into account. But don't forget to "future price" the property too. All things being equal, when local income doubles, property prices will double correspondingly. We will be back to square one.
In conclusion, do I think income will double? Yes, but maybe in 20 years. Will the majority be able to afford RM1M property? Sure. But by then, RM1M property will only be PR1MA housing, and our RM800k condo investment will be worth RM4M! Hooray! ;D
You've done it again!! All the careful analysis with figures and all that. You sure you're not a statistician? Well, at least a mathematician maybe?
Or otherwise someone who is meticulous or organized. haha...The last part on income rise but property rise also is so very true. Remember back in those days when people here so often talked about the 5C's? One of the Singapore dreams was to be able to own a condo. It's no longer mentioned any more cos it's so damn expensive now. The salary a graduate earns today is so much higher than what our parents did last time. But now, the condo prices here are what mainly the rich can afford. Difficult for a normal graduate to afford it even after working for many years. So pay is higher now for graduates, but condo prices are even wayyyyy higher!
HDB flats of today can cost more than condos not so long ago. Ironic. We are constantly chasing.... All those talk by teachers about graduates having better life for being educated is not entirely true. I think their less educated parents who earn much less and can afford a condo back then are more blessed.
Opps.. some ramblings... I've gone off-course.
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OK thanks guys for all the contribution, whether serious ones of the occasional jokes which I think most of us enjoyed. I'll summarize here so that those who come in here seeking answers (like me!) can have them at a quick glance. Some extras on my own thoughts are added also.
SHOULD WE INVEST IN ISKANDAR???
1. Buy within you means. Best is if you have spare cash. Never throw in your money if that money is all you have for your children's future education or for your day to day needs!
2. You need long term foresight. Property investment is largely a long term thing. If you want to make a quick buck, that's speculation. Possible but risky.
3. If you can, buy for your own stay. Even if market is bad, you have less worry. The one who buys it to bang on his or her luck that the property prices should increase will lose sleep if there is some sort of crisis.
4. What are some risks to consider? Possibility of no rent for a long time. Negative cash flow on your part. Rental in JB is low and will very likely not cover your monthly loan payment. Competition from many other condos or properties around you. May be very hard to sell off in future. This is Malaysia, not Singapore. Land is spacious, future buyers are spoilt for choices. Yours is one out of many others. Malaysian condos do not generally have a good record for maintenance. (After a few years, they may look worn down.) Bank interest rates are projected to go up very soon!
5. What is the upside? Possibility for Iskandar growth if things go as planned smoothly.
Please add on if you wish. Or feel free to correct me on the above.
(Actually from the way I look at it, there are more risks than benefits now to solely invest on Iskandar. Those who bought their Iskandar properties a few years ago should be the ones who smile. But having said that, it is still possible to invest now, but it takes faith and a very long time to iron out those risks.)
I'll summarize here so that those who come in here seeking answers (like me!) can have them at a quick glance. Some extras on my own thoughts are added also.SHOULD WE INVEST IN ISKANDAR???
1. Buy within you means. Best is if you have spare cash. Never throw in your money if that money is all you have for your children's future education or for your day to day needs!
2. You need long term foresight. Property investment is largely a long term thing. If you want to make a quick buck, that's speculation. Possible but risky.
3. If you can, buy for your own stay. Even if market is bad, you have less worry. The one who buys it to bang on his or her luck that the property prices should increase will lose sleep if there is some sort of crisis.
4. What are some risks to consider? Possibility of no rent for a long time. Negative cash flow on your part. Rental in JB is low and will very likely not cover your monthly loan payment. Competition from many other condos or properties around you. May be very hard to sell off in future. This is Malaysia, not Singapore. Land is spacious, future buyers are spoilt for choices. Yours is one out of many others. Malaysian condos do not generally have a good record for maintenance. (After a few years, they may look worn down.) Bank interest rates are projected to go up very soon!
5. What is the upside? Possibility for Iskandar growth if things go as planned smoothly.
Please add on if you wish. Or feel free to correct me on the above.
(Actually from the way I look at it, there are more risks than benefits now to solely invest on Iskandar. Those who bought their Iskandar properties a few years ago should be the ones who smile. But having said that, it is still possible to invest now, but it takes faith and a very long time to iron out those risks.)
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Can I chip in?
Go with your gut feel. Highly successful property investors never never bother about too much of an analysis. Property investment have a track record of defying logic. Just look at Singapore for the best example. By any logic... today's Singapore properties' pricing are not sustainable. Just when you give up your self belief and join the flock... that will be the time the market crash.
Go with your gut feel. Highly successful property investors never never bother about too much of an analysis. Property investment have a track record of defying logic. Just look at Singapore for the best example. By any logic... today's Singapore properties' pricing are not sustainable. Just when you give up your self belief and join the flock... that will be the time the market crash.
Yes, thanks for sharing!
I just found myself a new dilemma. Gut feel aside for the time being, I decided to work out the sums on my loan amount. What I found out shocked me.
