Now They Tell Us: Experts Say Housing Is A Lousy Investment And Always Will Be

Source:http://finance.yahoo.com
Well, the experts are weighing in again. And, once again, they agree: Housing is a lousy investment. And it always will be.

But wait. Just a few years ago, weren't the experts saying that housing was always a great investment? That house prices would always go up?

Yes, they were.

One thing you can be sure of with respect to market punditry is that experts will extrapolate recent trends into the hereafter. As will most people, actually. That's why, no matter how many times markets overshoot, people get burned.

But are the experts right this time? Will housing always be a lousy investment?

Of course not.

At some point, house prices will fall far enough that housing will become a very attractive investment, just as it was in the early 1990s, before the great housing boom began.

But the pressing question for those who are thinking of buying or selling a house today is whether we've reached that point...or whether house prices still have a ways to fall.

Most fundamental analysis suggests the latter. Housing inventories are still inflated (we built too many houses), and the end of the housing tax credit has removed one near-term incentive to buy. Interest rates are low, which has made houses more affordable, but, nationally, house prices are still above their long-term average.

Demographics are also becoming less favorable: As baby-boomers retire, many will seek to downsize, selling off second homes and moving into smaller residences. And with high unemployment and debt loads still crippling many consumers, it's not clear who will be buying the houses the boomers want to sell.

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Azizi Ali: Property investment in the new decade

The times have been good for property investors in the past couple of years. Prices in certain areas, particularly in selected areas of Kuala Lumpur and Petaling Jaya have risen significantly, some as high as 50 percent. And as a result of this rise, practically all property investors had made money. In fact, some people have seen their net worth jump up by 30 or 40 percent because of the price rise. For example, a young colleague who purchased their house two years ago saw the value of their house increase from RM950,000 to RM1.3 million today. Of course, the owner was all smiles when they told me the story.

I am happy for them. As an avid property investor, I have benefitted from the rise myself, so I am certainly not complaining. At the same time, I must admit that I have some reservation about the whole scenario. The price rise has distorted reality to many investors, including my colleague. Because the price climbed up as soon as he bought the property, and remained at a high level even today, his view on property investment is seriously distorted. He thinks that:

1. Prices will go up as soon you buy a property.
2. The gains will be in double digits per annum.
3. This is normal.
4. Prices always go up.
5. It is easy to make money in properties.
6. He is a super genius when it comes to property investment!



Long-term property investors will quickly point out that none of the above are true. That’s right – none! For starters, I can tell you the current situation is exceptional. It wasn’t like this five years ago, and certainly not ten years ago. I can also tell you that times are not going to remain this good forever. Prices do not rise to the sky, and interest rates do not stay low forever. In fact, interest rates has already climbed (or to use the toned down term of ‘normalised’) by 75 basis points already this year.

Why am I so sure of this? Simple; I have seen similar euphoria before (the first in the mid-1980s and then in year 1997 during the Asian Currency Crisis), and the story did not end well on both occasions. Like most bubbles, prices edged up slowly initially. The initial buyers made money and this attracted others to invest into properties as well. And as prices climbed higher and higher, the euphoria got to the levels that some people were rushing to buy because they were scared that the prices will spiral out of their reach if they do not act then. But when the market crashed, as all bubbles eventually do, a lot of people were seriously hit, a lot of money was lost, and that included seeing their properties being auctioned off by the banks.

I see the same story being repeated today. On top of the ever present dangers, there will be massive challenges in this new decade. There will be much turbulence in the coming days, and some of them will be unlike what you and I have seen or experienced before. This may include double-digit interest rates, multiple bank failures, currency crashes and explosion of the derivatives market.

As a result of the new challenges, the investors using the current success formula of buying five properties at one go (by paying the minimum down payment and borrowing to the hilt) will be seriously hammered. They will experience much pain, to put it mildly. Some people will lose their properties, some will lose more than money and yes, some will become ex-millionaires.

But of course, where there is danger, there are also opportunities. This will include a huge number of properties being auctioned and also getting huge discounts from distressed sellers.

For more information about Azizi Ali, visit www.millionairesplanet.com

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Here are some learning points I got from the convention

Source:http://terra-nusa.blogspot.com/2010/07/property-convention-2010-4jul2010.html
.......Here are some learning points I got from the convention:

1- invest in yourself - buy books, attend seminars & talks
2- have a correct mindset & positive thinking
3- seminars and books are good but not good enough. You need a support group. So you are encouraged
to find a suitable and compatible, fellow property investors
4- leverage on the others' experiences, skills and network
5- act now .. take action .. not just action .. massive action
6- start investing as 'baby investor'. Don't try to prove to others that you can do better than them buy buying
the most expensive property. Learn to crawl, walk then only run.
7- Start with +ve cashflow, follow by capital appreciation. Ideal would be a combination of both.
8- the number of property you bought is not important but how much your +ve cashflow is
9- Pros and cons of residential property vs commercial property investment
10- Which property to buy if you want financial freedom and financial independence
11- Have a plan for both entry and exit.
12- Don't get too emotional or attached to your property.. You should love the deal not the property
13- Invest at your own level, experience, skills and financial capabilities. For newbies, go for residential
properties. Smaller capital appreciation and less cashflow but less risky
14- Money management & many-many more

Although I knew all of the above, from reading books and attending various seminars, it is always good to listen to it over and over, especially coming from successful persons.

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Property Millionaire’s share their secrets

Source:http://investkk.com/property-millionaires-share/
It has been done over and over – making money out of property investment, but it is not without its share of peril.

It has been done over and over – making money out of property investment, but it is not without its share of peril. At recent Property Convention, four proeprty millionaires shared their journey towards financial freedom. The convention was organised by Paysolution Technologies Sdn Bhd. The company’s founder, Michael Tan, 34, channeled positive energy and vibes through a “motivational” approach by eliciting “I” from his questions. “Who wants to be a property millionaire?” and the crowd goes “I”. “Do you want to be financially free in five years?” And the crowd hollers, “I”. You get the picture.

The convention was also interspersed with stretching exercises and participants giving one another high fives. Additionally, each participant was given an egg to take care off. So right off the bat, it was an eye-opener for many participants.

Tan’s financial advice
Tan has been involved in property investment for approximately four years, with wealth accumulation of more than RM2.28 million. Through his mortgage broking firm, he has taught more than 220 students within 8 months and has helped them purchase properties worth more than RM8.07million.
property millionaire

He also advised all to find out how much one can borrow, to find out how much one is worth. “If you currently have rentals, then your income (level) goes up. For example, if your monthly pay is RM10,000 and rental income is RM2,000, the amount that the bank will calculate is based on RM12,000. Therefore the (borrowing) limit goes up,” Tan explains.

Tan also provided a few formulas. One included determining one’s Finish Line, which translates to determining how much you need to have in order to retire within your limits. Not surprising, all 150 participants’ figure ran up to the millions.

“Last time, to be a millionaire is a privilege. Now, it is becoming a necessity due to money inflation,” he explains.

Tan’s formula – calculate your required Pension Fund
Pension Fund (PF) is the amount you need when you arrive at your desired retirement age, in order to receive your Desired Monthly Income (passive income).
property millionaire

DI (Desired Income) = Ideal passive income monthly

CA (Current Age) = Current age, rounded down to closest 5 years (e.g. 48 becomes 45)

RA (Retirement Age) = Ideal retirement age, rounded up to 5 years (e.g. 48 becomes 50)

POA (Passing On Age) = Age of passing, rounded up to 5 years (e.g. 81 becomes 85)


PF = DI x (POA-RA) x 12 months
For example:
PF = RM10,000 x (75 – 45) x 12 months
= RM3,600,00

Which means, I would need to have RM3,600,000 in savings, so that I can retire by 45 years old and enjoy a passive income of RM10,000 per month (assuming that I pass on at age 75)!

Chin’s investment strategies
One of Tan’s convention co-sharer, Juanita Chin, 39, became a property millionaire in less than five years. She currently owns RM5.6million worth of properties comprising resort condos, shop offices and office suites. She cautioned would-be-investors to be rational and not emotional. It is all about money and sense.
property millionaire

All her properties are in Penang and her first property was with a low downpayment of RM5,000. The property was in Gurney Drive. Chin said, “It was a balance unit. On the 4th floor. Facing a graveyard. Leasehold.” After the chatter of amazement eased, she added that she did research and discovered that Japanese community favoured living in the area and preferred the lower floors. The first unit was rented out and fetched a positive cash flow of RM400. She has since purchased two more units and is getting a total of RM3,000 in rental from the three units.

