Landed House or High Rise Apartment?

Just like any other trend, today, people with lots of money tend to invest on real estate or commercial properties.

*This scenario only valid in Malaysia, further study needed in other country.

1. If you are going for rental business – buy apartment
Apartment costs less, people also opt to rent apartment instead of landed house because of common thought that apartment is way cheaper than terrace house.
Apartments also have one fatal problem, its has low resale value.

If you go for sentiment analysis your target market will only be:

  • a. those who are looking for cheap house
  • b. those who are going for rental business

2. If you go for re-selling – buy landed house
Terrace house cost a lot, and its exponential by factor 2 for corner lot, exp 1/2 for end lot. Semi-D house falls under corner lot terrace. This kind of house has a market pullover in renting value, simply means there is almos always a demand. Landed housing is good for re-sell value, of course – its after you wait for first 5 years to avoid RPGT.

If you would like to increase your house value:

  • a. Have a good condition of kitchen cabinet
  • b. Landscaping can increase its value 5% more than current market
  • c. Tile porch / awning / front gate
  • d. Kitchen extension

The cheapest solution if you buy for the sole purpose of reselling it, spend your money on landscaping.
3. If you want both – buy a shop lot (corner lot)
Corner lot have a double rental value compare to middle unit or end lot and the pricing easily doubles  in value after 10 years. Its only a matter of  strategic location. As what people say, if have extra rod, go to bigger pond, you’ll be easily get bigger fish.

This is a guest post by Zhafri

[LCF Comment Below]
Prudent reminder – property market is almost at its all-time high. Malaysia government has  raised Real Property Gain Tax (RPGT) from 10 to 15 percent, and 5 to 10 percent for disposal within 2 years and 5 years respectively. Singapore government  has recently tightened rules on mortgage lending, when the new ruling shorten loan tenures and lower loan-to-value ratios. See below:

Singapore residential property new ruling
To quote Yap Ming Hui, in his article, What Robert Kiyosaki didn’t tell you:

All the suggestions Kiyosaki made were about ‘what to do’; he never gave concrete advice on ‘how to do it’. For example, you must take on ‘good debt’ to become wealthy. This meant taking on more risk by acquiring loans to invest in properties. However, he didn’t show you how to manage this risk or the investments you made.

I feel that the approach Kiyosaki advocated is muddled and has the potential to be both dangerous and misleading. The closest analogy I can give to illustrate my point is this: you’re put in a Formula 1 race car and told not to be scared as there’s nothing to stop you from driving at the same speed as other Formula 1 drivers. Only, you have never learned the special skills needed to control a race car.

The fact of the matter is that taking on more risks does not guarantee financial success. Fraught with uncertainties, it might get you rich quick, but it can also ruin you. ….Then, like my friend with whom I had breakfast, many have taken out maximum loans with a view to getting rental income and capital gain. Only, they cannot find tenants or buyers and struggle to make the instalment payments to the bank.

This Post Has 8 Comments

  1. I have always thought Robert kiyosaki is better at selling his books than to actually teach people how to be rich. Like the typical direct selling ever so popular in Malaysia, showing you their fancy cars, properties and luxurious to prove how successful their businesses are, but their mode of success is only a beautiful cover with no content

    1. Haha Hui, good observation over there. Human are visual creatures and we tend to follow the herd, that’s why blatant display of success by brandishing fancy cars and luxurious real estate properties works almost all time.

  2. To invest in landed property (residential), we need to have very strong holding power. As rental normally for landed property is very low and can’t even cover the monthly loan repayment amount.

    Maintenance for wear and tear is higher compare to high rise as well. Those maintenance have to take into consideration.

    Let say we need to hold it for 5 years, and the capital gain will be 80% to 100% (only happen within these 2 years). Then minus the total amount we fork out to top up for monthly repayment, interest that we pay for 5 years, legal fee stamp duty and maintenance cost.
    I only can see we can gain handsome return if we can hold it for longer term.

    Agree on the books and seminars normally only mention how to invest in property and get rich but never mention about how to manage those risks.

    For investment, we always have to identify the risks, evaluate the risks and manage the risks !!!

    1. Agreed, Yap. Many people only get inspired see profits made by the so-called property flipper in short term, which is rare cases but they thought they will be so lucky to experience the same thing.
      Thanks for sharing your experience 🙂

    1. Well Kris, because his self marketing is good, I’d say he’s probably the first personality people look up to when they become aware of all these financial freedom stuff. However, as we become more “advanced”, only then we discover what’s lacking in what he preaches.

  3. Using debt to make money is always a plan with risk. I mean, there is nothing without risk in this world. When you drive a car, you have the risk of banging someone or someone bangs you. When you drink a cup of water, you have the risk of getting choke or the water is not clean and bring you sickness. Everything has risk, it’s about how likely the risk is going to happen and how big the impact is to your financial life. My perception for Robert Kiyosaki’s teaching is very much about raising awareness which is much more important than teaching the reader step by step. When we fully understand the “why”, the “what” and “how” will come naturally.

    I agree that if you are going for rental business, buy apartment; if you go for re-selling, buy landed house; if you want both – buy a shop lot (corner lot). Very sound advice, often property investors do not see this. Many property investors bought property without a plan and whine about it when they don’t make money. Some just buy whatever come convenient to them. If developer giving 10% discount (zero downpayment), buy! Giving DIBS, buy! Free legal, buy! Free S&P, buy! We need to buy property with a plan, for most working class, buying 2 property would kinda exhausted their bullets so they really have to choose wisely.

    1. Well said again Daniel, please drop more regular comments! I believe Kiyosaki’s book really lacks in the how-to’s, but different people would have varying degree of success with the implementation part.

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