Friday, February 01, 2008

Calculate Investment Return on Real Estate

If you buy property or real estate, how do you calculate the ROI (Return of Investment)? Is it by your rental income or capital gain? Do you include the ownership fees to purchase your house? How about renovation cost? Let’s look at the calculation below how to calculate the ROI by rental income and capital gain. Calculating the ROI for property can help you decide whether you should buy that house or not.


ROI by Rental Income

If you purchase a house for the purpose of rental income, you may want to calculate your ROI based on rental income.

Property Purchase Prize: $180K
Ownership Fees: $2K
Renovation Cost & Furniture: $40K

*Ownership fees are legal fees, government stamp duties, loan agreement fees and etc.

Total Purchase Price = $222K ($180K + $2K + $40K

Maintenance Fees (Monthly): $100
Monthly Rental Income: $800

* Maintenance fees are insurance, security fees, property damages and whatever cost to maintain the house.

Monthly Net Rental Income: $700 ($800 - $100)

ROI = Net Rental Income for Year / Total Purchase Price X 100%

ROI = 3.8% ($700 X 12 / $222K X 100 %)

So, the ROI for income rental gain is 3.8%.



ROI by Capital Gain
Total Purchase Price: $222K (Calculated from above)
Selling Price (in a year): $230K

ROI = ($230K - $222K) / $222K X 100%

ROI = 3.6%

So, the ROI for capital gain is 3.6%.

If you purchase the property for the sake of investment by earning the rental income, the ROI is 3.8%. To be more optimistic, you may also include your capital gain which is 3.6%. So the total ROI for the house that you invest is 7.4% (3.8%+3.6%).

If you purchase the property for staying, you can only calculate the ROI based on the capital gain. In this case, your ROI is 3.6%. Please note that you’re now enjoying the house and at same time you’re also enjoying the capital appreciation at 3.6%. Isn’t this a perfect investment?


My 2 Cents

If I am buying a house for investment by renting out my property, I would look at the property that has at least 7% ROI (exclude the capital gain – conservative calculation). Reason is the Fixed Deposit (FD) is 4% and my average investment return from unit trust is 7%. If the ROI is less than 7%, I may as well invest it in unit trust. Remember that the rental income gain or capital gain from property is not the actual gain because we haven't consider the mortgage interest yet. On the other hand, if I am buying a house for staying, I will also look at the property with at least 7% ROI as well. The reason is same with what I mentioned.

How do you calculate the ROI for your property? What ROI value will make you decide to buy the house? Do you really calculate the ROI when purchase a house? If no, maybe it is time to think about it.

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27 Comments:

Nadlique said...

Hey :)

Nicely written article.

Was wondering, do you invest in unit trust as well? If yes, do you go for the aggressive, moderate, or the conservative ones?

ChampDog said...

Yes, I do. I usually go for aggressive and conservative one. Moderate funds got few but not many. Probably around 70% aggressive, 10% moderate and 20% conservative.

Steven Goh said...

Great article on Real Estate ROI, actually is there any tool available from the web that is easier to use? Instead of self calculation, may be we can just key in the figure and let the program do the job? If you can write this program and sell for USD$2 per download, you are a rich man :)

ChampDog said...

Ya, I have come across those site and they provide it as free. But I can't remember the URL right now. When I do, maybe I will just post it here. So I guess I won't be rich to sell this tool. It is free everywhere. :D In fact, it is just a very simple calculation. Until today for all those financial calculation, I’m still using MS Excel.:)

imDavidLee.com said...

yea..7% return for property investment considered not much d...

if for me, must have more than 10% since can get good return in 7%-10% for good perform Unit trust like public mutual...

ChampDog said...

Yes, you’re right. 7% is a little bit low since we can’t get it from unit trust investment. Aiming for more than 10% is a good idea too.

However based on my experience, it is very hard to get a house that has > 10% appreciation. As for me, I have 2 houses, one is 2% and the other one is 4%. Maybe the house that I bought is not in the prime area, which probably explains that.

