Which tools give you the best returns? Property and equity investment are purely different strategy that we can use to compound our money given different time frame and risk appetite. Below are the few characters of property verses equity market that I would like to share with you.
| Property | Equity |
| 1. Types of property including vacant land, residential property and commercial lots.2. Need larger investment
3. Time consuming to own the property as the whole process of purchasing might take minimum of 3 month even you pay cash 4. Return in terms of rental and capital appreciation 5. Tax on Real Property Gain Tax (RPGT- is free till until further announcements from government) 6. Profit normally will be floating after few years of investment 7. In general property is generating consistent return throughout time. Eg. My entire property portfolio is gradually increasing the moment I acquired it and the worst it stay stagnant. 8. Majority of my business associates invest large amount of their wealth in this properties 9. My allocation in this portfolio is 90% |
1. Types of equity including share, future trading and unit trust2. Only need few hundred to start the investment
3. Fast ownership as the process of purchasing can be done through internet or just a phone call 4. Return is including capital appreciation, dividends and bonus issues 5. Tax free – you can make as many as possible 6. Profit can be as fast as few hours 7. None of the stock in the market can give you consistent return and gradually going up. The share price movement can be affect by market emotion even though the company is having solid growth. The price can never be stagnant 8. Minor group of my business associate invested their wealth in this portfolio 9. My allocation in this portfolio is not more than 10%
|
From the above table, you should know that by having properties in your portfolio will definitely make your wealth grow steadily over the years. In the case of myself, I invested 90% of my wealth in property namely vacant land, commercial lots and residential lots. My first property acquired in year 2004 was a vacant land which currently I still own under my portfolio till today. The market value has shot up from RM6000 per acres to RM 30K @ 500% profit. But stock that I purchase in year 2004 which I didn’t own anymore and the worst I really can’t even recall what is the stock name!!
I always believe property gives the best return consistently every the years and in nature property is the best tools against the worst enemy that is inflation. While in stock market, even the best fund manager can’t assure to me consistent return every year. As I always told my business associates, what is the meaning of life if your wealth is depending on tomorrow morning news?
Just to share with all of you my own portfolio, I named it as “Sure Win” portfolio. Out of 90% my properties, the major I invested is vacant land. Holding so many properties especially vacant land virtually is at no risk to me. Why I bought so many vacant lands? The answer is “I got TIME”. I started buying my first piece of vacant land at the age of 25 as I know time is the best leverage tools that I ever have. Given time frame of 30 years, I never query the possibility of return on my land as I know it will be a lot and tremendous. Beside my vacant land silently building my solid wealth, my other rental properties continue to generate healthy cash flow not to say my appreciation but at least my loan is reducing on month to month basis. Imaging I’m getting rich day by day!!
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{ 8 comments… read them below or add one }
Hi CK Wong,
Great comparison between the Real Estate Investment and Equity.
I agree that time factor in Real Estate Investment will generate impressive return.
However, to put a foot into Property Investment, the major obstacle is HUGE capital requirement. I am from Penang, and observed that the housing price here is solid even with the recent economic downturn. New landed property is easily above RM500K.
How do we raise sufficient capital for Property Investment?
Best Regards,
Kelvin
Kelvin,
My experience;
1. Try to “join buy” if you just start buying property. Maybe with your parents or family member
2. Try not buy using personal loans. This will make your financial health worst next few years. If you really want to borrow, get financing from family members. Low interest and secure.
3. Look for below market value property and try negotiate with seller to signed SPA at market value. Less capital intensive for you.
Like it or not. You got no choice, you have to think of “YOUR” way of raising capital. If you have any idea, you can share with me. I might be able to help and whose know we can be partners?
Happy Investing.
Ck Wong
CK Wong, Thanks for your prompt reply.
I am looking forward to invest in Penang property too but lack of fund. I will share with you more information, and maybe we can take it as case study?
And i am optimistic that Penang property price will continue to appreciate due to 2nd bridge linking the island and penisular. Expected completion date around 2012/2013, if i am not mistaken.
