Cash Flow vs Capital Appreciation

I have lunch with this friend nicknamed K.K. every week. This is one smart guy who is already driving a fancier car than me and talks about property day in and day out. Recently, he just got another home loan approval for a landed property in Klang. Yes, banks are still approving loan applications for those who qualify. His sharing for all investors as below.

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I believe everyone has their own investment mantra. Some may be thinking of extra cash every month from our rental incomes? Some aiming high to get a good capital appreciation in the longer term. The best person to understand how we should invest is our own self. We are the best person to assess our own financial capabilities. Question is what do you want to achieve?

Landed properties. Generally landed properties yield a better appreciation than high rise but I do noticed some condos actually appreciated almost the same percentage as landed over the same period of time. Do our homework. View the homes, check the surrounding, understand who are the potential tenant market. Even landed properties may still give potential positive yield though this is most likely not the case. It’s not the norm but for me, it happened. A good study and analysis will always increase your chances to find one. Landed usually fetch lower rental and the rate are not too far from a single to double storey.

High rise. I’m not an expert on high rise but I guess everyone who read this article already know that rental yield are usually better than landed and positive cash flow can be our motivation. In fact nothing beats owning many high-riseunits with positive rental yields! Having said that, while the appreciation can be lower than landed, it doesn’t matter because end of the day we can always evaluate our own financial and determine what’s best for us. I always have lunch with someone who buys only high-rise. Some of his units have appreciated considerably too.

Choosing one. If you have strong holding power and aim for long term capital appreciation, landed will be a good choice for you. On the other hand, if you wish to get extra rental income from positive cash flow, perhaps high rise is your game plan.

My current goal. At the point of writing this article, I do not have any high rise unit and all my landed properties are rented at negative cash flow but the capital appreciation was reasonably good. What’s next? I planned to buy some mid cost apartment for some positive rental yield to balance my portfolio 🙂 Thats all for now and I would love to share with you my experience with my first high-rise, once I have signed the papers.

K.K.

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contributed on 11 July 2016

next suggested article:   We have limited wealth, thus stay focussed on building it up

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