ASKING SEAN #36 | INVESTMENT CONCEPTS FOR FIRST TIME HOME BUYERS
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- čas přidán 9. 04. 2020
- In today's episode, we will address a common mistake that many first time buyers make. The mathematical calculation tells us that after we pay up the 30 years loan for a house, it will cost more than double with the interest. Then why should I take loan as it's more expensive?
The first concept we need to understand is LEVERAGE. The concept is to use the least cash to get a property, and then leverage on time as the property will increase in price. Then when you decide to cash out and sell the property, the difference shall be your return on investment. Real estate is one of the only asset that bank will lend you 90-95% to buy, and this is an opportunity to do so. Using RM3 to make RM100 is more sensible than to make RM 100 using RM 100 or more.
The next concept is WIN-WIN. Why should we be concerned about banks making money when we are also making? They need property investors like us, and we need them to invest.
Last concept is TIME VALUE OF MONEY. The same RM 100 today in 2020 will have a different value in year 2030. So even if you work super hard to save up enough money, the value depreciates further. That also explains why property prices go up year by year=)
My 2 cents on property investment:
1. Cash flow. Whether can u rent it out to cover ur mthly payment / or atleast interest. Many property these days cant even cover interest. Do the math. Make sure to incl all maintenance, agent fee, potential vacancy, reno etc. Most of it are yielding negative cash flows. In many cases, it might b better just getting ur 3% fixed deposit, its still + cash flow.
2. How much it will appreciate? After 2009, property prices inflated like crazy, but not so much in recent yrs. Its all down to supply demand. Prices should b da reflection of how much rental / future rental it can bring. And If our economy is not doing well, less jobs, less pay, less ppl can afford high rental, then prices less likely to appreciate as well. Unless there are foreign investors etc. Becareful to b over optimistic in estimating capital appreciation.
3. Its a huge commitment, debt can b good debt or bad debt. Do ur homework, do the math, learn more from Sean, invest within ur means.
loved it, great content as usual!!
Yay, thank you! Haha. Appreciate it=)
Hi Sean, for under construction project, buyer is paying progressive interest as well. By the time, the buyer got the key, he/she actually paid a certain amount already before renting out.
Hey mate that a good advice for all young people who want to buy there first house 🏠👍👍👍
As far as I am concerned, 1 more merit for having property is that u can use it for refinance if you gonna pokgai ad / in need of cash for another investment without having to fork out alot of money.
3 years later after this video, milo ais is now rm5 to rm6 😅
OMG you’re right. Will there be a time milo ais is RM 10??
@@iherng hopefully Malaysia's overall income has picked up before RM10 milo ais happen 😅
Hi brov.....can't be that high at 4.2% loan.....should be around 3% plus only.
This was before the correction. Still early days of MCO haha=)
Ya bro true...better secure the mortgage earlier...and we can anytime reduce the interest during the tenure if we want to by putting up extra cash (depends on ur budget & affordability) and reduce the principle...