Having said that if your rental income has 7% return and add up the capital gain, you probably already meet > 10%.

So investing in property doesn’t really earn lot money which many people have the false impression. We all should think carefully before we buy house and it is probably the biggest investment in our life. :)

p/s: I wonder how many home buyers (like you and me) out there have ROI > 10%. I bet not many.

Michael Tsen said...

great write up, only one small comment on your calculation. the percentage for capital gain is only correct if you sell within the year, if it is sold 10 years later then the 3% becomes 0.33%.

this write up is also what we said a typical view from mutual fund believer on property invesment. Its nothing wrong but not the complete picture yet. You can do more studies on this by talking to ppl who already earn a lot in real estate. they will disagree with this article totally ...

for hot area or popular property, it is a common pratice that if the rental can cover the monthly repayment, then its worth while to invest in that property. reason being capital gain may double fold every 2.5 years, giving you a compound return of 30%.

property investment is an active income, not a passive one. A lot of innovation and creativity is needed to be successful. For example in renovation, says a renovation would typically cost 1mil. But you use some innovation and only spent 300k to achieve the same result. That way your property may have an increase value of 800K (usually slightly less than your renovation cost) and you only spend 300K, that is an instant paper gain of 500K. Another example is you use tip top technology, so instead of 1 mil, you use special materials and ended up paying 2 mil for the renovation. Because the materials you used is one in the world and no one else have it, your house may be categoried into 'collectible' group and the value may easily fold into 4-10 times.

the amount of money also matter, says you have 10 billions to be invested. You could relatively easily pick a development project, put your money there and get a 3-5% return. The percent is low but the money is big, 0.5 billion. there is no mutual fund in this world that you can buy with that money. If you setup your own trust fund, a lot of fee will incur and it will get as complicated as property investment ....

so after words is that .... property investment is slightly a different game, it should be played as an active income business, not a passive one.

ChampDog said...

It is a very good comment with detail explanations. I appreciate that very much. The calculation for the capital gain is meant for selling price in a year. Yes, of course if the house is sold after 10 years, it becomes 0.33%. I will update the post. Thanks for the feedback.

You bring up a very interesting point that property investment is an active income and not the passive income. This is the first time I heard treating property or real estate investment as an active income. Thinking of it, it is quite true if anyone wants to be really serious in property investment. But bottom line is still really depends on how you want to play the game. Let’s look at my comments below see whether it is making any sense or not.

Let’s look at the definition of active income versus passive income. Simply say, active income basically means you want to work on something to get the income. On the other hand, you don’t work on something and get the income.

If you’re a full time property investment, you invest in property for your living. You probably put a lot of afford to raise your rental (using whatever strategy), play around with the renovation as you mentioned and etc. So, you basically work hard on it to make the maximum profit from your property. You treat property investment as your business. Therefore you play the game as an active income business. It is also depends on how the full time property investment to play the game. He can also treat it as passive income and put minimum afford on it.

Typical people like me and many others I believe, I don’t do it for full time. Invest in property is not my full time job. I simply do not have the bullet to play this game and treat is as active income business. It is really way beyond me. This is probably what you meant by “view from mutual fund believer” on property investment. That’s why majority of us treat property investment as a passive income. This kind of reminds me that what Kiyosaki said before, “Mutual Funds is Useless” because they’re passive income.

Well, I think there is no right or wrong answer whether you want to treat property investment as active or passive income. If you’re aggressive people like Donald Trump and Robert Kiyosaki, you probably want to treat property investment as active income. They live beyond their means, and they make their dream comes true. They don’t play safe game.:) Remember also that greater income comes with greater risks. That’s a financial universal law.

If you’re like me who live below or equal to my means, you probably just want to treat property investment as passive income and let it work it out for you without putting much afford. But of course the return will be lower because I’m playing safe game. Who said playing safe game cannot succeed in life?

