Which portfolio is better for you? And which portfolio will give you the better return or rental yield? Here I’m going to share with you what you suppose to “have” if you are beginner in your investment life. Every single step you make or move now will either helping in boosting your wealth or it will drag further into deep financial turbulence. So make your choices.
More condominium development at Likas & Signal Hill next 12 month
VS
- Leading shopping mall in KK
| Residential Portfolio | Commercial Portfolio |
| 1. Initial capitalLower compare to commercial with the range of around RM30K-RM50K depending on types of residential properties you intend to acquired. Like example, you need at least RM30K if you purchasing RM200K condominium. Of course this is with assumption bank will borrow you 90% over your purchase price.2. Borrowing Interest
You are enjoying lower rate as bank view this group of customer differently. At current rate, whole tenure is BLR-1.8% @ average of 3.85% per annum. 3. Rental Yield for residential properties especially in KK is limited to less than RM6K per month. So far I never heard any residential properties reach above RM6K per month and the highest I heard so far is Jesselton Condominium whose enjoying RM5K per month (fully furnish unit). Actually there is limited room for residential rental to rise as most of the tenant is treating it as “home” unless your apartment or condominium units is located at prime location whereby you can rented it out like services apartment. Famous services apartment in KK is like Api-Api Apartment, Marina Court and Likas Square. 4. Capital Appreciation The pace of residential appreciation is slower compare to commercial properties. Appreciation of the residential property mainly depend on: - Surrounding private and government schools. - Numbers of units - Maintenance of the place - Distance to town (supermarket, hospital, highway & etc) But whatever it is, KK residential properties prices in general has moving to higher level despite global financial crisis. You know and I know, a lot of investors are investing heavily in GOOD LOCATION especially Likas, Damai & Luyang!! Coincidentally last week, one of my clients telling me she is thinking of disposing her Semi-D at Iramanis and move to Likas. Why? She told me she ‘waste” 3 hours per day in car just to send her kids to schools, 1 hour in the morning and 2 hours in the afternoon. To solve this, she has rented a unit of condominium at Likas costing her RM3K per month with the “option to buy” to facilitate her in sending kids to schools. As I always say, parent willingly scarifies their pocket money to make sure their kids received proper education. I expect rental in Likas will be moving up gradually especially apartment and Condominium costing less than RM250K. Remember “TIME” is money. How could you waste 3 hours per day if you are working class group? |
Higher capital especially when you only can get 80% financing over your purchase price for commercial property. That mean you need to have at least 20% excluding legal fees charge together with government stamp duty. This will easily reach above RM100K if you purchasing RM400K commercial properties.
2. Borrowing Interest Higher compare to residential as bank view this as higher risk portfolio. At current rate Bank is offering Whole tenure of BLR-1.4% @ average of 4.15% per annum. 3. Rental Yield is unlimited. One of my business associate collecting RM36K rentals per month from his shopping unit located at prime location at KK. He bought it 10 years ago for less than RM1M. That reflected gross rental yield of 20% per annum!! Not only that another famous investor in town has acquired commercial building at Penampang area for RM14M last 3 years and he is collecting net rental of RM200K per month. Yes it’s 2.4M per month @ 17% per annum. Unbelievable right? You better believe it!! This is one of the major beauties of commercial properties.
4. Capital Appreciation Capital appreciations for commercial properties are definitely higher compare to residential properties. Look at Alamesra Commercial shop lot, if you average investor who owned a unit there, I believe you must be bleeding many years ago as until today most of it still untenanted. But if you are highly loaded, sure you will make it as whole project at the back are selling very well lately. One of the successful appreciated commercial properties is known as University Plaza developed by Wong Kwok. They are the 1st developer in town who start selling double-storey shop lot for RM500K which is consider expensive that time but now it worth around RM700K with rental per month of not less than RM5K per month. That is 12% rental yield per year and capital appreciation of RM200K within 3 years. Another is success story is 1Borneo Shopping mall. It was sold for RM700 psf (pre launching price for the ground floor) back in 2006. After 4 years the ground are selling for RM1K-RM1.2K that represent 80% appreciation with rental of around RM7 psf. It was a great success for Datuk Raymond Chan. Thank to him as he has help tremendously in increase wealth of Sabahan.
Wealth of Sabahan begin here..
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Dear investor, a lot of success story around us is good to hear. It was really a great achievement to them and also to you as long as you start somewhere today. Every portfolio comes with different risk, different return and capital requirement. Thus I strongly recommend beginner to start investing in residential properties as the risk is lower and the most important low capital requirement. When you already familiar with residential market only then you move to more challenging commercial properties. I always believe, life is like playing ‘CHESS”.
Every Step is Crucial!!
You have to do it RIGHT at the first step so that your journey of success will be certain. And remember LUCK is no longer applicable in this game. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
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{ 41 comments… read them below or add one }
HI CK.Really appreciate your input. Thank you… Continue the good things.. always. Have a good day!!
Dear CK,
I am a new reader to your blog. Found it very interesting to read your writing about investing in kk. I just came back UK after working a few year in London. Thank you for sharing and looking for more interesting information.
