There are a lot of investments you can do. From FDs to Unit Trusts to Insurance savings plans and even opening your own company, the choices are aplenty. What about property investment? Let me share my reasons why property investment is attractive and applicable to me, who’s working full time, has a lovely wife and a mischievous baby daughter.
Passive income. People can shout all they want but the truth is, there are still a lot of properties available for RM250K to RM300K. The rental is still acceptablelah, even if the yields are notes crazy asa yesterday. There’s potential capital appreciation too,in a few years time. However, you need to have around 15% downpayment for the loan, lawyer’s fee, etc. Depending on how old you are, this is sufficient to cover your mortgage and gives you a positive yield no matter how small this yield may be. If I can, I would like to continue buying to rent out. The reason being after a while, this becomes a passive income for you. The capital investment that you do would most probably be once, apart from the maintenance but the rental will only increase over time and the property will only increase in price over time. If you are able to rent out for a few years, you would notice that the rental yield becomes not just better but GOOD.
Family planning. Don’t tell me you want to buy a property for your kid in the future. Do it now. Chances are when they are old enough, you can either sell the house for their education or even give them the house as a gift. Even if a property is worth just RM300,000 today and rising with just the same rate as inflation, it will more than doubled when you sell it later. If you are staying in a landed property today, when you are older and your kids are no longer staying with you, it may be wiser to move to condo for easier maintenance, security and convenience. By then, your current landed property would be worth so much that after you sell and bought a condo, you would have enough for your retirement. Thus, property buying serves both your kids and even your own ‘ageing’ planning.
Great investment. Honestly, if I was richer or borrowed from my parents and bought double of the properties I bought and sold off everything today, I could now be sipping coffee and reading a book beside my swimming pool. Yes, it is true. However, it is ok, I may still retire earlier by 5-10 years perhaps than the official age of 56. You can save a lot of your income by not going to Starbucks so often, buying a Saga instead of Vios but if you take the ‘save your way to riches’ route, it will take you a very long time. Surely you will get there but it will be slow. You can also borrow huge amounts of money and drive up to Genting and perhaps you may win big or lose it all. With property investments though, the route is faster, more fun and ‘surer’ than many other investments because property is after all, a human need. That’s why they call it ‘home sweet home’, ‘home is where the heart is’ and when you feel tired after a full day of working you call your wife and said, ‘I wanna go home’.
Caution. Property investment is however not without any risks. You must have read sufficiently to be knowledgeable about your buy. You should do a thorough evaluation before buying. There’s no such thing as simply close your eyes, point and buy. The last thing is to listen to your friend. If he is right, you are good. If he was wrong, you have just lost a friend. Secondly, no matter how bullish you are about property, you must have your fundamentals right, sufficient savings in FD, coverage in insurance and work hard in your current job.
There, back to three basic reasons and one little caution on why I love properties and perhaps the reasons for you to start loving properties too. Just be reminded, there is no super fast route in property investment. On and off, you may hit a jackpot but that is just pure luck. The fortunate thing is, ‘luck comes to those who work hard’. 🙂
updated on 8th March 2014
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