What do you think? Below are the points to consider.
a) Bought a house (to stay-not investment) at age 26 in yr 2006 with downpayment-10% from parents
b) Loan tenure is 30 yrs, with 90% bank financing and monthly repayment from myself
c) Fund from EPF-ACC 2 for buying house still intact (could be potential source for next hse)
d) No personal car loan
e) Credit Card payment on time
f) Max out the 33% liabilities from monthly income for hse repayment
g) Have about RM25K of fund (in equities and others)
Properties in Penang-say condo or apartment, medium density cost around RM300K – RM400K. Maintenance range from RM100 – RM250 per month.
Average rental can fetch around RM1000++
Landed property-terrace, 2 storey is around RM500K – RM700K.
Average rental probably around RM1000++ too. I guess.
Most of the developer build 3 storeys nowadays to increase the selling price. Units from Southbay-Mahsing group cost around RM800K++ with 3 storeys.
My question:
1. Based on the current financial status i’m having now, how should i structure myself for property investment or wht type of property price range should i be looking for?
2. In addition, what is the strategy of investing in new and old properties? Are they the same?
*i guess my biggest concern is getting cash and financing for property investment*
Best Regards,
Kelvin
Kelvin,
Penang property is mostly for capital appreciation. Rental is too low. I understand from my friend that apartment bought for RM170K only can fetch rental of RM700-RM850 including managements fees. So virtually its a negative cashflow aligator unless you pay more downpayment and get less housing loans. Another strategy you can try is to look for property below market value, at least 20%. This will help also. As I always say if you look for good property everyday..within a year sure you will found 1 property below market value to invest in.
Frankly I prefer old property because:
1. I can buy below market value
2. Matured area
3. I can get immediate rental
4. Not much renovation need / less up front capital
5. You can signed higher SPA / up to market value to get higher financing. (This will solve you problem of capital problem at early of your investment plan)
Anyway there is a lot more to consider and share. I will share more on this in the next discussion topic. Happy Investing.
Ck Wong
Kelvin is right. Buying into a 700k property is no joke. Firstly, you need a 10% deposit of 70k upfront, and the legal fee and stamping will already slice off a part of your savings. When the rental doesn’t come in, that is when you start to sweat as the banks keep calling you every week. Finally they will raise your interest to BLR +4%!! They will then say” now, this will teach you a lesson”.
I had a similar problem in one of my properties in KK few years back, and had gone disillusioned about property investment. …. 5 years had passed, I am still holding on to my portfolio but stopped buying anymore.
Yong,
Happy Investing.
Do you know that you only can get your driving license after you are 17 and even before you got your license you need to pass the exam together with practical driving. Its part of the common step you need to gone through before you reach to the top. Right? Same goes to property investment? Where you invest that cause you loss so much? For your information, I never ask my business associate to start high price property for investment? That’s too risky. I always ask them to purchase property below RM200K which manageable and easy to be rented. Done ever blame the market, just blame yourself for not study well the market.
You cannot Grow Land.. Ck Wong & KH Wong
Hi CK Wong,
This is my first time reading your blog and also comments here…
Personally, all these are very good and keep it up !
Besides that, I have few question that was in my mind for sometimes, but still couldn’t find the right man/people to discuss about. OK, my dilemma is like this:
1) What is the best property (as empty land, residential unit, commercial shop lots, etc) to invest in ? If so, then why ?
2) What is your opinion and action, if the scenario is like this: ” I have a piece of land and the price is appreciating a lot”. Shall I still keep it and let it keep appreciating OR I sell it off and get another investment property ?
Please comment.
Happy Investing too!
KK
HI alfred,
Thank you for your compliments. Your first question is not easy to answer. But frankly as long as you buy you are at winning side. Loser is always at those who keep cash. To answer your second question, I think better sell as when land price reach certain level it will be stagnant and appreciation will increase at slower pace. So make your own decision as I havent sold any of my properties since I started accumulating in 2004. Happy Investing.
You cannot Grow Land.. CK Wong & KH Wong