Hope my comment is making sense. Feel free to add more if anyone of you has more comments.

jamy said...

Hi Champdong,

I hope you don't take offense, ok :).
I would rather invest in gold, 4000% for me the last 5 years :). That is why I can buy my 50acres lots :).

Houses are not really a good RE investment but lands are. After gold is over, I am going to buy land, this time 500 acres then 5000 acres :).

Jamy

ChampDog said...

Sure, no offensive at all. Wow! 4000% in 5 years is a very amazing value. I'm not sure how I can invest in Gold in my country. How is the risk as compared to other investment?

My parents used to buy a land for oil palm plantation. It was not successful due to some political issues. Buying land in my area is very expensive. I can't afford to buy at this moment.

Btw, what do you do with the land? Do you resell it again? or Make it to do for other things?

Steve said...

4000% return from gold investment in last 5 years? The gold price only appreciated by around 200% since 5 years ago. I would be curious what kind of investment strategy that allow Jamy to rip a return of 4000% from gold while the gold price only appreaciate by 200%. No offence, just want to learn from him :) http://goldprice.org/gold-price-history.html#5_year_gold_price

jamy said...

Steve,

Gold and silver stocks (mid-tiers) that have good management and relatively potential then. I prefer North America stocks (US or Canada) though I did buy some S.America stocks and some S.Africa. A lot of my stocks I have collected were less than 50cents then.

It was not a Science rocket to make 4000% if you started back then in 2001 because there were less than 50 potential gold stocks then. Of course, my learning cut down to half because I have a mentor who is in his late 70's and have been in the gold/silver market for > 20 years now.

A lot of Jason Hommel's (he started in 2003 when he only had about 50 readers, I was one of them, now his email list has 68,000 readers) picks were more than 4000% the last 5 years.

In fact, silver went up even higher (relatively). It is not a big secret to have 4000% gain among us gold and silver investors.

We expect even more in the next 10 years. I expect most of my penny stocks will go to > 100 in the next 10 years. Yes, I build my fortune in gold and silver investment and lands.

Have you heard of the news that GATA is going Washington ? We are so thrill that Ron Paul is one of the president candidate.

You can read some of my gold investment insight in my blog though I do not write a whole bunch of it there.

In fact, I partake some Malaysian forums years back and wrote my insight about gold and silver, no one was interested. I was like a lone voice in the wilderness. In fact, I have predicted gold to go $1000 even as early as 2005 but then a lot of people think I was lunatic :). See now gold pass $900,but I still think people think I am lunatic and still do not believe what I said about gold, sigh.

Something so simple, but so difficult to understand by crowds.

Champdog,
I do believe some big finance institutions in Sing. offer gold funds (might be check with OCBC)and check out some Canadian online stock brokers, they might take in foreign clients.

I have a 2 Canadian online broking accounts because I invest in a fair bit of Canadian mines.

I see not investing in gold now is more risk than invest in gold. With the present economy situation, it is not a rocket science that it is the best investment.

My dad just passed away this Jan 1st, he taught me the best long term investment is land not houses. He was right cos over the years land appreciate more than houses.

What he did was he bought a lot of rural land then in Sarawak (not oil palm, just lands that were too far from town, no body want it), when government started building roads, developers buy the land from him. He did not buy outright but sell to developer in return for houses. So, his lands turn into many many houses and shop lots.

I am lucky here cos the lands here are much cheaper than Sing or big cities in M ( I presume you are in M, right ?). When I was here 10 years ago, lands were so cheap in the rural areas but now more and more people moving in from South Florida (Miami areas) so lands also increased a fair bit.

This is a long term investment. I don't think I will do anything in my life time. Just leave it to my son and he can do whatever he want. But, I think I get the kick out of collecting land cos I feel like I own part of American soils :). From a Sarawakian girl to a land owner in US, it is siok :):):). But, land investment is the most boring investment, no excitment cos you cannot open the account and look, wow my portfolio went up 20% , 30% etc... All you do is admire the lands you collected. :):).