Some of the strategies that she employs include:
• Knowledge – the more you know, the less mistakes
• Leverage on assets – refinance properties for extra capital to reinvest
• Joint-loans with family members
• Know your banker
• Look out for discounts and early bird specials from developers
• Find a group of people and negotiate for a “bulk” discount

Yee’s practical approach
Dr Peter Yee, a guest speaker at the convention, has benefited many times from property auctions. So far, he has purchased 14 properties, including terraced houses, bungalows and shop offices. Rental income and the sale of six properties have earned him profits of more than RM1million.
property millionaire

His straightforward candour and funny anecdotes during his sharing session were more than well received. He is perceived to be like a family’s funny uncle. His area of expertise is in the auction and secondary markets. He mentioned that he has paid tens of thousands in “tuition fee” – monies lost from bad purchases. As the years progressed, he stopped paying tuition fee, but instead made a tidy sum.

He also shared that it is important to know what’s going on. “See this shoplot. Beside the two lots owned by the same person. The owner of the two lots beside mine, did not know the next lot was going to be auctioned. I bought it and then the owner purchased it from me. I like people like this. Busy, hardworking people who don’t know what’s going on,” he said cheekily.

Yee also added that it is important to know an area well and adopt a wait-and-see approach. Look out for signboards at properties. If the owners are desperate, the prices will drop in time. Or if a piece of land is priced at a low value, due to the owner’s mistake, then it is to Yee’s benefit.

Doshi’s principles
Milan Doshi, a Singaporean residing in Malaysia and the convention’s second guest speaker, has been involved in investment property for more than 10 years. Currently, he has 19 properties, with one in Singapore. The loans amount to RM11million, with a positive cash flow of RM15,000 to RM20,000 per month.
property millionaire

“When I started working, my friends were driving second-hand cars. Two to three years later, they were driving new cars and I was still taking the bus and LRT. I knew something was not right,” Doshi shared.

“My first job was as a commodity trader. My boss told me that the sooner I learn that the four years in university is nothing but rubbish, the earlier you become useful to me,” he continued. It was years later that he found out what his boss meant because everything he learnt was theory, not real-world practical learning.

When he began investing in units in HDB flats in Singapore, he was doing well, until one friend told him to buy the most expensive property that he cannot afford. It made sense at the time, because the more the asset appreciates, the bigger the gain. But alas, as values can increase, it can also nosedive.

He has since moved on and has made many good purchases. To date, he has more than a handful of shoplots at Berjaya Times Square. Some of these lots are lesser than 1,000sq ft and were purchased for a price tag of more than RM1million each.

The six principles that he strongly advocates are:
• Learn as much as you can – from sales people, the market, entrepreneurs, experts
• Network – it’s who you know
• Earn as much as you can, as fast as you can
• Savings – invest in yourself e.g. save RM200 and spend RM200 on books, etc.
• Borrow – as much as you can and invest to gain returns that are more than interest rates
• Invest wisely, as much as you can



property millionaire



The egg
Back to the egg. What was it all about? It was to represent a loved one and the reason one is striving financial independence for. In short, be grounded and remember loved ones and those in need even when one joins the millionaire club.

My point of view… Learn is a process and I fully agreed that “applied knowledge is POWER”!!! I know a lot of property investor invest a lot in learning the basic of investing. But at the end of the day it seem like they still repeating their mistake and the worst it do not really helps in growing their wealth. Beside wasting time and money, they will also feel frustrated and at the end of the day they might give up. As a beginner of property investor you have to learn the basic that is Save, Save and Save your monthly income and lives below your means to raise your investment capitals then start investing in smaller properties ie BELOW RM100K. Your guts eventually will be developed to digest bigger investment when you are ready. When the number grows, I believe your road to financial freedom are clearer…

Happy Investing



You cannot Grow Land..CK Wong & MY DAD

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Should I Keep Making Mortgage Payments?

Source:http://moneyning.com/money-mailbox/should-i-keep-making-mortgage-payments-money-mailbox/
Sometimes, the prudent thing to do may not be such a simple decision.

Much of our society is build around trust and the general notion that most people are honest and nice. The refund system, for example, wouldn’t work in some countries because too many people would use the product and then turn around and try to get a full refund. Self service checkout is another brilliant idea that unfortunately wouldn’t work in many places around the world.

As a result of our honesty and our selfishness to play by the rules, everyone benefits.

A mortgage is a great financial tool, allowing potential home owners to realistically buy a house earlier in their lives by borrowing into future income. One can argue that without mortgages, land prices will be drastically lower, allowing everyone to buy anyway. But then how can anyone afford the rest of the house? The nice granite counter top, the stainless steel appliances, and the big screen TV cost money. Without credit, most middle class people cannot really afford anything other than buying the piece of land.

Lately, more and more people are just skipping their mortgage payments. Some cannot afford to pay because of a job loss, but others are just squandering, or as some call it, gaming the system. Many of these people are starting to blame the lenders for their reckless standards during the boom years. Unfortunately, the selfish act of conveniently missing payments doesn’t just hurt the lenders, but every one in the process.

Jason writes:

… I’m now behind [on my mortgage payment]. I felt bad at the beginning, but I eventually got used to it. How long do you think I have until the banks repossesses my property?

How long the foreclosure process takes doesn’t matter. You borrowed money, and you signed the loan documentations at your own will. It’s your responsibility to pay it back. Do something about the missed payments immediately:

* Call your lender and tell him about your situation. Work something out. If you are behind, chances are they’d rather keep you as a customer than to evict you, which is very costly.
* Look to refinance because mortgage rates are at record lows if you have any equity left in your home. Even if you don’t, talk about this as one of the options. How about extending the length of the loan to lower the payment while we are at it too?
* A loan recast might be possible. Have you ever pay more than the minimum required monthly payment? Check to see if you can ask for a loan recast. I know the difference in payment is probably small, but it could still help.

Some people are happy to skip their mortgage payment. Actually, some are even bragging about it, as if it’s financially savvy to borrow money and not pay it back. I bet they have never been in a team environment where one member isn’t pulling his weight. When one person in the team doesn’t do their job, everyone else needs to help out. While the lazy worker may think he is getting off easy, everyone else works harder and have to share the load, working longer, harder and more miserable hours. Would the lazy worker be admired, or hated? Is it appropriate to brag about this? Would you want to suffer due to no fault of your own?

You may not want to pay your mortgage, but everyone else needs to suffer by paying higher fees to compensate for your own convenience.

Mortgages are great, but it’s still a privilege. Sure, the banks make money from it, but if no one profits, we can all kiss the mortgage industry good bye. Next time you hear someone talking about missing mortgage payments when affordability is not an issue, let them know that you are paying for his share.

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8 Great Places to Retire You've Never Heard Of

Source:Yahoo Finance
by Laura Cohn
Friday, June 4, 2010
Worries about the stock market are leading some Americans to look outside U.S. borders for inexpensive places to retire. In many cases, retiring abroad offers the added draw of warmer weather, a lower cost of living and a slower pace of life. Whether it's South America, Europe or Southeast Asia, a number of destinations offer Americans the ability to stretch their dollars and still live the dolce vita.


Calitri, Italy

• Population: 5,685
• Climate: Mild, averaging 50 degrees Fahrenheit in winter months and 90 degrees in summer months.
• Proximity to water: Located in the center of southern Italy, Calitri is about 75 miles from the Mediterranean Sea.
• Proximity to major airport: It's about 80 miles to Naples International Airport (NAP).

The Draw: This town in southern Italy offers scenic vistas and low-cost real estate, and it's close to the Amalfi Coast.

Tip: As a retiree with a residency visa, you may be able to gain access to the country's national health-care system. But many expatriates prefer to buy their own health insurance because private hospitals tend to be more upscale than their state-run counterparts.

Chiang Mai, Thailand

• Population: 1.6 million in the province; 250,000 in the city.
• Climate: Tropical; from March to May, temperatures reach 100 degrees; average high for the year is 89 degrees and the average low is 68 degrees; dry season typically runs from mid November to early May.
• Proximity to water: The Ping River runs through the city, but otherwise it's landlocked.
• Proximity to major airport: Chiang Mai International Airport (CNX) is less than ten minutes from the city center.

