Property - where to buy?

One way of generating passive income is through investing in property. Not all properties give you passive income immediately. It really depends on location, expenses, and if your property is sought after for rental. Some requires several years or maybe longer to break even and maybe to get positive cash flow. You have to consider the expenses as well such as tax, expenses, interest, etc. Calculation below is for a Malaysian purchasing a property in Malaysia, Singapore and US. The property is a typical house for average working people in that country. Loan is calculated for 35 years if applicable.

(Please not some of the the calculations are approximately)

Case 1: Malaysia property 
Detail: Intermediate double storey with built in 1500sqf in Skudai, Johor Bahru

Purchase price  = RM 330,000
Deposit (10%)  = RM  33,000
Loan                 = RM 297,000
Loan monthly for 35 years with 4% interest = RM1315 per month

INCOME (Yearly)
Rental = RM1000 x 12 = 12000

EXPENSES (Monthly)
Loan = 1315 x 12
Maintenance = 200 x 12
Tax = 100 x 12

Total Income (yearly) = RM12000
Total Expenses (yearly) = RM19380

Profit = RM (12000 - 19380 ) =  - RM7380
Return on Investment (ROI)  = (Profit/Deposit)*100 = (-9780/33000)*100 = -22.4%

Case 2: Singapore property 

Detail: Private 3 beds room condominium The Florida in Hougang with built in around 800sqf

Purchase price  = S$ 500,000

Deposit (20%)  = S$ 100,000

Loan                 = S$ 400,000

Loan monthly for 35 years with 1.5% interest = S$2500 per month

INCOME (Yearly)

Rental = S$3500 x 12 = S$42000

EXPENSES (Monthly)

Loan = 2500 x 12 = S$30000

Maintenance = 200 x 12 = S$ 2400

Tax = (20% of rental income for foreigner) = (20% * 42000) = S$8400 

or Tax = (10% of rental income for Singaporean) = (10% * 42000) = S$4200

Total Income (yearly) = S$42000

Total Expenses (yearly) = S$40800 (S$36600 for Singaporean)

Profit = S$(42000- 40800 ) =  S$1200  (S$5400 for Singaporean)

Return on Investment (ROI)  = (Profit/Deposit)*100 = (1200/10000)*100 = 1.2% (5.4% for Singaporean)

Case 3: US property 

Detail: 3 beds landed double storey with >2000sqf in Atlanta, US

Purchase price  = US$ 33,000

Deposit             = NA - Pay by cash

Loan                 = NA - Pay by cash

Loan monthly for 35 years with 1.5% interest = NA - Pay by cash

INCOME (Yearly)

Rental = US$800 x 12 = US$9600

EXPENSES (Yearly)

Loan = 0 

Management (8% of rental) = US$768

Maintenance  (change one air cond yearly US$1000 and other expenses) = US$ 3200

Tax = (30% of rental income for foreigner) = (30% * 9600) = US$2880 

Total Income (yearly) = US$9600

Total Expenses (yearly) = US$6848

Profit = US$(9600- 6848 ) =  US$2752  

Return on Investment (ROI)  = (Profit/Deposit)*100 = (2752/33000)*100 = 8.3%

*********************************************************

*********************************************************

So, which one is an obvious choice? From the calculation, buying a property in US seem the best option. In fact, in my opinion, it's very very good time now to buy a US property because US dollar is at lowest plus their property is at all time low as well. Furthermore, the same money you put as a deposit to buy property in Singapore entitle you to purchase two properties in US with cash! Well, although it looks very attractive, many still dare not to purchase. Some may says US is far far away. Some says US has lots of land and property seem to go down rather than appreciate. And, some says that the dollar will depreciate further. Well, choice is yours... and mine as well... 

Malaysia property [Investment = RM33,000,  ROI= -22.4%]

Singapore property [Investment S$120,000, ROI = 1.2% (5.4% for Singaporean)]

US property  [Investment = US$33,000,  ROI= 8.3%]


ADVISORY WARNING: This website provides information as an educational service to its readers and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Readers and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the reader or prospect's individual analysis and decision making. The author expressly disclaim any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. 

Financial Freedom - THE calculation!

As mentioned earlier in my previous article, would it be actually possible we can achieve Financial Freedom (FF)? When you actually absolutely doing nothing, but still receive money at the end of the month. The next question would be 'how much do I need to achieve that?'. Most of us simply say RM1 million. Why RM1 million?