Jamy

ChampDog said...

@Steve
You're asking a very good question. :)

@Jamy
Thanks for sharing your 4000%. So it is actually related to the stocks investment that make the 4000% and only the gold price appreciation 200% alone. Gold & silver investment is totally new to me and thanks for sharing the potential great investment to me. It looks like I need to do more research on this area. :D

Ya, it reminds me that we talk about it before in your blog about Gold funds in Singapore. As far as I know, I don’t think there are gold funds in Malaysia and perhaps I’m wrong.

Sorry to hear about your dad, my condolence. Invest in land is definitely a good idea because back to few years ago I met a shop owner who own quite number shops in Penang and I asked him, “Wow, you’re so rich!”. He just replied, “No, I’m not. They are the gifts from the shop-lot developers. I sold the land to them. The land was so cheap and rural when I bought it many years ago.”

If we have some insider news, that it will be optimum case and we don’t feel so boring with the land that we bought. :)

Thanks letting me know about land and gold / silver investment which I have never thought of them before. I believe this will benefits to all the readers here as well.

jamy said...

Champdog,

No problem.

I will write a post about where to get info on gold/silver and some of the stocks that I bought which gave me 4000% gain the last 10 years this week when I have some day off from school.

I am in my medical studies (going to sit for my board in 3 months time) + internship in the hospital + a young family + home school my 4 years old, so time is a challenge commodity for me :).

My only advice about investment is diversify. Never put all eggs in a basket.

We have a family trust fund that invest in bonds, mutual funds, etc...The fund is managed by a trust fund manager, the gold, silver, land and tax liens are my personal investment because investment has always been my first love beside God and my family.

I don't like to be a land lord because both me and my spouse are not too handy person, labor here is very expensive so makes this kind of investment unattractive to us. We are quite book person, so we like to invest on things that do not need a lot of hand work.

I love tax liens (paying tax for people and in return the county tax office pay me interest, that is a guarantee kind of business because if the house owner continue not pay his/her tax, I can bid the property when it is auctioned).

So, I am very diversified as far as investment is concerned.

Cheers
Jamy

Steve said...

I agree with Jamy. Diversification is the key in investment. There is no one asset class that always perform. Check this recent news on the meltdown of housing market in the US http://finance.yahoo.com/real-estate/article/104340/Housing-Meltdown

We should learn from it that there is no risk free investment.

Michael Tsen said...

making real estate a passive income is by recruiting or appointing a team of people who can do all the work for you managing all your estates ...

what i was saying is if normal ppl like us treat real estate as a passive income, buying a piece of property, do nothing and hope it to appreciate, most likely you will be very disappointed as time goes.

some odd ocassion I oso earn 40x return from some mutual fund alone. But that doesn't really mean much. Overall average returns is still 8-12%.

just over a few days during chinese new year holidays, I earn $80 from the initial $1. 80x sure sounds fantastic, but afterall, its just $79 I earned. If I were to put up $100,000 as a start would I still earn the same 80x ? most probably not ....

I think jamy's case is commodity. there are rules and tips on commodity trading. Unfortunately I dun know any. But basic principal still holds, if you work around gold or silver, understand them then yes you have the 'know how' to invest into that commodity. If you just buy gold/silver as ornaments and only 'hear' that people said good things about buying gold etc, then most probably years down the road, your money is going to be transfered from you to jami's pocket :D

I keep gold too, but not as a commodity investment. More like a recession preparation, or more like world war 3 preparation ... :D

ChampDog said...

@Jamy
Sure, I can’t wait for your post sharing your 4000% investment return experiences. Yes, I agree with diversification too but one thing we have to aware also not to put all eggs in too many baskets. I bet you have already known this.

Tax liens business is something new to me and thanks for sharing the information. I I think tax liens only applicable to U.S, is it true?

