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Sunday, December 14, 2008


Finished reading this book 2 days ago (guess what? I've finished reading this one in the toilet again!).

First question, why should you involve with property? Is there any better investment that can give you these criteria:
  1. give a decent return (above inflation rate)
  2. requires minimal work on my part
  3. requires minimal time
  4. finance by other people's money
  5. within my control
  6. has acceptable risk
  7. gives tax reliefs
  8. gives peace of mind
Great isn't it? If you can suggest other investment that similar like this I'd greatly appreciate.

Yes, I hear you. Some mates asking me about what kind of house is the best for investment? I'd say medium cost flat or apartment (low cost is great deal but often has problem with maintenance and they are hard to sell because of the agreement stuff). Why not semi-d or terrace? I won't say you cannot buy those house, but for investment (rental) the best is you get yourself an apartment or medium cost flat (Azizi says condominium and apartment... but I know that many of you can't afford to buy one with the average salary between RM1,000 to RM3,000 and other debts around and I know the condominium price in big cities like KL, JB and Penang are simply impossible) because we are talking about the best way to rent.

If you have to move to somewhere let say Penang for work purpose, will you rent a terrace house or apartment? Based on the rental price you will definitely rent an apartment. If you do that, do you think others will do otherwise? Plus, with busy schedule working from 8am to 5pm everyday they surely have no time to go some other place for sweating themselves. So, apartment has always provide some facilities like pool and gym. Not to mention tennis and basketball court. What's better than this?

You must always make sure your rental give you a positive cash flow. That means, you are not paying for your property but the tenant does. Let say you pay bank RM500 monthly for the housing loan and your tenant pay you RM600, this is a positive cash flow. Ok I hear you saying what about the maintenence fee? Nowadays the maintenence fee is 10cents per square feet. That means if let say your apartment is 900 sq/ft then it will be RM90. Still you get RM10 for the positive cash flow. Better than negative right?

Now, when we are talking about positive cash flow what criteria do you need to look at before buying a house? The answer is simple. LOCATION. Most people buy the wrong location and then whining why it is hard for them to get tenant and worse they get negative cash flow every month. Example of good locations are near to school and office, shopping malls just nearby, in town, near to hospital and near to public transport such as bus and train station. These are good example to be considered before you buying it. Again I'd suggest KL, JB and Penang are the 3 best cities for you to buy (bear in mind, do not buy properties that are too far from you as it is easier for you to look after it). Do not buy properties in Sungai Petani as example as the price is very slow to go up and the rental is so cheap. But if you are looking for a house to live, then go for it. Cheap and spacious. Many of my colleagues complaining that the rental is way too cheap and they simply can't make money out of it!

Another good thing is buy the property below market value. You can get good deal at the auction! I haven't tried this one but my friend did and Azizi would suggest us to buy through auction too. Before you go into auction, you must check on the house you are interested about the market value. If the house value is RM150,000 and you buy it at auction with RM160,000 then you have lost RM10,000 in a blink. Usually peoples in the auction will have some groups that will keep rocket up the price and please don't be fooled by them. Get your fact right. Get some info and books before you jump into auction ok?

Financing your property. Most peoples hate debt. I know, I'm having the same problem. To me, if you don't afford to buy thing cash, meaning you are not afford to buy it at all. But it is not the same with property. It is fine if you buy house for living but if it is for investment then it is other way round. I you rent the property you can claim interest portion of the mortgage as tax deduction. This is a significant deduction as the interest of the mortgage is extremly high during the early year (as much as 90% of the payment). For example, if the mortgage is RM1,000 a month some RM900 of it will go for settling the interest portion only! This mean that you can deduct RM900 off from the rental income received when calculating the tax due.

Other than the tax deduction buy financing your property, you can also buy more properties. Let say you have RM100,000 in hand. Instead of buying 1 RM100,000 property you should just pay RM10,000 for the down payment and you can finance your property for RM90,000. That means, you can have 10 properties by doing the same thing instead of buying only 1 property. But that is only an example to give you a clear picture. Do not do that! Remember you must have at least 3 months salary in your bank account ok? 4 or 5 properties is more than enough as you can rental as your business income for income tax. Meaning, if you have less than 4 houses, you will be listed under 4A section and get taxed but if you got 4 houses, you will be listed under 4D section and you even can claim money from them! Life is wonderful... isn't it?

You are a millionaire landlord when the tenants:
  1. pay rental on time
  2. pay rental automatically
  3. handle all minor problems themselves
  4. happy to have you as the landlord
The most imprtant thing is the Tenancy Agreement. You must have this in order to make sure everything is going smoothly. Most of my friends say that it is a waste of money when you have to pay for stamping and you will get taxed when they know you have rental as your side income. Mate, listen... if you do not have this Tenancy Agreement, you are not only risk yourself when they tear apart your lovely apartment like what tsunami does but they can also stay there for free! What prove do you have against them? Let make it as simple as it could be. My dad has experienced this before and so does my colleague's mom who didn't get rental payment for a bout a year simply because the tenant is in financial problem and need sympathy. Ouch!

There are more keys that will lead you to be a Millionaire Landlord but you need to get yourself a copy of this book. It is worth it! (ah RM39.90 for a great book like this? you spend more than that for your retail theraphy! liability!).

Where wealth is concerned, direction is more important than speed
-Azizi Ali-


  1. Where wealth is concerned, direction is more important than speed
    -Azizi Ali-

    I like this one. Slow and steady. Make sure you're on right path. Good luck! :)

  2. cahaya - yes. direction is more important than speed can be applied in many other things as well :) i love this excerpt too.

    what say you about real estate biz?