Cheers
Rita
no money lor, how to invest?
hutang sekeliling pinggang
HI,
Life is like this. Manage well your own life..Otherwise other people will manage for you. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Dear, Mr CK,
thank you very much for your info..
i hv learn a lot from ur article..
i’m looking foward to own a apartment in prime area.
hi CK,
Few of my lady friends find your topic amazing and so real in our day to day life. Can we organise to meet up with you and properly can share with us how to invest in KK ?
Rita
HI,
Its fun to read all these facts and figure. But action from you is more important. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi CK,
I have been following your blog for more than a year since it was introduced to me by KClau..since then I have recommended my friends to visit your blogs for useful info regarding property investment.it’s very real and practical…
I have questions to ask you ,
What is the meaning of serviced apartment?.. how it’s different from a condominium and a standard apartment.?
Thanks
Rahman
HI,
Services Apartment is mostly like hotel whereby they rented based on unit which might have more than 2 rooms. Normally rented to a family during the holiday. Condominiums provide more complete facilities like playground, swimming pools, Tennis court, better view and preferred location..etc. While apartment only offer basic facility. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi CK,
Likas will continue to grow in prices as land and houses are getting harder and more expensive to get.
Most part of Likas coastal area was reclaimed during the Berjaya government era.The coastal highway was reclaimed from today tanjung Lipat all the way to yayasan and also our Likas stadium Complex. Therefore for obvious reason you see lots of our politicians has big houses in Likas which make the Likas area even more sort after. Such as Tuan Yang Terutama (TYT) Yang Dipertua Negeri Sabah, Tun Datuk Seri Panglima Hj Ahmadshah bin Abdullah,Tan Sri Abdul Hamid Egoh and Datuk Lamri, Datuk Harris and the list go on…
Beside having the most schools in one area Likias also have have places of worships such the City Mosque, Chinese Temple, Churches so these make the place even more livable.
But the big draw for me to Likas is it,s all surrounded with double lanes road or high way. i.e Jalan Tuaran, Coastal Higway, Tuaran by pass, interconnected by Jalan stadium and the City Mosque-jalan Tuaran interlinked. With that , it,s easy to go in and out of town with ease. Plus ! try the tanjung lipat – yayasan higway during rush hour. without fail , you will have 3 to 5 traffic police at these 2 roundabouts to unload the taffic from City center. Seeing is believing.
Last But not least, Likas has is the beauty of seafront. all the way from Signal hill/Tanjung lipat all the way to yayasan. To me , this is one of the most beautifull drive and also sunset you can experience in this part of the world. And not forgetting our Mt Kinabalu. No wonder some of the condo here such as peak. peak suite, peak vista , Jesselton condo, Bayshore and Radiant Tower area fetch prices that are comparable to KL .
Azlan
KK is one of the ‘best’ place to live cuz of its 6s…
got
sun
sea
sand
scenery (mt kk, tip of borneo, kadazan/dusun girls)
seafood (cheap, fresh and abundant)
sighting (rafflesia, org utan, probosis)
(and sipadan?)
Hi,
Not only that, Sabahan has strong spending habits. That is the main reason why properties demand remain strong and overall property is generating good rental. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
When i first came to kk, the beautiful coastline, blue seas, blue sky amazed me; it was breathtaking from tanjung lipat to yayasan ( as azlan said) and the stretch from lok kawi till putatan. I made up my mind to make kk my home and i have.
Naturally so, property that overlooks this beautiful masterpiece will fetch high price.
Hi CK,
I love your info, but I am staying around KL area. I am a fresh grad, still looking for a job, so i don have much time looking around KL area looking for info on KL property (more like I don really know how). So i just want to ask if u know any blogger or articles, similar to yours, that talks about KL property???I wan to start learning and knowing the market while I save for my initial capital to start.
By the way, keep up the good work, I learn a lot from you and have plans to apply it in KL.
Regards,
GhosT
Hi,
No matter where are you principles in investing never change. Remember..mountain never move only human move.. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
CK, what is your view on Gaya Court (15 yrs old), near Foh Sang. Selling RM280K @ 1200 sq ft ie RM233 p.s.f. Any potential of capital appreciation with this kind of price? One thing mgmt did not paint the blgd thus, outlook not attractive.
Hi,
Gaya Court are located at prime location but its only less than 25 units. I dont see any attractiveness there as there is no potential for future development nor improvement of the facility. There is one auction last few week at RM220K. Its avoided area by me. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi CK,
Need you opinion on a piece of property.
Type: Commercial
Price: 280k
Status: Completed
Here’s the unique thing about this property, according to the state government, this property will be tenanted by a local university once it is sold to buyers and the university will tenant it for 5 years. The rent that they are going to pay is RM2800 per month.
The questions are: 1) Which is the more profitable option, buying the property by cash or taking loan? As I’m 48 this year, i cannot stretch my loan period that long.
2) In the case that the property is already going to be tenanted, should I acquire as many of them as possible?
