I wrote this article after watching a documentary about "The True Story of Bangkok's Ghost Tower" at https://www.youtube.com/watch?v=WE5L6yf3nro or click the title. At the same time, I am worried with what is happening to the global economy when there are banks bankrupt in USA (Silvergate Bank, Silicon Valley Bank, and Signature Bank, which collapsed in March 2023) and Switzerland (Credit Suisse Group AG). Deutsche Bank and other more than 180 banks are in line for possible bankruptcy.
There are troubling signs in these bankrupt banks:
1. depositors money are not secured. it is limited to certain level depending on countries such as USD250,000 in US. Most depositors money are lost if exceed this insured level.
2. bond holders lost their money - this is the risk of investment. But isn't it funny the main shareholders who are in the board of directors managed to took out their money before the collapsed. How convenient!
3. the rule of laws are broken in USA and Switzerland. Some analyst call Switzerland has become a "banana republic"!
4. It is dangerous to put all of your money in a single bank. It is better to split your money into several banks or investment funds without exceeding the insured values. For Malaysia, the maximum amount being insured is RM250,000 per account holder per bank. (read here https://www.pidm.gov.my/en/how-we-protect-you/deposit-insurance-system/deposit-insurance-system-faqs).
Now back to my property investment. Since 1997, I have successfully accumulate a substantial amount of property investment in several market segments: investment, house, shop, premium house and land. The first investment above was done without any much knowledge including how to get a bank loan. It was painful for the first 4 years. It was during ASEAN financial crisis. The interest skyrocket to 13%! I had to pay RM800 while the rent was only RM400. This went on for 4 years. Fortunately, I managed to pay all the loan in 2013. My wife wanted to sell the house in 2016 for RM170,000. I didn't. We almost got a buyer. Fortunately, I had to cancel the selling of the house due to disturbances from the potential buyers. I believed they also didn't know the buying procedure. A few months before MCO in October 2020, a buyer already agreed and signed the agreement to buy the house for RM250,000. But, he had to cancel due to MCO and job condition were very bad. At the end of last year 2022, I managed to find a new buyer of the house for RM260,000. Selling a low medium cost house is really a long process. We the seller and the buyer must be very patient!
Now a buyer is interested with my shop lot for about RM800,000. This shop lot was bought in 2009 with fixed interest. From the rental, I got almost RM1,200 monthly profit. The rental rate is about to be increased at the end of the year. Due to these three factors I had a strong feeling not to sell unless the offer is really good.
My main concern is what if after selling and all the cash are in the bank: the economy crash like in USA and Switzerland, or scammer (the calls are getting frequent. I just cursed them or ignored them!). What is the best strategy to keep the cash money and grow the money.
Bank Negara Malaysia (BNM) OPR has increased 3 times since early last year. Read here after BNM increased the OPR two times last year. My total monthly payment for all investments (4 loans) has increased for more than RM700 which is not bad actually. One of my colleagues have to pay additional RM700 just for one house loan!
Inflation is good for a wise property investor. Despite all the monthly increment, the total rental fees has increased by RM150 (excluding my shop lot at the end of this year). I even managed to help one of my in-laws to increase the rental fee by RM400!
Contact me if you want to learn proper property investment including looking for the right investment, formulate your strategy, looking for tenants, income tax, and the management. Paying for my service is a lot cheaper than losing million of RM!
So, you should plan your investment, loan and repayment wisely.