Do you think RM1 million is enough? Have you done the calculation if all the numbers met the requirement. how long do we need to generate such money? Is that actually possible in this reality world?. For example, a case of a typical Income and Expenses of an engineer (single) 25 years old in Malaysia.
Income:
 Income : RM 4000

Expenses (estimate)
 House loan: RM 800
 Car loan: RM 500
 Bils : RM 200
 Petrol : RM 200
 Entertainment: RM 200
 Giving: RM 200
 Insurance: RM 200
 Tax : RM 200
 Misc = RM 500
 TOTAL EXPENSES: RM3000

Assume the income and expenses stay the same for the next many years. He actually can save RM1000 (Income - expenses) per month and in order for him to save up to RM1 million requires approximately 1000 months (83.3 years!). Having say that, the engineer will achieve FF at the age of 108.33 (35 years + 83.3 years) years old! This sound ridiculous. In fact, the engineer can only works until the age of 55 (or 58) years old. So, if you are in this scenario and thinking that one day you can achieve FF, think again.

Another solution would be, he works harder and reduce the expenses. Says, now the engineer works part time to accumulate his income to RM5000 and he sacrificing his expenses to RM2500. Each month, he can saves up to RM2500 and within 16.7 years, he should be able to save up to RM 1 million in his bank account. At that time he should be 41.7 years old. Bravo. Brilliant. He's a millionaire at the age of 41.7 years old. But the question is 'is he really financial freedom'?. How long can he actually survives with the money? Assuming, he still spend RM2500 per month, he will use up his money in 33.3 years at the age of 75 years old. What if he lives longer? And what if he is sick that requires him to spend more.

What I am trying to share here is that it is difficult to become FF if we rely on our working income. As many of you may already aware, instead of saving the money in the bank, he should invest the money in asset so it can generates passive income. He will achieve FF when the passive income is more than the expenses.

                     Passive income > Expenses

will share more regarding the passive income in the next article...

ADVISORY WARNING: This website provides information as an educational service to its readers and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Readers and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the reader or prospect's individual analysis and decision making. The author expressly disclaim any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. 

Investment Opportunity in Malaysia

I have been always wanted to write a blog about my journey of investment opportunity in Malaysia (and other countries) since many years ago. Today, on the very same night after I returned from a seminar organised by http://www.azeapropertyinvestment.com/, I am highly motivated that I should sit down and start doing things I should have done ages ago. (well, of course, I hope this will last long... :). In this seminar, the main speaker was Yang Po. She is simply amazing. She was a normal 'kampung girl' when she was young and now she owns two very successful businesses. She has extensive experience around the world. She was the the Director of YSL and managed MontBlanc and Kenzo. She shared her invaluable experiences on her success. I have learnt massively from her.

As many of you may already know that investment is one of the way of generating passive income so that you can be financial freedom in the future (as Yang Po mentioned 'you sit there, doing nothing, open bank account, you hear, swop swop swop [cash flowing out] ). It means again, you are doing absolutely nothing but receive income every month. I always had this thought 'Is that actually possible?' or maybe most of you have the same thought. I had been asking this questions many time. But I SEE THE HIGH POSSIBILITY of it after attended the seminar. And, this blog is one of my first step towards it. Yipppe!!! (To my wife and siblings: I made my first step!!! Belanja makan, ok!  :)

This blog is also meant a journal of my journey as I have invested and learnt so much in the past but I did not have a proper documentation of all the investment strategies I had been using. I invested in Share, Forex, online marketing, etc etc.

In my opinion, the very first step towards Financial Freedom is to identify our Assets and Liabilities. The rules of achieving is to have more assets and less liabilities. Assets is something that you own which can generates income for you. For example, is your house an asset or liabilities? Many will says it's an assets but in reality it is a liability because your house does not generates income for your but rather incur expenses (loan, bills and tax) every month. So, it means probably best to stay in a small and cheaper houses first. Do not put so much money on your first house, rather use the money for investment). It is only consider an asset if you manage to rent it out and generate POSITIVE CASH FLOW. At some point, you can consider some of your properties as asset even though it generates negative cash flow with a strong prediction that your property value will appreciate in the future.

Another questions would be, what are the possible assets? Assets can generally divided into four which are Business, Property, Paper (share, forex, etc) and AA (gold, collective, etc.)...  I think I have to stop now. I will share more in the future regarding of the definition of Cash Flow, the strategies I used for trading and the calculation of investing in properties in Singapore and Malaysia. See you all around.


ADVISORY WARNING: This website provides information as an educational service to its readers and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Readers and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the reader or prospect's individual analysis and decision making. We expressly disclaim any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information.