KUALA LUMPUR: Banking customers, including individuals and small and medium sized enterprises (SMEs) will be allowed to delay the repayment of their existing loans, including mortgages and hire-purchases, for a period of six months.
This is part of the central bank’s new measures to assist borrowers experiencing temporary financial constraints due to the Covid-19 outbreak.
In a letter to the heads of financial institutions today, Bank Negara said the automatic moratorium will be effective from April 1.
“Banking institutions should provide individuals and SME borrowers with adequate information on how the suspended loan/financing repayments/payments will be treated during the moratorium period,” the central bank said.
The automatic moratorium is applicable to ringgit-denominated loans or financing that are not in arrears exceeding 90 days as at April 1, 2020.
The moratorium does not apply to credit card balances.
For outstanding credit card balances, Bank Negara said customers should be offered the option to convert the outstanding balances into term-loan of not more than three years.
“For corporate borrowers, banking institutions are strongly encouraged to facilitate requests for a moratorium,” the letter stated.
And in property investment there are ways you can maximise profit even if you are just getting started or a newbie.
Let’s look at the whole property investment value chain, to better understand this.
To start off with, choosing the right property market at the planning stage will let you maximise your borrowing capability, and at the same time ensure you can continue to leverage from the bank.
Choosing which market to invest in will determine the percentage below market value you can get for your property. This can go from between 20% up to 50%. But the trick is, do you know if the value you get is the actual real value?
In the current market, we are seeing worrying trends where the prices of certain property type are actually depreciating (or going down) creating a scenario we call negative equity. Why? Simply because new projects by developer have been sold at a price much, much higher than actual valuation. The prices were artificially inflated.
Instead of buying new projects, there is a huge opportunity in buying from the secondary (or sub-sale) market, which 𝗦𝗨𝗥𝗣𝗥𝗜𝗦𝗜𝗡𝗚𝗟𝗬 𝗰𝗮𝗻 𝗺𝗮𝗸𝗲 𝘆𝗼𝘂 𝗺𝗼𝗿𝗲 𝗺𝗼𝗻𝗲𝘆 𝗔𝗡𝗗 𝗙𝗮𝘀𝘁𝗲𝗿 𝘁𝗵𝗮𝗻 𝗻𝗲𝘄 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿 𝗽𝗿𝗼𝗷𝗲𝗰𝘁𝘀
And now is one of the BEST time to start investing in the secondary market..
✅ Property is at least 20% cheaper than market rate
✅ We can know safely and surely the actual valuation
✅ Start receiving passive income within 3 to 6 months
✅ And the good news is make from between RM 20,000 to RM 60,000 within 3 to 6 months (and still collecting rental)(you can read more here)
Next is property type.
You need to decide and choose the property type. Choosing the correct property type can stretch your borrowing capability to optimise your return. And this can be determined based on your individual profile and your budget.
Well, you may think to yourself – “What budget? Property price is so expensive now, it is way above my budget.”
Let me debunk one of the biggest myth in property investment. You do not need a lot of money to start investing in property.
You can start investing in property with as little as RM1,000. Again, match your available and existing budget/ capital with the different property type.
So what are some of the property types? Residential property type ranges from flat, apartment, condominium, single or double-storey terraces, semi-detached or bungalow.
Whilst commercial property types are offices, shoplots, retail space, hotel, industrial (such as factory and warehouses) and special purpose property.
The first step
So first thing first, you need to decide on the budget that you are comfortable with. This includes how much monies that you have (which we will call capital) to pay the upfront necessary payment needed and the monthly installments.
With this mind it will be much easier for you to further narrow down the property type.
With the budget 2020 around the corner, what are your wish lists as a property investor?
It has been a challenging year since the Pakatan Harapan’s 1st budget tabled by Finance Minister Tuan Lim Guan Eng last year. MALAYSIA’S Budget 2020 will be tabled in Parliament on Oct 11. As announced, the theme for this year’s budget is “Shared Prosperity: Engendering High-Quality Inclusive Growth Towards High Income Economy”.
