Is Renting Worth It? The Case for Buying a RM900k Condo

Is Renting Worth It? The Case for Buying a RM900k Condo

When the price is really attractive

Looking at all the other listings would reveal that RM900,000 is indeed a very good price even if this is just a typical 2,000 sq ft unit. Many times, if we already understand the typical pricing and we come across a listing, we better be quick yeah.

When the seller is willing to price it attractively

Sometimes, there are sellers who would be a seller for a very long time. Somehow, this seller is not motivated at all and not desperate too. They are just putting the price and maybe they have engaged 5 real estate negotiators etc. The more negotiators, the longer it will take yeah and not the other way round. If we engage just ONE negotiator and we give exclusivity to the person, they would be super motivated because they know they would not need to worry about others ‘stealing’ their deal.

Now imagine if they know you have 5 other negotiators… you really believe they will do this deal first or do you think they will focus on the exclusive ones first? Hope this explains the motivation part of engaging a good negotiator who would do his / her utmost for you and you alone. This particular seller was selling it at RM900,000 and this looks like RM100,000 below the typical listing price! Who would not want to save RM100,000?

Location is the single most important reason

There could be other locations, not interested. There could be cheaper units, not interested. There could be bigger and more renovated units, not interested. When we have interest in a certain area and a unit is suddenly made available, grab it soonest possible. Just like how this buyer was ready for units in the area and the seller was happy to sell quickly too even if he knows the area is an attractive one because if he is leaving Malaysia, it would be very inconvenient to complete the transaction later on.

Details about that RM900k unit in Mont Kiara

Some sharing from the REN (Kevin Teh REN02206) as follows:

Buyer love the renovated condition. Buyer was looking for a hassle-free investment. Transaction could be completed quickly as previous owner was migrating and wanted to cash out quickly. As per data on EdgeProp, the rental listings for listings near La Grande Kiara, the average monthly rental is RM4,430.

When renting is no longer an attractive option

If one were to rent, the typical rental could be RM4,400 on average as above. How much could one afford if one could actually afford to pay a rental of RM4,400? Here’s the answer and it explains why it makes perfect financial sense.

As long as buyer has the required 10 percent downpayment, the monthly repayment is actually lower than even the rental. Renting for 10 years means all the money belongs to the owner.

Know the difference between principal versus interest

Paying 10 years of below repayment meant at least half of what was paid goes into the principal payment… Chart as below: So, over the 10 years, this new owner would have paid roughly RM480,000 in total but RM166,000 goes into the principal. In other words, the owner paid RM312,000 for interest and this is equivalent to a ‘rental’ of just RM2,600 per month. Super value yeah. RM2,600 to stay in such a condo in such an area.

Happy understanding and perhaps the next done deal could be your deal!

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