The Draw: Far from the civil unrest in Bangkok, this city in northern Thailand offers cooler temperatures and a calmer environment. Renowned as a medical-tourism destination, it is home to an ample supply of private hospitals, state-run clinics and full-service pharmacies that provide high-quality health care at bargain prices.

Tip: As an outsider, you cannot own land in Thailand without a local partner -- but you can buy a condo or an apartment.

Coronado, Panama

• Population: While Panama's population is about 3 million, one estimate puts Coronado's population at about 2,500.
• Climate: Tropical, with daytime temperatures between 85 to 90 degrees.
• Proximity to water: Right on the Pacific Ocean.
• Proximity to major airport: Tocumen International Airport (PTY) is about 65 miles away.

The Draw: Just over an hour's drive from Panama City, this beachfront town hosts gated retirement communities, a low cost of living and inexpensive medical care.

Tip: As a U.S. retiree, you may be able to participate in Panama's generous pensionado program, which offers discounts on airline tickets, doctor bills, hotel stays, movie tickets and cultural events.

Cuenca, Ecuador

• Population: 467,000 (618,000 metro area)
• Climate: Mild with an average temperature of 58 degrees; dry season falls between June and December.
• Proximity to water: Four rivers, including the Rio Tomebamba, run through Cuenca. The Pacific Ocean is the closest major body of water, but it's not nearby.
• Proximity to major airport: Aeropuerto Mariscal LaMar (CUE) is about a mile from downtown.

The Draw: Ecuador's third-largest city offers low-cost living, inexpensive real estate and affordable health care. And as a foreign retiree, you can get special benefits, such as discounts on utilities, public transportation and cultural events.

Tip: The U.S. dollar is the country's currency.

Istria, Croatia

• Population: 206,000
• Climate: Mild; hottest in August with an average temperature of 75 degrees, and coolest in January averaging about 40 degrees.
• Proximity to water: Right on the Adriatic Sea.
• Proximity to major airport: Pula Airport (PUY) is about three miles from the center of town.

The Draw: Expats say Istria is like Tuscany, only cheaper and less touristy. The mountainous region -- which, in fact, used to be part of Italy -- is across the Adriatic Sea from its former ruler. Istria has low-cost real estate and mild weather. As an expat, you may want to opt for private health insurance through a global carrier such as Bupa International (www.bupa-intl.com).

Tip: Doctor visits are much less expensive than they are in the U.S., running as little as $50.

Kuala Lumpur, Malaysia

• Population: 1.4 million
• Climate: Very humid and rainy, with average temperatures between 70 and 91 degrees.
• Proximity to water: About 50 miles to the Indian Ocean.
• Proximity to major airport: Kuala Lumpur International Airport (KLIA) is 33 miles away.

The Draw: This buzzing spot in southeast Asia just north of the equator offers inexpensive living for big-city types. If you meet the financial requirements (which means depositing roughly $150,000 in a Malaysian bank account), you can participate in "Malaysia My Second Home" (www.mm2h.gov.my), a program that includes a variety of tax incentives as well as property-buying and business opportunities.

Tip: English, the second language, is widely spoken here.

Punta del Este, Uruguay

• Population: About 7,000 permanent residents.
• Climate: Average temperatures are 86 degrees in the summer and 54 degrees in the winter.
• Proximity to water: There's 31 miles of coastline between the Rio de la Plata and the Atlantic Ocean, which meet at Punta del Este.
• Proximity to major airport: Laguna del Sauce Airport (PDP) is ten miles away.

The Draw: You'll find inexpensive living, natural beauty and affordable homes near the beach in an area known as the Riviera of South America. Low-cost health care is a plus.

Tip: As an expat, you can buy private hospital insurance, which covers you at specific medical facilities, for about $50 a month.

Buenos Aires, Argentina

• Population: 3 million
• Climate: Mild, with the average temperature about 64 degrees Fahrenheit.
• Proximity to water: Right on the Rio de la Plata, which feeds into the Atlantic Ocean.
• Proximity to major airport: Ezeiza Ministro Pistarini Airport (EZE) is 26 miles away.

The Draw: Okay, you've heard of this one, but if you retire to the capital of Argentina, you'll enjoy low property prices in a South American city with a European flair, a slow pace of life and a reliable health-care system. Spanish is the official language, but English is spoken widely.

Tip: Doctors, dentists and other medical-care providers generally expect you to pay cash upfront.

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If Your House Is Worth Less Than You Owe, Is It OK To Just Stop Paying Your Mortgage And Walk Away?

Source:www.smartonmoney.com
ince the market collapsed back in 2008 we’ve seen the real estate market take a nosedive. People who bought at the height of the market (assuming that real estate would always appreciate) found themselves in a situation where their homes had dropped significantly in value. My wife and I are a part of the group who have taken a significant hit, our home value has dropped by over $40,000.

Many people, especially those who bought homes without a down payment, or with a sub-prime loan are now finding that they also owe more on the home than it is currently worth. According to a report by First American Core Logic, a real-estate data firm, more than 11 million families are in “negative equity”, that is, they owe more on their home than it is worth.

Thankfully we aren’t underwater, but what about those people who are? What are they to do? A growing group of people are saying that for most of those people it would make complete sense to just walk away from their mortgage, stop paying, and take the credit score impact of a foreclosure. They call it a “strategic default“.

My question is this. Is it OK to walk away from your mortgage if you have the money to pay, just because you’re underwater and have negative equity?
Credit Score Impact Of Foreclosure

There are a lot of things to consider when you’re thinking about walking away from your home. First of all, you need to consider the financial impact of walking away from your mortgage.

One of the most obvious impacts a foreclosure will have on your financial life is on your credit score. Now, I’m not one of those people who will tell you to constantly check your credit score and rely on it for everything, but the fact is that it does play a part in a lot of things these days, so you can’t completely ignore it. So what impact does a foreclosure or delinquent payment have on your credit? Fair Isaac pulled back the curtain a bit and revealed a little bit about what kind of a credit score impact those things might have:

30 days late: 40 – 110 points
90 days late: 70 – 135 points
Foreclosure, short sale or deed-in-lieu: 85 – 160
Bankruptcy: 130 – 240

So having a late payment, a short sale, foreclosure or bankruptcy can have a pretty significant impact on your credit score. In any of those situations it is going to show up on your account and have pretty negative impact. What does a lower FICO score potentially mean?

Absorbing a big credit-score hit can make many transactions more costly. It’s not just paying more for credit card debt and auto loans, insurance can cost more as well.

The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute.

A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters.

So having a foreclosure, short sale or even late payments can mean you’ll end up paying more for a variety of things. Definitely a huge impact to consider when you’re thinking about walking away.
Moral Dilemma Or Just A Contractual Transaction?

While walking away from your mortgage will obviously have a negative financial impact, especially as it relates to your credit score, this still isn’t enough for many people to not consider it. There are still those who are just having a hard time making ends meet, and while they can still make the payments, they would prefer to just walk away from the hefty mortgage on their underwater home, because they don’t want to lose upwards of $50-100,000 (or more) on their home value. Why take the hit when the bank can better absorb the blow?

It does seem to make sense on the surface, but now we need to ask the question, is backing out of a mortgage contract an OK thing for a homeowner to do, or is it morally wrong to back out of a contract you are still able to fulfill?

Personally I tend to come down on the side of paying your obligations if you’re able. I like to think that a contract is something you live up to. You knew the terms of the deal when you signed up, and now you should live up to it if you can. We need to be responsible for the obligations that we’ve made.

Others would counter that a strategic default is a legitimate option that is even spelled out in the mortgage contract, where specific ramifications of a foreclosure or short sale are spelled out for the homeowner. To exercise those options is just a a part of the legal transaction.

I understand that argument, but don’t agree with it. Just because the ramifications of missing payments or defaulting are spelled out in a contract, doesn’t mean it is an acceptable or desirable thing to do. Also, there is nothing in the mortgage agreement that makes your continued payment contingent upon the value of the home going up! It is a risk that you take!

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The Art of Tenant Selection

Source:http://www.milliondollarjourney.com/
This is a column by our resident real estate expert Rachelle.

I have been renting properties in the GTA since about 1997. Here are my hints and tips for selecting the best tenants.