@Steve
You’re right. No one asset can always perform. It is a very good article. House prices will fall about 25%, bottoming in 2010? It looks like still have long way to go. Anyway this is just prediction no one in the world can sure about that.

@Michael
No wonder I don’t really impress with my property appreciation. :D

Were you playing cards to get the 80x during CNY? It sounds like the case. lol. Although I’m not sure what you’re saying, I think you’re saying that sometimes the % return doesn’t matter it is the amount of investment that makes the difference (e.g. the last example that you gave in your first comment regarding how people earn 0.5 billion). This is how people play the game to really make big money?

Jamy will be very rich then… :D Just joking. Yes, investing blindly can’t make you any further. My impression to commodity is usually high risk and unpredictable.

Jose said...

I agree with Mike that if we are not good at actively managing properties, our gain may not be great. If I understand correctly, I think what Mike mentioned may already available in the market. REIT funds are a pool of money from investors who whould like to have exposure to the property asset class. In fact, REITs has the benefit of not worring about the maintainance, quick rent, mortage loan interest rate, etc. Best of all, we don't have to worry about renting out our properties and having problem collecting rentals. Actually, I encounter cases of people having problems with their tenants. There are so many stories about bad tenants. Having said that, I also met some lucky homeowners that have good tenants. I would say that it depends on luck too.

Whether we want to be an active investor in property, or just a passive investor, property is something that we cannot afford not to include in our investment portfolio. It will help enhance the diversification of our portfolio.

@Champdog Commodity has higher risk because it is cyclical. When we speak of commodity, there are 2 types. The soft commodity and hard commodity. Examples of soft commodity are palm oil, corn, soya, rubber, etc. Hard commodity are metals and minerals such as oil, gold, silver, zinc, copper, etc. The prices of commodities are much depending on the supply and demand. For example, oil price will shoot up if the winter is very cold. Other factors such as geopolitical, climate change, disease, etc will also cause unpredictable price movement.

jamy said...

Champdog,

I will write one of these days but I won't say when cos too many things to do and with my senior brain, I will give you the link on your blog once I have done it, ok. But a promise is a promise, just don't know when :) cos when I write, I want to make sure I write something meaningful and resourceful, not simply write one :).

In fact, I learn about gold and silver stocks from my mentor who is an old man of 80 years old.

This old man is a very interesting guy. He has one of the most interesting life you could possibly have.

He was a missionary in amazon jungles Bolivia for almost 35 years of his prime life. He returned to US when he was in his 50's.

All his investment strategies are based on the bible. He was there to translate the bible to the ingenious tribe and when he left that tribal group, these people became the most financial independent group in Bolivia and many of these young men became the nation leaders, though they are the smallest Bolivia indigenous tribal group.

I was very fascinated by his investment strategies. He only buy gold/silver and Jewish stocks (a lot of Israelites companies have their head quarters in New York). He always look for companies that are without debts. You know lah, in America, even the tikus also have debts, how to find companies debtless leh ? If found, mesti very untung company.

Few years ago, I nearly fall out of my chair one day I realized a jewish stock that I bought 3 months ago for 21cents turn into a $10 stocks. That was when I started to realized this old man has insight and years of experience that is extremely rare to come by these days. So after that I was his shadow, what he bought I bought. Where he goes, I goes. He told his wife, he is going to assign me to be is power of attorney for his wife after he passed on. He only has a daughter who has no clue about investment and married to a doctor who also has no clue about investment. And of course, through him, I earned a whole lot of money, and from then, my father in law wanted me to take out a portion of our family trust funds to invest some in gold and silver and that is the starting of my investment journey on gold and silver. The real estate insight is from my late father who is a RE guru when he was still alive. We owned a fair bit of properties in Sarawak.

Yes, you are right to say about not to stretch it too thin. That is the reason I have not even want to venture into common stocks or mutual funds but only gold/silver and some jewish stocks.

