Property Investment 101: Calculating ROI for Property Investment the right way
I was happily listening to YouTube Music for free when an advertisement started playing. Someone was explaining why we should invest in the stock market and avoid property investment. His argument? Property investment gives low returns and is slow. Therefore, property should only be for own stay.
Now, I love the stock market and remain very much invested in it. However, to say property investment is just for own stay is very wrong yeah. Sorry, I repeat. Very wrong.
Perhaps we should look at five things about these videos explaining why stock market investing is supposedly so much better than property investment.
#1: Why do stock market gurus ALWAYS like to target property investments?
This is my personal opinion.
If we buy a property, we may need to pay a 10% deposit. For a RM500,000 property, that is RM50,000.
If this RM50,000 were invested in the stock market instead, perhaps it could generate a very high return on investment (ROI), right?
That is not all. Every month, the mortgage repayment for the RM500,000 property could be around RM2,500, depending on the loan amount, interest rate and tenure.
If only this RM2,500 could also be invested in the stock market, we might potentially make even more money!
Stock prices can move up or down within seconds or minutes. We can buy today and sell tomorrow if the price rises. We can even buy and sell within minutes.
Meanwhile, with property investment, nothing seems to happen for years. 🙂
#2: How come these stock market gurus do not focus on investing instead of making videos?
Maybe teaching is an additional source of income?
When the US stock market closes, the Asian markets may be open. When Bursa Malaysia closes, other markets may still be trading. Depending on the time zone, there are opportunities to follow markets around the world.
So, why do some stock market gurus still have time to create courses teaching others how to invest?
Oh… maybe they recorded those videos earlier!
Haha. I am not saying everyone who teaches investing is doing something wrong. I am simply asking why we should accept an investment argument without examining it properly.
#3: How come the ROI calculation for stocks and property is NOT the same?
Let’s say we invest RM50,000 in the stock market and make RM5,000.
Our ROI is:
RM5,000 ÷ RM50,000 × 100 = 10%
Wow! That sounds good, especially when compared with a fixed deposit offering a lower return. But stock prices can also fall, and returns are never guaranteed.
Now, when it comes to property investment, suddenly the calculation changes.
We buy a house for RM500,000. Two years later, its price increases by 5%, or RM25,000.
Some people calculate the ROI as RM25,000 divided by RM500,000. That gives 5% over two years, or an average of 2.5% per year.
Aiyo, so little! How can we compare that with stock market investing?
But wait a minute.
ROI should be considered in relation to the amount we actually invest.
If we paid a 10% deposit of RM50,000 for the RM500,000 property, and its value increased by RM25,000, the capital appreciation represents 50% of our initial deposit.
RM25,000 ÷ RM50,000 × 100 = 50% over two years, or 25% per year using a simple average.
This is the leverage effect. We control an asset worth RM500,000 without putting in the entire RM500,000 ourselves.
Of course, this is a simplified calculation. It does not include transaction costs, loan interest or other expenses, and it does not mean our actual net profit is 50%. If property prices fall, leverage can also magnify our losses.
My point remains: if we compare the ROI of shares against property, shouldn’t we use a consistent approach to the amount actually invested?
#4: Property prices never increase mah, so property investors suffer losses lah?
Let me be clear. Property prices do NOT increase for every property, in every location, for every property type or in every transaction.
However, when we look at the overall market, we should also examine the total value and volume of transactions rather than relying on individual stories alone.
According to Malaysia’s National Property Information Centre (NAPIC), the property market recorded 187,320 transactions worth RM105.12 billion in the first half of 2026. The Malaysian House Price Index stood at 234.7 points, with the average house price at RM506,317, representing annual growth of 0.9%.
These figures show that the market continues to have substantial transaction activity, although price growth has been modest. They do not mean every property has appreciated. Individual properties can perform very differently.
Source: Ministry of Finance Malaysia — NAPIC Property Market Report for the First Half of 2026
#5: How do we explain a friend who sold their property at a lower price?
I have heard people say property investment is bad because their friend sold a property at a lower price.
My view is that we should first examine the purchase price. Perhaps the person bought the property at too high a price in the first place. The same can happen if someone buys overpriced company shares.
Perhaps the owner needed cash urgently and was willing to accept a lower price to sell faster. There may also be other reasons.
We should not assume that one person’s experience tells us everything about the property market.
At the same time, we should acknowledge that market conditions can affect selling prices. Some locations and property types perform poorly, and some owners genuinely make losses.
The important lesson is to understand what we are buying, the price we pay and the reasons we may need to sell.
This is NOT about which investment is better yeah
Some people cannot afford to wait several years for property investment to deliver returns. Please do not go into property investment if you belong to this group. The stock market may be more suitable for you, depending on your risk tolerance and investment approach.
Some people are scared of volatility. They worry as soon as share prices fall and may sell even when the underlying fundamentals remain intact. For them, stock market investing may not be suitable either. Perhaps fixed deposits are more appropriate, provided they understand the returns and terms.
Then there are people who cannot accept low fixed-deposit returns, cannot accept stock market volatility and cannot wait for property investment returns.
For this group, perhaps the key is to focus on earning more than they spend and building their savings.
Everyone has their own unique circumstances and thoughts about what is best for them.
That is what I want to explain. Choose the investment you understand and feel comfortable with. No need to tell me which one is better.
Happy investing!
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