Property Investment 101: Renting vs Buying. Dilemma, right?
I am asked this question at least once every 6 months
Latest was just today. 24th March 2023. At 13:55.
Do you also have these three questions?
How do I know whether it is a good investment? If you ask a real estate agent, I think the answer depends on what the real estate agent is selling. Surely the real estate agent would sell a property which is a good investment, right? If you were to ask a property developer, the answer is of course the property which they are currently developing. If it’s not a good investment, why would they want to develop it and face the possibility of not able to finish selling the development?
If you ask me… who’s not an agent or affiliated to any developer, my brief answer is just don’t buy the wrong one. Frankly, most homes in most countries would experience an increase in price. If it follows the rate of inflation and the rate is 2% per year, the property price would rise by a whopping 20% after 10 years and we are not even calculating the accumulated increase. In other words, RM500,000 property would become RM600,000 10 years later if it follows just inflation rate. If you like to say RM100,000 in 10 years is not a lot of money, you may be right. There are many of my friends who could just save, save and save RM100,000 every 10 years. If you could also do the same, then save yeah. Don’t buy. 😛
Property holding power need to be strong
Quite true. Just need to remember that if the bank approved your home loan, they think your holding power is strong. If they believe you, then you should also believe yourself. All the banks would never approve any home loan which they think the borrower will run away after some time. I think they are as worried as the borrower. As for the holding power, usually it’s because of the monthly salary. In other words, if you believe you can hold on to your job, I think you can keep paying for the property. Else, if you lose your job, could you find another job? If the answer is no, then the holding power is not there. If the answer is yes, then yes you should have enough holding power to buy that property.
Renting vs Buying?
As a landlord, I want my tenant to keep paying me rental. If they have paid me rental for the past 30 years and they want to continue staying for another 30 years, I will tell them to continue paying the rental for the next 30 years. There is just no way that I could allow them to stay there for free just because they have paid me rental for 30 years yeah. It’s my home and I deserve to continue getting rental.
If you buy, then after paying it for 30 years, you can stay there for free for the next 30 years. Some would now tell me that if they buy, they will pay RM2,500 as home loan but if they rent, it’s just RM1,600. I think it’s best to take out the calculator and count RM2,500 x number of months and number of years and then you get the answer. As for RM1,600, just forecast how long our life expectancy is, then use that to get the answer to how much rental we will have to pay. Meanwhile at the end of the RM2,500 monthly payment, the property is yours and you could sell it for $$$. 🙂
Landed versus high-rise?
I have answered this too many times. I let NAPIC show you using a photo instead. Take a look at the image below and let me know if only the landed property would increase in price or actually all types of properties would increase in price? Actually it’s just a matter of who’s the top. That’s landed terrace. Who’s second? That’s the high-rise. Hope you have gotten your answer yeah.
Happy deciding my dear friend. Please do not ask me which property to buy. I have no answer for you. Just buy the one you feel comfortable to stay in.
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