Property Investment 101: 7 reasons why we will fail to buy a property

Property Investment 101: 7 reasons why we will fail to buy a property

“Propertyless” is perfectly fine okay, stop believing sales people telling you their property is must-buy

Not everyone loves to buy a property. Many of my friends remain “propertyless”. Many of them are doing fine and I think with or without a property, they are able to earn enough even post-retirement. In fact one have earned so much that she has retired a few years ago and she was not even 50 then. One failed to get a refinance recently despite showing the bank that she is the owner of three fully paid properties. Reason is because she does not have a stable salary. Well…

Okay, let’s look through 7 reasons (yes, 7 is my favourite number) why we will fail to buy one property in the near future. They are in no particular order and some people may have more reasons than others. Remember, property investment is not necessary if we earn by far more than the rental we needed to pay.

#1 Paying high rental today (for comfort.)

If we buy, RM400,000 may not be a property we feel is a dream home. Yes, our monthly repayment may be RM2,000 or around that number. However, if we rent instead, the rental of RM2,000 per month means we could stay in a property valued RM500,000 – 600,000. (Rental market is not awesome for some owners right now).

Thus, using comfort level as a gauge, it’s better to rent and stay in a RM500,000 property versus buying and only able to stay in a RM400,000 property.

#2 Overspending every month or even just finish all the salary every month

Wants versus needs is usually blurry until you really write it down and categorise them accordingly yeah. Did you know how much we actually save every month? Actually, RM300 saved every month is equivalent to mortgage payment for RM60,000. Crazy but true… Take a look at below. So, the more we save, the more we could afford. (in the future). The less we save, the less we can afford in the future.

#3 – Everyone else is renting anyway and they drive better cars! (Peer pressure?)

Most of my friends and even colleagues do not have a property anyway. They are also renting lah. They have the latest iPhone or the latest gadgets. If I use a cheaper Android based phone, I look out of place in the world. It’s as if I am not doing well enough to afford the latest phone.

If I buy a property, then my salary is not enough and I will have to drive a Proton Persona, maybe not even a new Proton Persona but a second-hand car. If I did not buy a property, I can easily afford a non-national brand. Maybe a Toyota Vios or maybe a Honda City. Both cars will reflect better on my success currently. Peer pressure is working negatively here.

#4 – Buying that property can wait. (I am still young lah)

My friend told me the best time has passed. So, I should wait for the best time to come back. When will it come back? Actually my friend also does not know but it’s okay. I want to wait for the best price so that I maximize my returns. Who is this friend who told you so? Oh, he / she also has no property yet. He / She is also waiting.

Actually, when was the best time? 2008 – 2013 period? 1998 – 2001 period? 1970s? The next best time is 2026? 2027? I have no idea. It will be a long and never ending waiting game then.

Reason to wait is also because we are still young, we have more time to think about what to do next. We have more time to delay the need to make a decision currently. Who knows if we are still going to be working in Malaysia five years down the road? If I buy now and I have to move elsewhere later, then what happen to the property? Very troublesome lah. So, when I am more settled, when I am more mature, when I am already married etc then only I will start looking at property investment.

#5 I need to de-stress with a vacation

Some (maybe the younger ones?) say vacations are very important. With a vacation, they can relieve their stress and thus can work better! They can also share with the world of their travel too. Meanwhile buying a property just adds debt and worry of not being able to pay on time. Vacation is de-stress. Property buying is stress. Better choose vacation lah.

#6 I can stay with my parents

They love me too much and I love them a lot too. They always want to see me daily. So, they do not want me to move out (so soon) and I also don’t want to move out too. I am not getting married anytime soon anyway. Haha. Actually, if we have a free place to stay, then it could just be an opportunity to buy a place and rent it out for rental income even as we stay with our parents. Many people may not have this option…Alway be grateful with what we have and make it work.

#7 Banks kept rejecting my loan application

Whoa, if this is the reason, is it the fault of the bank? Actually when banks stop lending loans, they stop earning profits. Soon, they would be in trouble when their profits trend lower. So, they definitely want to lend. The only issue we need to understand would be the reason why our loan application was rejected. Did we spend too much via credit cards every month? Do we have high credit card debts?

Is 50 percent of our pay going to the installment for the car already? Once we get to know the real reason(s), we can then set steps to make it better. If we did not improve, then this will definitely be one reason we will fail to buy a property.

When will property become too expensive for everyone?

The possibility of property becoming too expensive for everyone is unlikely to happen. The reason is because if it is too expensive for everyone, then property developers would have to close down because there is nothing they can build. If they build and try to price lower, they may not have enough profit margin to complete the project. Without property developers, then all the people working in the property construction industry will have to find new jobs since nothing will be built.

What will likely to happen is that people will be more open (lesser choices based on affordability) to buying further so that they can buy a place which is still affordable. People may have to accept smaller sized homes so that the price is affordable. The family size is also getting smaller, so smaller units could be acceptable too. Basically, it will not become so expensive that no one could afford. However, it will become more expensive and fewer people would be able to afford in the future.

Happy understand why we will fail to buy one and some ideas why buying one could be easy and necessary too.

Happy investing and please do share your thoughts. Thank you!

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