In our current market, if your place isn’t priced properly or is in bad condition you can look forward to bad tenants or periods of vacancy.

Today internet shopping has reached a new level and before people even come to see your apartment they have already shopped it for price, location and appearance. People used to take the first place they could find and now they’ll see many places before they make that buying decision.

As landlords we are competing for the best renters and with tenancy laws being the way they are, it is absolutely crucial to rent to good tenants. A bad decision will cost you 4 month’s rent or more in Ontario, plus any renovations that might be required after they move out. Even more importantly perhaps, the trauma inflicted by the experience of a deadbeat tenant is enough to scar people for life.

What Characteristics Do I Look For?
The selection process is absolutely crucial to weeding out the bad apples and moving the good apples into your place. From the moment I answer the phone I am evaluating the prospect and you should be too.

In my case I often have to “fit” the tenant to the landlord. There is more to a great tenant than paying the rent, especially in homes shared with the owner. Even with multiple tenants evaluating the customs and lifestyle of the building is essential to the landlord’s peace of mind. Tenants with different lifestyles may clash and then expect the landlord to mediate.

Here is my list of desirable characteristics. People who possess these characteristics make superior renters.

Organization: I like the people I select to be organized and be able to follow simple instructions. I tell every person I speak to “you must confirm the appointment by calling one hour before, if you don’t call I don’t go”. Believe it or not some people lack the basic skill of calling and showing up on time.
Preparedness: I love applicants who ask what they need to bring with them so they can rent the place. Some people bring a nice, neat package. The target market for the property will set the timeline. A family with children will be shopping several months before the move in date. A single guy looking for a basement bachelor might end up shopping the weekend before their move in date. In any case preparedness is an asset.
Financial Management: I want tenants to have financial management skills. If you can’t figure out how to get first and last together, I don’t want you renting any space I’m in charge of and I don’t care about your excuses. Please go be someone else’s problem.
Honesty: I want honest people renting from me. I affect a very friendly demeanor with potential tenants. This is deliberate. I don’t like being interrogated and I assume other people don’t either. So instead of telling the tenant all my rules and what I want, I am listening to them, asking leading questions, joking and getting them to reveal their character. If they are liars, what else are they hiding?
A common ploy among bad tenants is to manipulate your feelings and try to make you feel sorry for them. Learn to recognize this as a very serious danger signal. First of all it is inappropriate behavior to start divulging very personal information to your landlord. It’s the first time you’ve met and you know everything including the color of their underwear. Don’t rent to someone you feel sorry for or you’ll be the sorry one.

The Application
I have a very simple application form that I use. When I worked for buildings the application forms were often 2 legal pages long. Most of the information was unverifiable and unnecessary. When I developed my own application I wanted just the meat. I get copies of photo ID and SIN card, present landlord, pay stubs or if direct deposited bank statements to verify deposits from work, a few references, and of course on the bottom of the application I get them to sign for permission to do the credit check. The person you cannot believe is the previous landlord. The worse the tenant is the more they lie as their desperation to get rid of the tenant increases. Don’t judge, this may be you one day.

The Credit Check
The purpose of the credit check for renters is not to check their scores. It does reveal their payment history, which is important, but it also verifies all the information that is written on their application. On the credit check it will say who is their employer, their current address as well as any previous addresses. Pay particular attention to the dates of any moves. Moving every four to six months may mean that person is getting evicted or unstable.

Evaluating the Applicant Overall
Do not under dismiss your sixth sense. This may sound very new age but in fact about 60% of communication is non-verbal and our human instincts have been honed over millennia to keep us safe. I am pragmatic about most things, after years of experience, I don’t ignore my intuition. After I meet a tenant the first time I imagine how it would feel if they moved into the house. This is an easy way to get in touch with your gut.

RED FLAGS
When in doubt, just don’t rent to a potential problem tenant. Here’s my checklist of bad risks.

Last minute renters
Dysfunctional people
People who won’t do a credit check
People who try to manipulate your emotions
People who smell bad
Liars
People who don’t have first and last month’s rent
People who give you bad vibes
People with implausible stories
People with drug/alcohol issues
Do not under any circumstances tell them the reason why their application is being turned down. You don’t have to and telling them why may get you in trouble. You’d be surprised at what constitutes discrimination these days. So be safe and simply say “I’m sorry you didn’t get the space. Best of luck on your search”.

Safety First
When showing an apartment it’s a good idea to let someone know where you are going and call them as soon as the appointment is done. Three times in my years of showing and renting properties I felt like I was in imminent danger. I am a woman and I show apartments at night in questionable areas all the time. If this ever happens to you, do what I do, leave the space immediately and come back the next day to lock the door. Be safe and keep your wits about you. Just leave. No one is going to steal your empty or your applications. I cannot emphasize this enough.

Final thoughts on Tenant Selection
Do the paperwork and trust your intuition. In every single case where I have rented a property to a wrong person, when I look back, I had a “bad” feeling or a sense that “things didn’t add up”. Beware the miracle tenant, the person who shows up two days before the end of the month, who has perfect income who offers to finish your renovation work and pay above market rent.

Happy renting !!!

About the Author: Rachelle specializes in renting property on behalf of landlords. She also works with investors to find good investments in Toronto and surrounding areas. Her passion is bringing multi res properties back from the brink and maximizing profitability.

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Should I Buy Landed Property or Condominium / Service Apartment as First Investment Property?

Source:http://www.horlic.com/

Question: My budget is below RM450,000. I am not sure to buy a landed property or condominium / service apartment?

Answer: if I’m in your shoes, I prefer to buy high rise residential property example: apartment, condominium and service apartment. The reasons being are: -
I’m neither a cash rich nor strong holding power investor. Therefore, landed property will not be the best property type for my investment portfolio strategy.
I need positive cash flow property to earn passive income for long term planning. It is a norm for high-rise property having better rental yield compare to landed houses.
I need good rental income statement (positive cash flow) to increase credit score so that banks are willing to lend me more money to buy more properties.
I always believe in “Power of Leveraging”, that is why I’m keen to buy property for investment, using others people money (banks’ money) to make more money. Banks are making big money using others people money too, isn’t they?
However, that is nothing wrong with buying landed or high rise property for your first investment property; the best investment strategy is all depending on individual needs and objectives.

Is Now A Good Time to Buy Property For Investment?

6 May 2010 | Category: Property Investment, Questions and Answers | Leave a Comment

Dear Horlic,
My name is CL (Miss). I found your contact through your webpage horlic.com when I am trying to search for property investment ideas and advice.
Knowing that from monthly salary, it is quite hard to earn sufficient money for better living quality and children’s education. Hence, I am trying to search for opportunity in real estate investment to make hard earn money grows faster.
Since it is my first investment in property with my hard earns money, it must be careful and smart. However, I am a bit stuck with few things and hope your kindness to advice me.

Question: Is now a good time to buy property for investment? My friend – a property agent, said now is very risky for secondary market, but new launch is ok. What is your opinion?

Answer: “Anytime is a good time to buy property”, sound familiar? I believe most of the property experts saying the same thing.
For me, now is not the best time to buy property in Malaysia. One of my major concerns is the rumor of Mortgage Rate Resets on 2011/2012, which might be another economic crisis disaster going to spread over the world.
Is it a rumor or going to happen? I don’t really care. It’s better for me to be prepared and restructure my investment profile and strategy, mainly to lower down the investment risk. Cash is King! Opportunity is always there when the cash with you.
For you, if you insist to buy property now, it is more advisable to buy within areas you are familiar with. At least, you have the first hand information on what is happening surrounding the property.
Next, I agree with your property agent, buying property from developer is lower risk compare to secondary market. But from my point of view, it’s nothing to do with the timing of you buy from sub-sale market either now or later. It’s about your foundation and knowledge in investment property.
Property gurus and experts do buy property and make money during good and bad times, right? Unfortunately, we are not one of them. So, play safe.
Basically, second hand property involves more procedures, slightly more complicated, so the risk is higher for you. Whereas, the procedures of buying house from developer is straight forward. Of cause we are talking about reputable property developers in Malaysia.
Why not take this sweet time (at least you are having the cash in your hand not the failure investment with bad debt) to learn more before making any mistakes which might cost u a lot of money. Try to attend some free property seminars or more reading on real estate books, it definitely helps a lot! Good Luck!
Stay tuned for Miss CL next two questions..