The property market has been sluggish and the property overhang as well as home ownership remain the key concerns. Property consultants and stake holders of property sector has called for the abolition of the Real Property Gains Tax (RPGT) imposed on properties held for more than five years. Other common suggestions are the revision of the price threshold for foreign buyers, reduction of compliance cost borne by developers and better access to financing for homebuyers.
As a property investor myself, I have listed my top 5 wish list for Budget 2020 for property investors, home owners as well as would-be property investor and home owner.
Here’s my wish list:
1. Remove Real Property Gain Tax (RPGT) after the 5th year
In view of the slow market and oversupply situation, I agree with the call from players in the real estate sector who urges to the government to remove the real property gains tax (RPGT) after the fifth year of purchase to 5% (instead of the current 10%) for non-citizens and companies; and zero tax for Malaysians and PRs.
As a result, I believe it will indirectly stimulate the property market and encourage more buyers and investors to re-enter the property market. In addition, this will help to reduce the property overhang and the supply of unsold units in the secondary market.
The last RPGT revision impacted the market negatively. RPGT is a tax on capital gains and was meant to curb speculation, however the current property market is ‘stagnant’ and moving side way. Do you agree that holding a property from the sixth year onwards should no longer view as speculation and should be 0% RPGT for 6th year onwards?
2. Extend loan tenure to maximum of 40 Years
Currently, the proposal of 40-year loan tenure is only for first time home buyer. Previously, it is available for everyone. And it would greatly improve the property market if this proposal were to be extended to include everyone and for those who buys property from the secondary market as well. The advantage of longer loan tenure is that the monthly repayment is lower. This will then reduce the monthly commitment for property owner and a plus point for property investors. A reduced monthly commitment translates to more rental income to the property investors.
3. Increase the loan margin for 3rd property onwards
In overall, we need more catalyst and goodies to spur the property market. Currently, the loan margin for third property onwards is capped at 70% and it’s called LTV70. Therefore, to encourage more property investor to get back into the market, the LTV70 guideline by Bank Negara Malaysia (BNM) should be removed or revised to higher margin i.e. at least 80% margin of finance.
4. Extend House Ownership Campaign (HOC)to include property bought from the secondary (sub-sale) market
House Ownership Campaign (HOC) has been successful thus far to increase home ownership and reduce property overhang. However, HOC campaign is limited to only developer’s new/unsold units. As a majority of property transaction comes from the secondary market, HOC should also be extended to properties purchased from the secondary market to further spur the property market.
5. Increase EPF 2 allocation from 30% to 40%
We are allowed to withdraw money from EPF account 2 to pay for our property purchase. In view of the increased property prices, there is a suggestion to increase the funds allocation from the current 30% to 40%. This will be a good move to reduce the burden of the property buyer to pay for all the cost involved in buying a property.
Of late I’ve been hearing delay in VP from my friends. There is one particular project that I am personally familiar with, was launched in January 2011, but has yet to deliver VP even today (October 2019)! And I’m still unsure when VP can be delivered as I write …
But for some of my friends who have, at last, get their keys ended up very happy. This is because, not only do they receive keys to their property, but also a big checked (in the region of 5 figures) from the developer.
As a property investor, I’ve always preferred buying from the subsale market as compared to from developer.
Not only do I get my property faster, I also get to receive my rental faster and this enable me to continue buying my properties and create more passive income.
If you have any questions or comment, feel free to drop me a personal reply or in the comment box below.
Do you want to know how I look at Penang's property market?Watch this video to know moreThis is a short overview about the area of growth for properties in Penang#kaygarntan #empoweringyourdreams #propertyinvestment #propertyinvestor #propertyinvestmentcoach #themasterkeymethod #penang #propertymarket #overview #area #of #growth
If you prefer to read instead of watching the video, the transcript of the video (with additional points) is as below:
How long have you been studying the property market in Penang? And where are the top 5 areas in Penang that you see the most significant growth?
I started investing in Penang’s property since 10 years ago. And since I turned full time investing in properties, I started in depth analyzing and researching Penang properties 5 years ago. And I have compiled these data into several reports for e.g. Property Hotspots in Penang. I continuously study and update the data and have produced several ebooks related to property investment.