I let our family trust fund manager takes care of that because I really do not have the knowledge for it.

I am a medical doctor and my clinical time oleri take up most of my time, plus family etc, I leave the rest for the expect who we hire to do their jobs.

I think tax liens is American thingy. Also here we can do 1st mortgage and not having to own any mortgage company, and it is legal. That is to say you can be a lien holder on a property and help someone who has bad credit to buy property but you have lien over the property. I have a client (my patient) who owned 500 titles on people properties. I think only in US, you can do that. UK abolished such system recently (from a friend who told me).

So many countries I have lived in my life, I still find US has the most opportunity esp for us Cina who love to make lots of $, the sky is the limit if you want to 'Pien' (Hokkien meaning fighting for it.) :):).

Take care
Jamy

jamy said...

I do not see gold and silver as commodity but it is a form of money.
The reason why I think they are the best investment for the next 10 years is because of political, economy situation that make it so attractive.

The best place to find good articles on gold and silver investment is
gold-eagle.com

Go to their forum, there are lots of seasoned investors who are seasoned. And they posted their insight and wisdom most of the times.

My advice is do not subscribe to any paid newsletter, you get as much free and informative information from gold-eagle.com than any website on this surface of the earth.

I started reading gold-eagle as far back as 2001. That is when I first arrived in America show.

A lot of those people who posted in the forum are in their 60's, 70's or even 80's years old. I knew a guy who is 82 years old who we correspondence for a while.

A lot of them are really good in what they knew.

I don't know 1/1000 of what these people knew :)...

Jamy

ChampDog said...

@Jose
I think it is not really depend on luck too. You can still interview the tenants to decide whether you want to reject or accept them. Choosing the right tenants carefully is the key. Interview their background and see whether they can afford to pay the rental or not. Just keep in mind that we have the rights to reject them. Another very powerful method to avoid this kind of problem is giving 10% discount to them for early rental payment. Who doesn’t want to earn the free 10% discount? I bet with this method, majority of the collecting rental problem will be solved.

That is the reason I thought investing in hard commodity (e.g gold and silver) is very high risk due to the unpredictable price movement. But what impress me from Jamy’s comment is it seems like investing in Gold & Silver is not something that risky. Of course when you become expert in something, risky stuff may become no longer risky.

@Jamy
Sure, take your time. Writing something meaningful and resourceful is my style too but a least this is what I have mind. The outcome is really meaningful / resourceful or not is another story. :D

Learning from the experience person is the most valuable knowledge that we can gain. I’m happy that you met such a good mentor. From the sharing of his experiences, he seems like a hero. :D Talking about debt in U.S, not only those companies, I’m quite surprise to find out so many people suffer from debt in U.S. Maybe they enjoy life too much? That’s why the tax liens this kind of stuff only in U.S but not in other countries.

Do not see gold and silver as commodity but it is a form of money? This is very deep. :D Btw, thanks for gold-eagle.com site recommendation. I will visit it later and hopefully can get something out of it.

js said...

Champdog,

About this :"Talking about debt in U.S, not only those companies, I’m quite surprise to find out so many people suffer from debt in U.S. Maybe they enjoy life too much?"
I think that is what American dream is about :). Buy before you have the $.

The older Americans are not like that. My father in law is very much like our Asian mentality because he has lived through the great depression. He is frugal.

I think one of the reasons 1st and 2nd generation of Oversea Chinese are very frugal is because they lead a very difficult life leaving their poor home land in China and make a new start in South East Asia. But, as these generations passed on and their more affluent next generation is not going to live the kind of lifestyle they lived . I forsee they are also going to be like Americans, live like there is no tomorrow.[look at the $ they spend to go to space for nothing at all except name ?].

America is a big country and it is a very diversify country. You will find very liberal people (left wing) who consider homosexual as an alternative lifestyle but you also find extremely conservative people (right wing) who do not even believe education should be in the hand of government but parents, so they home school and have their own home business.