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10 Things You Must Know About a House Before Purchasing

Have You Decided to Buy a House

Buying a house means that you might be risking years and years of hard earned money and possibly putting yourself into debt that could take decades to pay off. There are lots of factors to take into consideration before you make your purchase in order to ensure you have a pleasant experience and come out financially healthy.

The rules are different if you are buying a house as an investment property than if you’re buying to live in it. In this article I will share some of the important things to consider about the property in question before you sign the contract and change your financial future.


1. How much was the home last sold for- Was it sold before the recession? I’ve noticed that nowadays, most houses at their 2001- 2002 price levels. If the house you are looking to purchase has not been reduced substantially (25 – 30%) from its 2005 – 2006 levels, you could be overpaying.

2. Identify the conservative estimates on the home value – Fortunately, you don’t have to hire an appraiser to do this. Zillow and eAppraisal are great websites which take into tons of factors to give you a price range. Don’t look at their estimate, but rather the lowest value possible in order to stay on the safe side.

3. How much are you paying for square foot of living space? The price per square foot is one of the most important factors you must consider when purchasing a house. You can easily find the average price per sq. foot in the same zip code or for similar houses in the area on Redfin and Trulia. Always aim to be on the lower end, especially if there is work to do on the house.

4. Are you buying a flipper? A “flipper” is a home purchased by an investment company or an individual with the sole purpose of making a profit on it. These houses are purchased as a foreclosure or a short sale, slightly renovated, and sold for a much higher price. Flippers are easy to identify – they almost always have fresh paint and new carpets, two of the cheapest ways to breath cosmetic life into a house. Also common in flippers are large mirrors, painted counter tops, painted doors. Remember,investment companies try to make the house look as new as possible while spending the least amount of money. Stay away from these because you don’t really know whats on the inside.

5. Leaky roof? Squeaky floors? Be sure to hire someone to check for mold. – You can always place an offer on a house without knowing the mold situation as almost all contracts allow you to rescind offers if it fails an inspection. Mold is a problem that can cause you to go under on your house and even presents itself as a health problem. Be sure to hire a sound environmental inspector to detect mold.

6. Sure, the house looked nice during the day – but have you checked the neighborhood at night? When buying a house, check the area during the day and during the night time. Sometimes, gangs and criminals tend to walk around at night. Also, do people walk around the house? Is it lit with street lights? Are their gang signs tagged on the walls of houses, markets, or street signs?

7. Is the plumbing in good shape? There are a few ways to run a quick check on the plumbing before submitting an offer. Go to one of the bathrooms and turn on the shower water, the faucet, and flush the toilet. See if the water drains properly. If not, you could have a problem at your hands.

8. Does the house have “curb appeal?” Although not a financial term, curb appeal describes the attractiveness of the house in terms of how people who might buy it from you later see it. Some houses are stunning on the inside, but look horrible from the outside – so much that they might be looked over for a less stellar house thats more attractive. If you’re buying real estate, its good to check how other people perceive it.

9. How much money do you have to spend out of pocket to bring your house to your standards? Besides the down payment, there are closing costs for a loan, furniture, renovation (paints, carpets, counters) and other small out of pocket expenses. Make sure you keep this in mind when putting down any sort of money.

10. Are you buying a corner house or a house in a busy street? Corner houses are priced much lower than houses in the middle of the street because they are often victims of car lights being shone into the house and more traffic. The same applies for houses in the middle of a busy street. Make sure when buying a house, you aim to be as far from the street traffic as possible.

Source:http://smarterspend.com/2010/04/10-things-you-must-know-about-a-house-before-purchasing/

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Avoid 3 Expensive Errors In Property Investment -By Azizi Ali

Sumber:Azizi Ali
Property investment has been a long and experienced wealth builder. Folks had built fortunes throughout the centuries by owning real estate. If it was true then, it is even more so today.

Yet at the same time, there are far too many people who fall into financial difficulties because they invested in real estate. I personally know of one of my own colleague who is up to his neck with debts because of property investment. When you sit down to think about it, isn’t it odd? The same investment that is making some folks rich is sending others to their doom! Although there are obviously many reasons leading to this situation, one glaring point is that the people who are making money know something that the others don’t. Now, while one do not have to have a PhD in properties to make money from it, it is also obvious that the more you know about it, the more money you will have.

Properties are also straight forward. The more properties you own, the wealthier you will be. As to why this is so, the reason is simple: a person who has financial difficulties will never come to the situation of owning five or more properties; he has enough problems even to own one! For a guy to own five or more properties, he has to know what he is doing and should be a master of his finances already. While there are always exceptions, that is the rule of thumb when it comes to properties.

Now, the three common errors folks make in property investment are (1) buying in the wrong location, (2) buying the wrong type of property, and (3) making decisions based on what happened in recent history. Unfortunately, all three errors are very costly, very expensive and also very demoralizing.

Buying in the wrong location

This is the fatal and yet, the most common error. Folks keep on buying properties in the wrong locations (for their purpose). The solution to this is simple – if you are buying for your own use and intend to stay there forever (or close to forever), then you can buy a property in a location where you like. This may be in your own kampong, town or orchard. But if you are buying a property for investment purposes, you have to buy where ‘others’ like. And the ‘others’ here have to be in the thousands, not one or ten or twenty individuals. You realize that you may be buying in a place where even you do not personally like. But as ‘personally liking’ is not a criteria for making money here, it should not be in the equation at all.

Buying the wrong type of property

This is the second most common error – buying the wrong type of property. They want rental income but they buy houses. They want capital gain but they buy apartments. In this case, the answer is the opposite. For example, if you are buying for rental purpose, there is only one answer – apartments. If you are buying for capital gain, then the answer is houses. In other words, buy the right property for the right reason of investing.

Making decisions based on what happened in recent years

The third and most common mistake is making decisions based on what happened in recent years. A lot of people think: prices have increased in the last three years so the trend will continue for the next three. This is a very dangerous type of thinking, especially in the rapidly changing environment of this new decade. What happened in the past five, ten or even twenty years may not be repeated in this decade. So, anyone who had based their investment decisions on recent history may soon be licking their wounds. There is a very real threat of prices going down in the near future. Add the very real possibility of interest rates shooting up, and you can see that it is a whole new ball game altogether. These latest challenges call for new and innovative answers.

Now that you know the three common errors folks make in property investment, you will be happy to know that I will be conducting my popular and #1 property seminar in Malaysia where I will elaborate on more errors that investors make and of course, their solutions. Further, I will also share strategies that will protect you from possible downturns in the market so you will sail on through smoothly regardless of the economy. For those who are unprepared, naive or greedy, they will suffer much pain when the upheaval begins. A lot of people will be unable to repay their mortgages and many of them will lose their money and also properties. I will guide you on what to do to protect yourself and yes, on how you can benefit and make huge gains from the fall.

As mentioned earlier, the more you know about property investment, the higher are your chances of making money from the investment. You will increase your profits, reduce your work and more importantly, reduce your errors drastically. When you consider that the cheapest property in Malaysia now is RM100,000, isn’t it worth investing a little bit of money to learn how to do it right? Remember that the knowledge will stay with you for life!

If you have not attended the program before, log on to our web-site, sign up for the program NOW and take advantage of the early bird offer.

Copyright © Azizi Ali 2010

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Buying Cash or Taking Loan

Sumber:http://fortunesense.blogspot.com/2008/10/buying-cash-or-taking-loan.html
Imagine if you have cash to buy a property, will you buy it by cash or you will buy it using the banking property loan facility ?

Example: If you have RM 200000 cash on hand and is able to generate 4% return rate yearly, after 20 years you will have RM 438224.66.

If you take a loan with RM 200000 and loan interest rate is
- 7%, after 20 years the total payment is 372143.49,
- 8%, after 20 years the total payment is 401491.23
- 9%, after 20 years the total payment is 431868.46

From the calculation, it seems that it is wiser to put your cash in the investment tool that can generate 4% if your loan interest is 9% and below.

Updated section:

Part of the reader's comment,

If i have RM 200k Cash earning 4% a year, and i have to pay monthly installment of RM 1,550.60 for 20 years for my housing loan (which charges me 7% interest a year), how much will i have afte 20 years?
What if my monthly installment is RM 1672.88 instead (at 8% rate, 20 years) ?