Thanks in advance, your advice is truly well appreciated. =)
Hi,
The gross rental yield is 12% @ above our bank FD 6 times. BUY but please find out more on:
1. Who is the developer? To determine how strong is the developer.
2. Who going to signed the tenancy with you, the developer or another company setup by developer. This is to secure further your rental. Rental Guarantee is well known nowadays but the problem is who guarantee the guarantor, even Leeman Brothers bank also collapse!!
3. Please consider also what are the masterplan of the developer as this will give you general view of what going to happen after 5 years.
4. I will leverage my money at all time. But since your age is advancing, try consider lower borrowing says 50%? This will enable you to borrow more and investment more in properties.
“BUT” I’m doubt about this rental “its too good to be true” – who going to pay RM2800 per month for rental near Uni? What business they are doing? IF they really can rent out for 12% why they sell? Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi CK, what do think about the new shopping mall Star City potential? Just bought a unit on the ground floor but with the current economic climate, i’m a bit worried! Due to complete end of this year!! Thanks!
Hi,
Star city need another tew years to really matured in terms of crowd and rental market. Its not easy looking at their current management who did not really put in effort in promoting the whole place simply because they have sold out the entire mall. But at least they going to complete the whole project soon. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Need advices.
Beside the developer, what other ways can we confirm the actual owner of:
1. a commercial shoplot
2. an apartment unit
Thank you.
HI,
If the title of the unit is out, you can find it at land office. If the title is not out, better trust your lawyer in finding the actual owner. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi CK,
What do you think of Lintas Jaya Shophouses ? Of late, there are many shops opened and i heard there’s a supermarket opening soon. Along the road, there’s this RTM building under construction.
Hi,
Location is good. But what is your purchase prices? The rental yield with current transaction price is NOT very attractive. Happy Investing.
You cannot Grow Land..Ck Wong & MY DAD
Tx for the reply. Heard they’ve transacted at RM1.3 mio recently. Rental yield is around RM5k for the whole block. Good to invest ?
HI,
It you compute using RM1.3M purchase price your rental yield is only at less than 5%. If you can manage to maintain your negative cashflow. Please proceed if you are financially strong. But if you PURELY depend on your rental income to cover your installment better avoid. I believe the commercial lot especially area like this will continue to enjoy steady appreciation. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Thank you CK. Market 88 commercial shoplots. Saw in the newspaper that the properties are up for sale at RM1.5 mio (i guess must be those 3-storey). Wow, a whopping increase from original price of RM888K +. Yes, strategic and good location. Are they valued for that price? What’s your comment ?
Hi,
Most of the valuer unwilling give such value. Try to calculate what business you can run there if you are renting for RM6K per month for ground floor.Not easy..But if you really loaded with cash..no harm buy and keep while enjoying future appreciation. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
With the last 2 entries, we see that people are still buying into negative cash flow properties. Why is that so?
Perhaps they are cash rich, perhaps they totally believe in the future projections. But buying below ROI properties and negative cash flow properties is against the principle of property investment, that can also be disastrous.
HI,
For experience investors, its a common they continue purchasing negative cashflow property. But its too danger for beginner. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Dear All,
Anybody knows the websites of the local government agencies ( KK ) handle the subdivision and conversion of land titles.
Thanks a lot.
Regards,
Telipok Boy
Hi,
Everything link to land office is not computerised in Sabah. All is manual and alot of loopholes. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Hi! CKWong,
The websites will be used for the purposes of information and reference only. Presently, i have no clues at all.
Of course, the better way is to appoint property consultant or property lawyer.
Thanks and regards,
hello CK,
Want to ask u about putatan platinum plaza. Double storey shoplots in a up coming area, now transacting at 700k. I see good potential in this area as the population is fast expanding in putatan.
However skeptical about the rental yield, only 3k for a double storey shoplot and the purchasing power in local population. Whats your comment.
Hi,
Are you sure you only getting RM3K for 2 storey shoplot there?So Little?How can it be, I thought rental yield is at least more than 6%?Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
The purchase price is 770k. Lets say, the rental per month 3k, thus the ROI = 4.6%
if the rental is 4k, the ROI = 6.2%
It will be very good if we can get 4k/mth. This is a suburban area, 10km from KK, unlike places damai/ luyang/likas where the ground floor alone could fetch rm3600pm.
Hi…Guru CK
What do u think if Selling of 3rd Floor KK Time square at 1460 sq ft x RM290 p.s.f.
Any potential of capital appreciation with this kind of price?
HI,
KKTS is picking up. The tenant and business start move up so far. But so far office investment in KK is not a very good investment. The rental yield and appreciation is not “matured”. Look at Wisma Merdeka office, only after 20 years the office started to be occupied. If you notice auction list, there is one coming out end of this month. The reserve prices is less than RM280 psf. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD
Recently news come out the KKTS Phase II will resume on coming next month,So what do u think the capital appreciation for KKTS office units ? Actually i m looking office unit for my own use, any owner or broker introduce for me to looking ?
HI,
Office in KKTS look very presentable compare to the rest of shoplot in KK. So far office is not a good investment in KK but since you are use it your own then its ok. Try look out at local news paper like daily express. Happy Investing.
You cannot Grow Land..CK Wong & MY DAD