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The absurdly optimistic property investment tips

A typical design of low cost houses in Malaysia.

A typical design of low cost houses in Malaysia.

TheMole
Written by TheMole

A Youth’s Take – A weekly column by Zaidi Azmi

Nov 25, 2017

THE only thing that is not gloomy in the country’s current property sector are its investment seminars.

Attend one of these pay-to-hear lectures and you will be told how –despite the current property glut– now is the right time to invest in property.

Funny how a similar sales pitch was also used when the sector was doing great, making one wonder when is actually the wrong time to invest in property?

Anyway, the one I attended a couple of days ago gave an elaborate life-hack on how those earning a meagre monthly income of RM1,500 can own not just one but three properties in five years.

Too good to be true? Apparently it’s not. At least according to the seminar’s so-called property guru.

His ‘strategy’ which cost attendees RM150 to listen to, hinges primarily on one’s ability to sublet six houses, secure several unit trust loan financing and get a consistent percentage of mortgage loans from the banks.

So the first step will be a combination of securing a RM50,000 Amanah Saham Berhad (ASB) unit trust loan financing and finding six houses to sublet; the profits from each house can be as low as RM200.

After a year, one will have enough money – derived from the profits of the sublet properties and the yearly dividend from the unit trust– to use as a deposit to buy a RM50,000 low-cost auction house.

The monthly instalment for a RM50,000 low-cost house costs RM250, so according to the guru, one should rent the house for RM500; which means that one will have an extra profit of RM250.

Then the following year, secure another ASB loan but this time opt for a RM150,000 loan with  its monthly repayment deriving from the profits of the sublet houses.

After four years, one would have saved enough money from the dividends of the loans to fully pay for the low-cost house while still have some extra cash to use as a deposit to buy another auctioned low-cost house.

And since one is required to buy a RM100,000 auctioned house, the monthly housing loan repayment for that particular property will be at RM500 which will then be easily covered by renting the house at RM700 a month.

On the fifth year, get married (yes, I kid you not, the guru literally told us to get married) and do a joint-loan with your wife and get yourself a nice RM250,000 house with RM1,200 in monthly instalment to be paid using the profits from the six sublet houses.

What a load of crock. 

The thing with this guru’s secret formula to property investment is that he didn’t explain any contingency measures that one should have if things go south.

He also did not explain what one needs to do in cases of errant sublet tenants or where to get some extra cash if one of the purchased houses needs repair works.

Or the fact that it is almost impossible for someone with a low income to smooth talk a bank into giving him or her the same percentage of mortgage financing for multiple property purchases.

It is simply irresponsible for these kind of property gurus to dangle the illusion that those with weak financial backings should invest in multiple properties when what they should be striving for is to own a property.

The guru said it worked for him.

Well, good for him.

But just because it did, don’t parade it like it’s a risk-free one-size-fits-all formula because Edward Murphy has proved that anything can go wrong, will go wrong.

To those with weak financial standing, think very hard before you give these too-good-to-be-true tips a try, because no one likes to bite off more than he can chew.

It’s like what my farmer of a dad once told me – “you invest only when you have surplus because not everyone has wealthy parents to fall back on.”


If Zaidi Azmi isn’t busy finding his ways in the city, this 26 year-old northern kampung boy can be found struggling to make some sense of the Malaysian political scene. Zaidi can be reached via email: [email protected]

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TheMole

TheMole