Lastly, what if my monthly installment is RM 1,799.45 instead (at 9% rate, 20 years) ?

The answer for all 3 questions above, is that your money won't even last for 20 years!. Meaning, once your lump sum finishes, you still owe money to the bank!.

Conclusion: You'll be better off paying off the bank if your investment rate is lesser than the interest charged by your loan. Simple as that!.


COMMENTS

U Lian // June 20, 2009 10:00 AM
Is the amt of return of 4% taken into consideration of inflation? What is the actual value of the money after 20 years?

Fortune Sense // June 20, 2009 12:54 PM
The 4 percent return rate does not consider the inflation rate but the total amount of investment after 20 years do consider the compound interest factor.

For both the total amount of investment and the total payment to the bank in this calculation do not take into the inflation factor.

The conclusion is judged by the face value after 20 years.

Do share your opinion on this.

cheongpeng // August 19, 2009 7:22 PM
The calculation is just theoretical. In practical, when purchasing property, u need to pay lawyer fees, stamp duty, maintenance fees, repair fees and others. This is just a rough guide.

For the example, the interest u earn if put in 4% investment is used to pay for bank interest. So...u r still the same. Unless the property increase in value. What happen if u made the wrong decision?

Fortune Sense // August 19, 2009 11:07 PM
Thanks for the input.

The calculation method is based on the assumption that the interest earned is being reinvested back into the investment that can generate the same 4% interest.

If the property value decrease or increase at the end of the loan period, the total payment at the end and the total investment value should be still the same as the amount being calculated.

Welcome to share your opinion on this.

Peter Lim Cheng Teik and Tan Shu-Yin // October 23, 2009 1:28 AM
I disagree with the calculation. When you take a loan, you have to pay monthly installments.

The monthly installments that you paid lost its opportunity to earn interest.

Thus, when you use a comparison of "total" interest you paid over a certain period of time, you're assuming that there's no opportunity cost during this period.

Infact, whether cash or loan is better simply depends on your inveestment return vs the interest charged. If your investment return is 4%, and loan is charging you 9%, then you're better to pay off the loan.

Fortune Sense // October 24, 2009 1:23 AM
Hi Peter and Shu Yin

The calculation does not include the "opportunity cost" investment return rate :P.

It is good if a person is determined and self disciplined to invest consistently the amount as the housing loan installment amount into an investment product that can generate positive return rate for the housing loan period.

Another perspective is that with the cash on hand (example 200K in this case), when the "opportunity" comes the money could be invested into it in order to generate a better return rate.

Hopefully by knowing the risks associated with the strategy that we use and understanding what we are doing, it will minimize the probability of losing and increase the probability of winning in the investment strategy plan.

Welcome to share your opinion on this.

Peter Lim Cheng Teik and Tan Shu-Yin // October 27, 2009 12:19 AM
Let's make a fairer comparison by assuming that the person does not use other "savings" to pay for his monthly installments, since i'm sure nobody is so dumb not to earn interest with their money.

If that person pays cash for his purchase, he won't have a monthly installment. Fullstop!

However, if that person takes 200k loan, he have to pay monthly installment. Although he have RM 200k CASH in hand, how about the installments?.

Let's be fair, in this case, and assume that he withdraws his "lump sum" of RM 200k to pay for his installments monthly.

The loan interest at 7% (yearly) translates to an interest payment of RM 1,167 on the 1st month. However, the interest you earned on your RM 200k at 4%, is only RM 667 on the 1st month!. That translates to a deficit. As time goes by, the deficit will be more.

Of course, you could assume that the person have "money" elsewhere to pay for the monthly installments (thus leaving the RM 200k intact to earn 4% compounding). If that is so, we could also do some funny assumption, like:

Take RM 200k loan, for 1 year, at 100% interest (super Ah Long). With this assumption, the total payment is only RM 323,989.85.

This being the case, does it mean that the above loan is better than 7% for 20 years?.

If it is so, let's get "funnier" again.

This time, we'll take RM 200k loan, for 200 years, at 1% interest per year.

With such loan, the total payment (over 200 years) is RM 462,667.40, which is the more "expensive" than the above 100% interest at 1 year, or even 9% interest at 20 years.

Obviously something is flawed, which is "Time Value of Money".

Yet your calculation never factor in opportunity cost, which will lead this kind of "funny" decision making.

Fortune Sense // October 27, 2009 7:25 PM
Hi Peter and Shu Yin

Thanks for the input.

The calculation does not include the "opportunity cost" investment return rate :P.

The calculation method will be different if take into the consideration of the interest earned when use the monthly installment amount to invest.

Do take into the factors (time value of money, opportunity cost, consistent investment method, positive retun rate, risks and etc) that are relevant to the individual while making the decision in order for him/her to have the most benefit.

Happy Investing.

Peter Lim Cheng Teik and Tan Shu-Yin // October 27, 2009 11:46 PM
I think a better comparison is this:

If i have RM 200k Cash earning 4% a year, and i have to pay monthly installment of RM 1,550.60 for 20 years for my housing loan (which charges me 7% interest a year), how much will i have afte 20 years?

What if my monthly installment is RM 1672.88 instead (at 8% rate, 20 years) ?

Lastly, what if my monthly installment is RM 1,799.45 instead (at 9% rate, 20 years) ?

The answer for all 3 questions above, is that your money won't even last for 20 years!. Meaning, once your lump sum finishes, you still owe money to the bank!.

Conclusion: You'll be better off paying off the bank if your investment rate is lesser than the interest charged by your loan. Simple as that!.

People who knows a bit, try to complicate matters to the public. People who knows a lot, try to simplify the complicate stuff. Housing loan vs investment return is as simple as it can get.

I would appreciate if the matter is not to confuse or misleading people.

I believe many people read your blog, and from your "article", people might get a misleading conclusion.

While i truly advocate taking housing loan instead of paying cash, i'm very clear of the reason (which is OBVIOUSLY my investment return is better than the housing loan rate, by a wide margin!).

Fortune Sense // October 28, 2009 8:38 PM
Thanks for the input. :P

Agreed with investment return rate needs to be higher than the loan rate and keep it simple.

Glad to know that your investment return is better than the housing loan rate and by a wide margin.

Wish you achieved your financial goal as soon as possible. :P

Happy Investing!

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Costs In Buying A Home Besides Your Mortgage

Sumber:http://freefrombroke.com/2010/04/costs-buying-home-mortgage.html
“What are these home costs?!?” you scream to yourself as you start your life in your new home. You went through your budget with a fine tooth comb, making sure you could afford the mortgage payments. You negotiated the house price and got a good interest rate on the mortgage. You know what your local taxes will be and you home insurance costs. You thought you were set. Then the OTHER costs rear their heads. You quickly realize that owning a home isn’t all about being able to pay the mortgage.

There are a number of other costs you need to consider before you buy a house:

Moving Expenses

Your stuff doesn’t get to the new house on it’s own! Do you hire a moving company? Maybe you try moving yourself, you may still need rent a truck. And how about packing materials? There are ways to cut down on box costs, such as checking out supermarkets for boxes, but you may still end up buying some. And don’t forget a tape gun and tape! Moving costs can easily cost you a couple of thousand depending on your situation.

Spackling and Painting

If you are fortunate, your new place will be all done up and have all the picture holes spackled and the rooms freshly painted. But many homes will still have minor dings here and there that need repair and fresh paint doesn’t mean you like the color. We all know its easier to paint when there’s no furniture in the room. So do you repair and re-paint? Do you hire people or do it yourself? DIY will still cost you and depending on how much work needs to be done your costs can easily rise.

Carpeting – Clean or Buy New?

Your new home may have nice wall-to-wall carpeting but when was the last time it was cleaned? Perhaps its not quite the color you want or its showing some wear and tear. You can go cheap with carpeting but sometimes you get what you pay for and this is your home.

Re-Finish Floors

Wood floors look beautiful! Were yours re-finished recently? Or will you need to sand and re-finish some of them? Again, ore costs in hiring people or renting equipment to do it yourself.

New Locks

You are going to want to hire a locksmith to change all of the locks in your new home. There’s no telling how many copies of keys are out there already!

Energy Costs

Make sure you understand what the various energy costs are before you buy. Check with the local utility companies for estimated costs for both winter and summer.

Alarm

Will you be getting an alarm? Will it be a monthly service? Here’s another cost that could be recurring monthly.