I calculated if I took 80% loan from the property, at the end of 30 years, I will have paid RM480,000+ just for the interest portion! And every month, out of the RM3,100 I have to pay, only RM885 is the principal portion. The rest goes to interest. YIKES!!! Even if I shorten the loan to 20 years, I'm looking at a staggering RM300,000+!
I never imagined it could be so much! Just basing on 4.22% loan interest rate. Can't imagine if they increase the interest next year....
What do you all advise? I'm guessing some of you make lump sum payments (or even full cash for those who can afford!!!) to reduce the loan amounts, and hence reduce the interest you have to pay also? Or do you just bite the bullet and are prepared to pay hefty portions for the interest for the next 20 to 30 years?
Take 30 years loan, but save up and repay earlier, say 15 years instead of 30 years to save on interest.
Cyberjaya does not have an aggressively expanding neighbour like Iskandar. Iskandar to me now is an extension of Singapore, which will be bursting at its seams by 2030. Even underground masterplan cannot save it, as experts have warned of the huge developmental costs. Iskandar is the logical choice.
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Stretch the loan as long as possible. Real inflation in Malaysia is higher than mortgage rate.
Government publish official inflation rate is all bullshit.
I guess that's the best solution to beat the high interest rate....
shctaw: Tried to but really feel painful as I mentioned in earlier post about the very high interest rate. At the end of the loan tenure, I could be paying like S$190,000 just for interest alone. And if they increase the interest further, it will likely hit S$200k! Was thinking of renting but after much reading and asking around, I was told not to bet on it and it will never cover the monthly loan amount. Yeoooo...ouch
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You can always put excess money from Savings account to Current account, so the daily interest will be calculated on principal sum less whatever money is in the current account, still save I think. I will try this method when my loan kicks in.
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OK thanks guys for all the contribution, whether serious ones of the occasional jokes which I think most of us enjoyed.
SHOULD WE INVEST IN ISKANDAR???
1. Buy within you means. Best is if you have spare cash. Never throw in your money if that money is all you have for your children's future education or for your day to day needs!
2. You need long term foresight. Property investment is largely a long term thing. If you want to make a quick buck, that's speculation. Possible but risky.
3. If you can, buy for your own stay. Even if market is bad, you have less worry. The one who buys it to bang on his or her luck that the property prices should increase will lose sleep if there is some sort of crisis.
4. What are some risks to consider? Possibility of no rent for a long time. Negative cash flow on your part. Rental in JB is low and will very likely not cover your monthly loan payment. Competition from many other condos or properties around you. May be very hard to sell off in future. This is Malaysia, not Singapore. Land is spacious, future buyers are spoilt for choices. Yours is one out of many others. Malaysian condos do not generally have a good record for maintenance. (After a few years, they may look worn down.) Bank interest rates are projected to go up very soon!
5. What is the upside? Possibility for Iskandar growth if things go as planned smoothly.
Please add on if you wish. Or feel free to correct me on the above.
(Actually from the way I look at it, there are more risks than benefits now to solely invest on Iskandar. Those who bought their Iskandar properties a few years ago should be the ones who smile. But having said that, it is still possible to invest now, but it takes faith and a very long time to iron out those risks.)
I did not have much spare cash to spare, but I bought into JB anyway because HDB just too expensive, jumbo flat asking for more than $700K and COV close to $100K. I'll be worse off buying HDB, and I need a bigger house with more rooms. So it was never an investment option for me, but a place to call home. I'll miss my HDB flat that will be rented out though, been living there for more than 10 years. Hope whoever tenanted to will not thrash the place until like slums...
in that respect, comparatively, iskandar esp nusajaya is already quite succesful compared to cyberjaya.
yes, indeed. the interest payments all add up. To save on interest, pay up as much as possible. the good thing about bank loans in m'sia is that whatever principal paid up not only will not attract interest, but you may actually re-draw out the amount paid up as and when you need it. Simplistically, what this means is that you can use the loan facility as a piggy bank or savings account that "earns" you whatever the prevailing interest. In fact, i intend to do just that.
Risks: further continued long term weakening of the RM. But that normally means your house value will go up more.
In summary, I think we have three options in terms of loan repayment:
1) If you intend to own stay or use for long term, or pretty confident of keeping the property, pay up as much as possible to reduce interest payment. But don't need to pay off all. Keep the loan running but pay minimum interest. My banker told me "can pay 99% also can". What does that mean? Don't close out the loan facility, just don't pay interest. Anytime you need money (or when loan is almost 100% paid), just redraw some from the principal paid. I think this way is better than paying off everything cash as you keep your property value liquid.
2) If those who confident of selling off on VP ('flipping') just pay the deposit and try to sell off when get keys. In this case, just take the interest hit until property is sold
3) those who unsure of keeping or selling (but not own stay "yet")- take the interest hit for a few years before deciding how to proceed. Try to rent out just to cover all or partially the interest (at least).
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