When we feel we are too poor to buy a property

This article was first published in July 2017 issue of Ivory Living

“I do not have enough money to buy a property today,” my colleague shared during a lunch recently. He continued, “I am looking at many condos but I could not afford them. I am just too poor to buy!”

This colleague works in the finance department and based on his salary is earning more than enough for a decent home, even if not luxury condos or gated and guarded properties. He was also getting married in September 2017 and he said this was the reason why he was looking for a place and yet places that he loved is just too expensive. He shared a few locations and unfortunately, all the locations were already hotspots. In other words, it would be those places where everyone wants to buy and unfortunately for him, many of these prospective buyers may be richer and thus could afford to offer higher. Should we continue to try to compete against all the richer buyers? I shared the following with him.

Asking WHY we buy is always a better question than WHERE to buy. For example, if we want to start a family, then the bigger the home, the better. For this reason alone, consider buying slightly further away where space is cheaper. If we want to have a mall nearby, then extend this ‘nearby’ to 10 minutes away and not ‘right next door.’ If we want it to be near our office, then look at connecting expressways or even nearby a public transport station instead of just within 10 minutes drive.

It need not be forever. Actually, a home today need not be permanent until the day we retire. Many of us would not work with the same company or even the same state until we retire. In fact any survey would reveal that people change jobs a few times before they retire. This is the reason why the decision to buy should must take this into account instead of that PERFECT property which would actually not happen anyway. Most of us are not so rich that we can afford anything that is being launched today.

Renting as a better option? This is a better option if we are renting a place which will allow us to save lots of money for a downpayment. This is not a good option if we are renting a very nice place so that we can enjoy and have very little savings every month. Remember, when we rent way too high, we may never buy in the future. Yet we wonder why are property owners getting richer and why some of them could afford to buy the second, third and then fourth property? Well, they rent out to people who did not buy and keep saving for the next one.

Affordability is key. We have often heard about the banks being more stringent with home loan applications. The truth is, banks love to lend to us. However, it’s not wise to stretch what we could afford to the limit. Making the banks worried means that they will reject our home loan applications. The key here is always affordability. If we can afford a RM600k home, why not think about a home of RM500k instead? Get that property and start saving for the next upgrade.

Generally, properties do not appreciate suddenly. It crawls up slowly during normal times. However, the rise is based on overall property price. Thus if it’s 3 percent per year, it’s 3 percent on the property price. RM400,000 x 3 percent up is still RM12,000 per year or RM1,000 up every month. Not many of us have increments of RM1,000 every month, agree? The only reason why we remain poor was because we refuse to accept a little discomfort today for a more comfortable life tomorrow. Seriously, when we did not use part of our salary for a property, where would the money be going anyway? Hopefully the answer is a positive one instead of a materialistic one. Happy working, saving and buying.

written for Ivory Living July 2017 Issue.

next suggested article: It’s always best to start investing 5 years ago, Agree?

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