Monday, 21 December 2020

Case Study: Property Investment No.5

My last property purchase was back in April 2012, which was more than 8 years ago.

My in-laws used to stay in relative's house. When that house was sold, they were forced to rent a house.

Instead of paying rentals every month, I thought it's better to get a house and pay the loan. 

So I decided to buy a house in the same area of my house for them.

At that time, developer was planning to build apartment priced above RM230k there, and 8-year-old landed freehold single storey terrace houses there were asking for around RM130k.

My instinct told me to grab one before it's too late.

I scanned through and shortlisted one. After viewing the house, decision was made rather quickly.

It was a freehold single-storey terrace house bought at RM148,000. Even though the price was higher, it was fully renovated with extension and also partially furnished.

I got a 70% loan and the monthly repayment was just RM500.

Initially I did not plan to settle the loan quickly to save on the interest, as I wished to save as much cash as possible to invest in the stock market, and as down payment for my next property if there is a chance.

However, starting from year 2018 when I was temporarily away from the stock market, I decided to settle this loan earlier by paying extra every month.

Finally the loan was settled fully in August 2020.

This is a property bought for own stay and it does not generate any income. It's like I invest in a property and fail to rent it out for 8 years!

So, it's a property with super negative cash flow, but is it a good investment?

The total amount of cash I have put into this property is RM186,772, the breakdown as below:

  • Down payment RM44,400
  • Loan repayment RM135,914
  • Stamp duty & legal fees RM6,458

If I include the assessment tax and quit rent up to year 2020, the total amount spent will be around RM188,000.

I'm glad that I didn't think twice to grab this property. Its market price has appreciated to around RM280k~RM300k now.

If I were to sell this house now at RM300k, I'll make a profit of slightly over RM100k even though I do not get any rental income from it.

More importantly, the cash that flow in will be RM300k.

If my in-laws continue to rent a house at RM600 per month, we would have "lost" RM60k in 8.5 years and we still do not own the property.

What money can't buy is that they will feel more secured and comfortable staying in own house compared to a rented house, which I think is priceless.

Would it be better if I invested all the cash in stock market instead of buying this property? Well, may be yes, may be no, I don't know.

However, I still think it's good to invest in both property and stock market.

Stock market might give us a higher return in a shorter period of time. Property market can also give us a high return but it needs more time.

This property forms part of my retirement plan. I hope that its value can appreciate to at least RM500k in year 2030.

While it is my last property purchase until today, I hope that it's not the last property in my life.


  1. You are kind to buy a property for your in-laws to stay. I hardly hear any of my friends did that for their in-laws, me neither :p

    In my opinion, property price in Malaysia should see improvement from mid 2021 onwards. In other Asian countries such as Korea, Taiwan and China, the property price have been surging. Malaysia property market is considered lagging but i believe it will catch up. The magnitude of price rise may not be a much as 2009-2013 period, but should also be attractive. There are many reasons to support my opinion, some of them are as follows :
    i) Property market is cyclical. Malaysian property market has been in down cycle from 2014 to 2020. It is about time for the cycle to turn.
    ii) There are plenty of hot money in the world market now looking for good yield investment. Property, other than stock and bond, is the investment vehicle. Many other countries' properties have started to rise even since mid 2020.

    1. My wife's family are quite unfortunate and they are definitely poor. If I didn't buy this house, I have to pay the rent for their rented house, so it's a win-win situation :)

  2. iii) Some experts taught that stock market normally react sooner than actual economy by ~1/2 year and property, on the opposite, normally lag actual economy by ~1/2 year. We have seen Bursa stocks have risen much earlier than the recovery of our actual economy. I suppose our property market will turn positive some months after the beginning of the recovery of our economy which expect to happen in 2021.

  3. I really think now is the good time to shop for property if one has the spare cash or borrowing capacity.

    1. I thought I have had enough in property investment since buying this last property back in 2012, but now I'm actively looking for another investment property... I do agree with you that we might have a property upcycle soon. However, I don't expect significant rise in property price like the last up-cycle. I think it will be more like a hike in psf, in which selling price remain the same but the property built-up size becomes smaller. I will only look for any undervalued deal, just like buying shares.

  4. ive sold my condo in OUG, kajang and double storey putra heights, currently only maintain 1 (own stay), since 5-7 years ago. All the money put into share for steady dividend income and some minor portion for growth stock.

    1. Vince, you must be a successful property investor! I guess you have lots of cash in stock market now. You're not thinking to go back to property again? I have a problem in investing in which I'm not good at selling, be it in stock market or property.

    2. ive went through property investment (appreciation - 5km from golden triangle radius and rental collection - near college/U/factory) before, both having the pro-cons, but 1 thing, Liquidation, hard to get cash out, if you really need 'them'; (im in a journey of life where liquidation to fund my passive income and kids education is important - much predictable cash flow)... Stock-dividend, so far im able to manage the balance well without taking loan for their education...

      About "Selling", or you can call it switching from "slow to fast" growth opportunity (stock/investment/property) to make money..."unpredictable to more predictable" income -> which normally im been adopting so far...