In doing my research and study, I use a lot of check list and tools. One of the tools I use is the Penang Map. Now, let us look at the Penang Map and let’s focus on Penang Island. I would “divide” Penang Island into 4 parts, North, South, East and East. West Penang is Balik Pulau and East Penang is really where it’s most happening and where both “growth” and “development” is.
We can further divide East Penang to North East and South East; using the first Penang bridge as the guide.
So, North East will encompass Glugor, Batu Ferringhi, Tanjung Tokong and Tanjung Bungah. All these are places are what I call “mature” areas. The main economic activities in North East are tourism and this includes Medical Tourism and Hospitality Tourism.
Another area in North East is Georgetown, which is well known as a UNESCO Heritage site. There are areas within Georgetown that is delineated as Core zone, buffer zone and pre-war houses. The activities in all these places are tourism, whereby there are a lot of street art, heritage walk and heritage tour, where people explore about heritage houses in Georgetown.
Moving to the South East, we will reach the growing area of Bayan Baru, which is one of the satellite city here. Moving further to the South, is the Bayan Lepas Industrial Area, Batu Maung, Teluk Kumbar and Gertak Sanggul.
These are the growing areas. The reason these are growing areas is because of the 2nd link bridge that linked Batu Maung and Batu Kawan. This link will bring population to come into the island gradually, towards the southern area.
This is, in a snapshot, the growing area and mature area of Penang Island
Now, let’s cross the bridge and go into the mainland.
Penang Mainland is divided into 3 major areas – Seberang Perai Utara, Seberang Perai Tengah, and Seberang Perai Selatan. Looking at the Seberang Perai Utara, there’s the Bertam township, which is a growing area; all the way to Seberang Jaya (in Seberang Perai Tengah) which is a mature area. Moving further south, there’s the satellite township of Batu Kawan, which is a well-planned township, and it’s a growing area.
As a summary, if you want to invest in Penang property, you will need to understand which area are growing and which is mature. Additionally, by understanding the economic activities in the different areas, you will know who your future tenant/ potential buyer will be.
If you have any questions, feel free to comment on the box below.
Firstly, what is below market value (BMV) property? In a nutshell, BMV property are property that is selling at a discount in the property market.
Imagine this, you, walking in the shopping mall and seeing all your favourite items (clothes, shoes and etc..) on SALE at every corner, with the tag of 30%, 50% and even 70%.
Now, imagine you, driving around in your favourable neighbourhood shopping for your property and seeing the sign “For Sale at Below Market Value”.
Below market value (BMV) property is essentially property that is selling from as low as 20% to 40% below the real market value.
However, you will not able to see it so easily. You need to do a little bit more research about where this below market value property is and look out for it.
The next question you may ask, so what’s so good about buying below market value (BMV) property?
For simplicity sake and easy understanding, I have listed the reasons why buying below market value (BMV) property has more benefits/ advantageous, into 3Ms as below:
Margin of profit
We already make a profit when we buy below market value property. We do not need to wait another 5 – 10 years to sell it to enjoy the profit. This is because, there is already a healthy profit margin.
Let’s say a property in the market is asking for RM 500,000 but you successfully bought it at a 30% discount (or better known as 30% below market value), at RM350,000. You would have make a RM150,000 profit!
Minimise your risk
Historically, property prices depreciated at most 20% lower than the original selling price. If a RM500,000 property were to depreciate 20%, it would be worth only RM400,000. You will not make any money selling this property in a down trend market.
However, because you bought the property at below market value, you have very little risk, or none at all.
Of course, when you successfully found a below market value property, you definitely minimize your capital. Using the same example as above, you would have already save RM15,000 on the initial deposit needed.
Using the Master Key Method®, you can even structure to purchase the below market value property in such a way that not only you purchase it with minimum capital, but potentially at zero capital.
Since the start of property boom nearly 10 decades ago, owning a home has become the cornerstone of the Malaysian dream. Although, with the increasing cost of living, depreciation of Ringgit, GST implementation and various other lending restrictions, the dream seems to be increasingly out of reach for many especially for the younger generation.