Gardening and Landscape Architecture

How much lawn do you have? How about shrubs and gardens? Can you handle the work? Will you need to buy or rent equipment, such as a mower? What does it cost to hire someone to handle the landscape? The previous owner may be able to give you an idea of the costs as well as refer you to the company they used. Find out if there are local ordinances about grass height and what you are allowed to grow as well as water usage for your lawn. [A recent realtor told me that young couples want more grass while older ones generally want more concrete. I can see why!]

Cable/Telephone/Internet Services

Will these services cost more than where you previously lived? Will you need any new equipment? Will you have it in more rooms in the new home (such as more cable boxes)?

Furniture

Odds are you are moving to a bigger home. Do you have the furniture you need (for example are you moving from and eat in kitchen to a home with a formal dining room)? You don’t have to buy this all at once but you may be tempted to fill in empty spaces.

Appliances

Do you have all of the appliances you need? Perhaps some need upgrading?

Additional Car

Are you moving somewhere that you will need another car for? Is public transportation or walking out of the question now? Think about your location and your needs when you are looking to move and figure out if you will need another car. If you do, remember you will also need additional car insurance and you will have more maintenance costs as well.

I don’t mean to scare you with all of these items, but they do need to be considered before you buy a new house. These may not all apply to you but you can see how quickly costs can run up! When preparing your budget for a new home make sure you take into consideration all of the other costs you may incur.

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Being Logical and Never Buy a House

Sumber:http://moneyning.com/housing/being-logical-and-never-buy-a-house/

My wife sent me a link to calculate the cost of renting vs buying a home the other day, which was basically a pitch from a home builder about why owning a home is so great. If you believe the calculations, buying the home with the prices we would consider is save us $1,075,638 after 30 years.

On the surface, it sounds like we’ve got to jump on this home buying bandwagon that everyone else is on. After all, who would turn down 1 million dollars of savings? Looking at it further though, and there are many flaws with this calculation.

First, although it has a box to put in a percentage for home value appreciation, it assumes that the property tax amount is the same for the entire 30 years. Unfortunately, this is just wrong. We will probably never get a new assessment of property tax every year, but we can bet that the property tax will increase with the home value over the long run.

Second, it assumes no cost associated with obtaining a loan. This is again incorrect. When a loan is made, there are upfront closing fees that just need to be paid. Some people end up taking a bigger loan to cover the closing costs but this is still money paid up front that could be earning interest in our saving accounts.

Third, buying a home usually accompanies a huge down payment. This is money that would otherwise be earning interest. This might sound like a small detail, but the down payment could more than double at 3% a year after 30 years.

Fourth and last (there are more, but let’s stop here since I think we see the point), it doesn’t say anything about the higher monthly payment that we have to come up with if we decide to buy. This situation stays the same for years before rent appreciates enough to surpass it. The extra cost of owning a home for the first many years could’ve been invested or saved, which would further cut into the perceived savings that the website is leading us to believe.

If we look at the calculation of owning vs renting more carefully, owning a house might actually be more expensive after 30 year if we include the extra cost of maintenance!! Hopefully, no one falls for the calculation in the link above thinking that they are saving a million bucks by buying a home now.

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Be Human and Buy a Home

Sumber:Moneyning.com
For an opposite point of view, check out the post titled Be Logical and Never Buy a Home.

Buying a home is one of those major events in life that everyone wants to experience. If we consider everyone we know, it will be apparent that people who own a house is usually living happier than people who don’t. There’s a sense of family and accomplish when we live in our own house. Here’s a couple more reasons why we all want to buy a house.

30 Years and We Are Done Paying for the Majority of the Expenses
Renting a house means that we will be paying rent for our entire lives, but getting a 30 year loan means that we will be done paying for our mortgages in 30 years. Once the 30 year hits, our expenses will go way down, which will give us more freedom to think about early retirement.

Leverage
Those who already own a house during the early part of the latest housing cycle saw their net worth grow tremendously. For example, I just saw a house on sale for $1.8 million today that was bought in 1998 for $700,000 and the original buyer bought the house with a 5% down payment. This meant that their original $35,000 investment in 1998 turned into more than $1 million dollars in profit 10 years later! There aren’t that many investments that can return such a high percentage increase, and the only way it is possible with a house is because of the degree that companies allow us to leverage when purchasing a home.

The buyer in our example only put down $35,000 for a $700,000 house. This means that they are borrowing $20 for every dollar that they put in. In the stock market, the most we can borrow is $4 for every dollar that we own.

It Forces Us to Save
There is no better way to get us to save than having a big mortgage payment. The good thing is that our mortgage payment is partly used to build our net worth over time as the money is put into our house. It’s the same theory as “pay yourself first” because bills usually take precedence over spending. Through time, the extra money that we saved will grow to tremendous amounts of money.

The Needed Pressure to Make More Money
With high bills actually comes pressure for us to work harder and make more money. It’s another psychological trick but it definitely works. If we don’t need the money, we wouldn’t really be working to earn it. I remember my boss once told me that having expensive tastes is a good sign for a sales person since it meant that it will drive them to work harder. Like they say, “if we need it, we will find a way” and having a big mortgage payment due every month definitely creates this “need”.

It is Not About The Money
Many people will echo this, because buying a house is not always about making money! The joy of owning a house, having a place we can call our own and giving our children a place to grow up cannot be measured in dollars. The uncertainty of renting and the need to move every few years because of unforeseen circumstances can only mean more energy wasted on something that can be avoided.

Conclusion
We can be logical all we want but all logical approaches have the flaw of needing the assumptions to all play out. If we are human, we should make sure that we will live a happier life and just buy a home.

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Common Homebuyer’s Mistakes

Sumber:1stophomefinance.wordpress.com
You know buying a home is your long-term biggest investment. Making a mistake over the purchase of a house may be difficult to correct because of all the cost involved and the legal binds once the deal (and papers) are signed.

Here are some tips, offered by the many people we encountered:

Do not rush into a purchase.
Buying properties requires careful consideration, with many variables to consider. Even if you think you found the perfect property, find all information you can get before deciding. This includes everything such as property value, access roads, public transportation, schools (if you have children), security public parks and other public infrastructure. Think 5 years down the road, if what the developers say tally with what you see. What is available will affect the value of your house in the future. If you are buying a second-hand property, a valuers report is worth investing for.

Do not get too excited.
Relax, and think clearly. The design of the house is not the main criteria for deciding to purchase a house. Insist on a full inspection and look at the fine details of the workmanship in the house; doors, windows, wiring, plumbing, faucet, woodwork (termites, water damages), renovation quality and roofing. All this will add up if you have to fix them later.

Do not make a lone decision.
Ask people about your intended purchase. Decide after talking with family and friends; wife, parents, friends, colleagues living in the area, and real-estate agents. Or go the distance by checking out property reports!.

Do not underestimate your credit score.
Before embarking on a house hunt, falling in love and putting down a down-payment for the house, re-evaluate your credit history. If there is a lax in some of your other credit payments (first house, credit card or car loan), maybe you need to ensure the payments are up-to-date before proceeding. Or, test out your “economic viability” by applying at a bank to see if you get approved.

Do not over-borrow.
As much as possible, try to borrow a little as possible from banks, putting up as much down payment as possible. Or have a combination on the housing loan by taking a small overdraft portion to cover future expenses (for fixing damages or renovation). Decide on how much you can afford and be sure your house is in the price range.

Do not rush signing with a bank.
Decide on the best mortgage package, and ensure the best deals by shopping around. Be careful of special offers as most of the time, there are catches to the offers. Consider and weigh them carefully. Understand the benefits of each package and choose the right one for you. Remember that banks are businesses and they will protect their interest as far as possible.

Do not become buddies with the home seller.
This opens up all kinds of emotional can of worms. Business is business, and the seller’s (whether real-estate agent or an individual seller) main interest is to make the sale. The tactics used will range from friendly to sympathy to manipulative. Do not show that you love a certain feature of the house, but highlight its weaknesses. Be firm, and demand all your wants from the seller. Negotiate as far as possible.

Do not ignore your neighbours.
They are you support system. Talk to your future neighbours for some insight of the neigbourhood, but more importantly, the neighbour themselves. They can help you in difficult times but if you cannot get along with the neighbours, future disagreements may occur, unless you are the loner, forgiving type.

