I met a young professional couple the other day. Boyfriend is in marketing and girlfriend is in sales. They treated me a cup of latte and wanted to ask for my opinions on buying their first property, a condo below RM450,000. The boyfriend is working in USJ and the girlfriend was still working in Penang. She said she should moving down in a few years, perhaps within 2 or 3 years. The question he asked was, where should he be buying since he is working nearby USJ currently. I told him that as long as there are homes within his budget nearby his office, that would be the most natural choice. In fact since he was also renting a room today, he can choose to buy a condo and rent out two rooms instead. In effect, he may still be paying almost the same ‘rental’ while his tenants help him with his mortgage. He agreed too and we searched for properties meeting his requirements as follows: Minimum size of 1,000 sq ft and maximum of RM450,000. Actually, there are still choices, even if it’s limited because he could only concentrate on secondary ones. New launches would not meet his requirements. Some choices? Do refer to the image. Out of the choices, he should shortlist those within 20 minutes away from his office. He was happy that there are still choices and would start viewing.
Then his girlfriend asked. “What would happen if my future office is in KL city centre? It’s crazy to drive from Puchong to KL city centre everyday.” I replied, “You can change your lifestyle by starting much earlier or take the public transport.” His boyfriend laughed, “She won’t be able to do it one lah.” She suggested buying somewhere in the middle instead. Between KL city centre and USJ. I told her that there is no certainty as to where her future office would be. However, there is certainty that his boyfriend would be working for 2-3 years more in the current company. Thus, it is always okay to buy somewhere nearer and in the near future, when she moves down to the Klang Valley, they can always buy another property and rent out the current one. She agreed too because there’s still uncertainty in her career plans. She is staying with her family in Penang while her boy friend is paying around RM800 per month.
As long as we did not buy a wrong property, it is always okay to get a property instead of renting. In fact, when we buy a property, we are still paying a “rental” because the home belongs to the bank and not us. However, we can then get some tenants who can help us in paying some portions of the mortgage on a monthly basis. The future would be based on what we do today. A RM400,000 property today, with a 3 percent appreciation rate would be RM463,000 at the end of 5 years. How many of us can safely say that I can save RM63,000 in 5 years? That’s RM1,050 per month for the next 5 years. Of course, the MAIN thing would be to save enough downpayment for our first property. (Image by calculator.com.my) This first one would propel us onwards in our property investment journey. Image shows how much we need to pay per month. Assuming we have 2 rooms which we could rent out at RM400 / room? We are then only paying half of the monthly mortgage payment. A wiser decision definitely compared to continuing renting a room at RM800. I wish my two young friends the best. I think they would do well.
written on 16 Jan 2017
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