What you read about America is all through media and pretty 1 sided.

There are a lot of thrifty people who frown on the subprime loans issue.

But, I think Americans as a whole take higher risk than the general population around the world :).

We always want to set new limit, try new frontiers :). I still believe we still have a lot to offer :). We fall and we will pick up :). New frontier spirit is what drive us :) and I love every bit of it :). I have to changing career at 47 :).

Js

ChampDog said...

Yes, maybe you’re right. One day our next generation is going to be like America. But I think will still make my kids won’t have this kind of mentality (live like no tomorrow). About the space thing, I really don’t know. Maybe most Malaysians are really proud of it? My taxes actually pay for it to make this dream comes true. :D

Yes, you’re right we are pretty rely on the media. I think not only U.S. If I’m not mistaken, countries in Europe are also suffers a lot from debt.

Are you totally change career or just changing job? But either way, I'm proud of you still have the energy to change career at 47.

Well, thanks for all the sharing from you. :)

mohd fuad said...

hi jamy,
Fuad here from Shah Alam, Selangor (malaysia). Well im working in shah alam, but born a Sabahan. I still go back to Sabah once awhile.. hmm ok, plain and easy, I’m very attracted to your story. You know about all those investment you did. You really made me think on things tht i nver realise. Anywy, here’s my story. When my late father pass away 10 years ago I was given 2 shops lot and a land (well more of a joint land amongst my brothers and sisters abt 73 ach). For the past 10 years I’ve been collecting rent from those 2 shops lot, it was not that much but i guess i was ‘hassle’ free, because all of those shops didn’t have any bank loan. But anyway, recently my family decided to sell our family land because most all of the siblings are staying somewhere else. Ok to cut the story short, each one of us got around RM400k for the land... n I decided to sell all my shops and already got some buyers (with loans prove already in hand) so hopefully by this coming February i’ll be earning myself around RM1.2mil (for the shops) + the RM400k (for the land), so that’s around 1.6 mil. I’m really looking forward in investing in short and long investment.. so my question is if you were in my shoes, what and how will you make use of all those money, (Im asking you this coz i'm not tht good in investing and financial planning). Hope you could shade some light here. Thanks

kayatan said...

Fuad,
Thank you for your compliment.
I do not think I am pandai enough to give any one any investment advice.
Sorry lah. Might be you should consult a certified investment adviser ?
Jamy

mohd fuad said...

(to jamy)
well at less you could give me some pointers.. ok here's one, let me know what u think.i recently stumble upon a land in Port Dickson (negeri sembilan)Its a piece of beach front land (freehold), near this famous admiral cove resort (you can google it). the agent told me tht you can see the sun sets, the place is very windy, and u can also see the boats n yachts come to dock. now here's the land: its a bungalow lot (6000 to 7000sf, not sure on the exact size). the price we r talking here is RM 60.00psf (still neg). so ruff estimation is +- RM360,000 for the land only. my question is do u think its worth buying?

kayatan said...

Fuad,
It is hard to give you advice on the info you have given.
No. 1 is I am not familiar with Malaysian real estate market. I have left the country 32 years ago :).
This is my 2cents :
What do you intend to do with the land ?
What are the price of the property in that area ? Is this property in the high end or low end compare to the rest.

This is my take when it comes to property.

I buy ulu land and dump it there and forget about it for years. This is what I call free money.
Then I will buy some properties that has good location, ie the street address where the rich and famous reside. I will buy the cheapest in the most expensive neighborhood.

I do not buy RE a lot because I am not too well versed in it. My late father left behind a lot for us in Sarawak. I learned some from my late dad.

But I personally believe in diversification.

We have a trust fund manager who manage my family trust fund (my late mother in law has set up a trust for his son, hubby is the only child).

Then I personally invest some in gold, silver stocks and some gold ETF (exchange traded funds).

In fact, I am pretty handicap when investment is concern. No where near the expect.

Hope this help.

Jamy


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