Do not regret your decision to purchase, once you made it.
Just like going shopping, never regret when the shirt you just bought is on sale the next week. Move forward and make the purchase worthwhile by giving your property the attention it deserves.

Do not agree on anything without black and white.
Whatever you agree with the seller, write it down somewhere, or better still, have a written signed agreement. A housing transaction takes a long time to complete, and things get forgotten unless it’s written down. Check all the fine prints and understand them.

Understand that no house is 100% perfect, but by making as little mistakes as possible, your property will seem as the best value for your money, and most importantly your family and future purchasers of your house (if you decide to sell).

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Rules of 80/20 – Property VS Job

Sumber:http://investkk.com/rules-of-8020-property-vs-job/
Jobs are necessity for everyone. Any of you loves your job very much and satisfy with your paid? Your boss really asks you work from 8am to 5pm? Have you ever thought of looking for higher paid job? How much you can save from your salary per month after deduct your daily expenses and all compulsory expenses like car petrol, home loans, car installment, children expenses and etc? I strongly believe majority of the employees are not satisfied with their jobs especially when we talk about their salary. Your employer or even my employer will calculate every dollar they spend which will compute into your job descriptions. So nothing comes free nowadays. That mean you get will get paid for what you work for and of course the more the better just like sales target. It’s a norm that sales job required us to achieved our target every month and if can they will push you to achieve beyond your target. This also happen to me. Sometimes it’s really tiring and pressuring knowing no matter how good you done today it will zeroes by tomorrow morning. I believe you will have same feeling like me if you are in sales line. Looking at myself, when I entered banking industry as senior executive climbing up to assistant manager after 7 years and with total increment of salary around 50% @ 7% per annum really make me sick of receiving such salary.


The Rules of 80/20
The rules 80%/20% really happens to me. So far I have spent more than 80% of my 7 years working life earning 20% of the incomes which I think it’s a worst investment that I ever made. Luckily I have spent the rest of my 20% time earning the rest of my 80% wealth in property.

My wealth building only started end of 2004 when I successfully acquiring first pieces of vacant land. My property ownership continue to increase till today and I hope it will continue to rise as my personal target for this year also has been set. Giving myself a pressure to achieve what I need in life is much better than been pressure by my supervisor to achieve the overall company profit right? Just to share with all of you, few of my rental properties has appreciated so much which enable me to cash out some of them through refinancing and top-up additional loans. Even though I’m running at negative cash flow now, but it’s very marginal and manageable to me. The positive part is that, in total I have cash out more than RM 300K compare to my initial capital invested which is less than RM100K. Yes that more than 300% increase @ 50% per annum (divided by 6 years since 2004). This is excluding my monthly rental income that continues to come in despite economy downturn. I don’t think your employers will not pressure you more during the last economy crisis. Some of you might get pay cut and your hope of getting bonuses is virtually zero. I got mine bonuses every year from my property appreciation. In fact, my wealth grows every second but a bit shaky last week after I decided to sell off one of my condominium to finance my purchase of commercial unit. But at last, I decided to call off my disposal of my condominium as I know the value going to be more due to its location, environment, size, and surrounding development. The appreciation of this condominium is equivalent to more than a year working income for me. Yes more than 1 year working income but I get it without much effort after purchasing this property in 2006 for rental collection.

Dear friend, my job gives me 7% increment per annum while my property give me more than 50% increment per annum!! 20%/80% rules right? Bear in mind, the appreciation equity is only from my rental portfolio excluding my vacant land appreciation and my share investment. If I include in, I think I might as well resign from the banking and focusing more on my property acquisition. Needless to say more as the time will not wait for you. Please start somewhere somehow today and continue acquiring good location properties as time will prove how success you will be 3 years from now.

As I always say, if you purely depend on your working income to built your wealth, until the day you die also you WILL NOT MAKE IT. Please don’t try NOT TO UNDERSTAND WHAT I TOLD YOU TODAY.


Who take care of your rise bowl?
It’s a fact in life we have to take care on our own rise bowl as your employers will definitely not going to take care of you leaving you a comfortable living. You will only realize the scary part after you reach 50 years old and your real nightmare only begin after golden ages of 55 years old. Wake up now knowing early birds will have more worms to eat. Happy Investing.

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Cost of Selling Property Charged by Seller’s Lawyer in Malaysia 2010

Sumber:http://www.horlic.com/cost-of-selling-property-charged-by-seller’s-lawyer-in-malaysia-2010/
How much is the seller’s lawyer charges for selling a property in Malaysia? It’s important for seller to know about all the charges in order to calculate the cost of selling property precisely.
For easier understanding, I have requested an quotation from my lawyer on the legal fees and other charges of selling a condominium in PJ, freehold, bought direct from property developer, selling price at RM380,000, master title, and etc.. Example:
Legal Fees
(According to the Solicitors’ Remuneration Order 2006)
To our professional charges in the preparation of the Sale and Purchase Agreement, in taking your instructions in respect of the said matter, to all attendances, consultations, correspondences and miscellaneous work incidental thereto (Purchase Price of RM380,000)
1% for the first RM150,000 – [RM1,500]
0.7% for the next RM230,000 – [RM1,610]
Others:
Deed of Receipt and Reassignment – [RM400]
CKHT 1A per Vendor – [RM300]
5% Service Tax – [RM190.50]

Disbursements
Stamping of Receipt and Reassignment, RM10 @4 copies – [RM40]
Purchase of Deed of Receipt & Reassignment from CIMB – [RM200]
Registration of Receipt and Reassignment at the High Court of Malaya – [RM80]
Traveling (inclusive of trips to and from Stamp Office for stamping of documents, etc. and all hand deliveries to and from Developer’s Office and Financier for redemption process, Lembaga Hasil Dalam Negeri and Commissioner for Oaths and all hand deliveries and collection from third parties to expedite matters – [RM200]
Stationery and Printing – [RM100]
Facsimile, Telephone, Courier, Postage – [RM100]

Summary
Total: RM4,720.50
Discount: RM933.00
Net Total: RM3,787.50
I hope this costing example may help first time home seller here to have better and clearer picture on the charges from your lawyer when you are going to sell your house in future.

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Information & Documents Needed by Seller’s Lawyer for Selling a House in Malaysia

Sumber:http://www.horlic.com/information-documents-needed-by-seller’s-lawyer-for-selling-a-house-in-malaysia/
What are the procedures of selling a house in Malaysia? If this is your first time to sell a house, then you should appoint a lawyer representing you to handle and ensures all the proper selling property procedures are in order, accordingly.
It doesn’t make sense to save the few thousand legal fees and putting you into the risk of a deal involving easily hundred thousand, agree?
After you have appointed your own lawyer, prepare the following information and documents immediately for them to proceed the selling process:A copy of the “Offer to Purchase”
A complete set of your “Principal Sale and Purchase Agreement”
The copies of your current loan documentations (“Loan Agreement”, “Deed of Assignment” and “Power of Attorney”)
Your income tax number and serving branch
The latest “Assessment Receipt”
The latest statement of accounts from the Joint Management Body/the Developer
A clear copy of your NRIC
Your housing loan account number and the address of the branch
A latest statement on the housing loan account, revealing that the Redemption Sum does not exceed the balance 90% of the Purchase Price

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Don’t Invest Property in KL Top 10 Flood Prone Areas

Sumber:http://www.horlic.com/don%E2%80%99t-invest-property-in-kl-top-10-flood-prone-areas/
Is my property in a flood zone? It is a nightmare question to be raised in every home buyer’s mind regardless they bought it for investment or own staying purposes.

Recently, heavy rain in KL and PJ almost every day. Flood warning system is alarming. The State Drainage and Irrigation Department (DID) and Kuala Lumpur City Hall (DBKL) are on high alert for flood monitoring in Selangor and Kuala Lumpur (KL). They have spotted Top 10 flood prone areas in KL as below:
Jalan Duta
Jalan Cheras (near Tesco)
Kampung Baru
Kampung Periok
Segambut Dalam
Segambut Bahagia
Kampung Kasipillay
Kampung Kolam Air
Jalan Kelang Lama (4th mile)
Jalan Travers
The areas named on above are now become my blacklisted property location for investment. Click here for other flood prone areas under Petaling Jaya City Council (MBPJ), Selayang Municipal Council (MPS) and Batu Caves.

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