  3. Yep! So much into it. Now, I'm enjoying the profits. :)

    Mula² sakit jugak when one of the house that I bought terbengkalai. I still have to pay rm400 every month for nothing.

    I even experienced selling my house undermarket price. It even gets lower and lower than the price I've paid before.

    Then I've started to buy not really expensive property, all around not more than rm200k per unit.

    Now the Total, I have 2 condos(about rm150k per unit) and 1 apartment(about rm200k per unit), which the selling price right now is rm350k per unit. Rental, tak payah cakap la. 1 bulan sewa dah boleh kaver 3 bulan bank loan. And I don't make full loan. It such a waste!

    It's a good business. Don't give up easily.

  4. Anonymous3:40 PM're looking at one!!! Hahahahahaha!!!!

  5. cahaya - may i know why you didn't take full loan? you know you can buy more property if you do so right? let say you take more that means you got extra cash to invest. don't you think? there are 2 kind of debts. one is a good one, another one is the bad one. so housing loan is a good one and since you said its give you a great return i suppose you should take more loan instead? now you have 3 maybe you need just another one to complete you 4D section and claim your money from IRB? :)

    - just starting :)

  6. good tips faisal..but i can never imagine myself living in an apartment simply because i need a garden..! but the idea to rent it out was great...!

  7. yes waliz. you have 2 purpose of buying property. 1 is for your own living. and 2 is for your investment. real estate is a good biz to get yourself involved. but still we have to see whether it suits us. not all biz can be handy to us... to me real estate is pretty cool and i'm involving myself in. i know you love gardening a lot. i have read your other blog too :)

  8. NaZ_zR11:48 PM

    hmm.. eye dia... i luv dis...

  9. waaa... nmpk nyer ko bakal jadi jutawan lepas nih..

  10. oh how i wish i could be a millionaire too
    but i think itrs just a dream unless i won in a lottery hehe
    have a great day faisal

  11. I am sure it's a great book. but there's another thing that I wonder even more- just how long do you stay in the toilet when you have to? LOL I mean, do you stay longer than required? muahahahahaha I would go, sit and finish what I went for in max 2 minutes! and believe me, thats not enough to finish even a page. hahahahhahaah

  12. Faisal,

    Investment in real estate is for rich people only. It is very good investment since it creates residual income & the fact that these type of properties are always inflate. When they got problems with cash, they can either sell or morgage it.

    Those who live in tight income, will find hard to cope with problems such as maintenance & finding tenants to pay up the monthly finance charge. As far as business concern, we shall never speculate, i.e, we should never think that there's always people who wants to rent/buy our property. There must always contigency plan - that is enough cash to pay the monthly finance charge, with or without tenants.

    I don't know about Penang but here in KK, the quality of buildings these days are of much concern to me. Obviously, we don't want to buy property with high maintenances and give us lot of headches. But, in most housing areas, that was the case.

  13. I have read this book. It's very good book! And you seem to summarize most of the points here. Azizi should thank you for promoting his book!

    However, I am not very clear what you mean by this ...

    "...4 or 5 properties is more than enough as you can rental as your business income for income tax. Meaning, if you have less than 4 houses, you will be listed under 4A section and get taxed but if you got 4 houses, you will be listed under 4D section and you even can claim money from them!..."

    Care to explain? : )

  14. jard - haha bakal je la. nak jadi tu lambat lagi kot :P

    blue - to be a millionaire is not impossible if you know how to do it :) the most important thing is how much you save instead of how much you earn.

    farah - haha there you go. i prefer to say no comment :P

    ismail - you should come to penang or the states i stated in the post. this business is not only for the rich but also for the average :) i have many examples of friends, dad friends or even colleagues who have been very successful in real estate. they were average too but then with the right step they earn a lot from this business.

    as i wrote in the post about location. that is most important thing to be considered. you have to find the best location for your investment. in penang, houses near the government office, factory and some banks are the best. you need not to worry about monthly payment as it will be paid by tenant not you. as example, my sister's house, a medium cost flat which she has to pay every month for RM300 and do you know how much is the rental around there? RM600. RM300 straight goes to you pocket :) its around queensbay mall area. yes, strategic place i'd say.

    plus, now you can sell your house at anytime you want which it is not this easy before (read: rpgt).

    foong - ok, its like this. i guess you already know about declaring your house and the rental income to income tax if you do the stamping for your tenant agreement.

    ok, you need to pay some amount (it's not much though) of money for the rental because if you own below than 4 properties you are only entitled in 4A section meaning you are taxable.

    but if you own 4 and more properties, you are entitled in 4D section which means you rental is not your side income anymore but your business.

    got it?

    you know about individual and business tax right? if its under business, you can claim some amount of money. if you want to know more about this you should read this book. in that book it will explains more about rpgt as well.

  15. Ok, got it. Thanks! : )

  16. penah baca gak pasal ni..
    tpi xpenah amik serius sgt..
    why?? no answer for that!!! hahaha

  17. foong - no problem bro :)

  18. kamal - money is not easy to get when you don't know the easy way to do :)

  19. Ha ha..MAYBE aku shld move to Penang la cam ni. He he. Sounds easy to make money over there.

  20. In Reply to your comment,

    I don't take full loan because I want to settle it fast and maintain good relation with the bank. After that, perhaps another property.

    You know right if we took full loan and pay according to the bank terms, you will end-up paying double the price of the house.

  21. ismail - hehe its a good move ;)

    cahaya - trust me cahaya. try get yourself a copy of property millionaire by azizi ali. you will get what i mean ;)

    remember that you won't get rebate like car loan for housing loan.

    read the financing property part again ;)


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