Property Investment Growth - value added house and shop

Last year, after finishing my car loan for RM897/month in May 2012, I decided to take a rest from any investment. I would like to have some time to relax and enjoy my new freedom. However, as I watch the world wide economy turmoil, I became nervous. Usually, it takes a minimum 6 months for whatever economy problem that hit Europe or USA to be at Malaysia's doorstep. As a result, from September 2012, I frantically looked for any property investment.

At the moment, I already have 4 property investment. However, the growth is slow considering I started to buy a house since 1997. The economy turmoil in 1998 really slow down my property investment. In a way, I was forced to buy my second house in 2000 since it is very close to my work place. JB property market for the last 10 years have not recovered from 1998 financial turmoil. If you buy a house, you still need to top up the rental fee you can get every month. In worst times from 1997 to 2002, I have to top up almost 50% of the monthly loan even I got tenant. However, based on my observation, commercial market especially shop office market is very good. You can easily gain profit upon first tenant rent your shop.

I have the opportunity to invest in a single storey shop lot in 2002. However, my financial was not in good condition at the time. I have to let go the opportunity. But, this does not deter me from finding the best strategy to buy a shop lot. The best opportunity came in 2008. I saw an advertisement in a newspaper about a shop house located close to my house. I didn't let the opportunity pass by. Immediately, I went to the developer to inquirer about the property. At that moment, I only have RM5,000 in my hand. The property cost RM306,000. It means I need to come up with RM60,000 as the deposit. After further discussion with the developer, I managed to buy the property with 100% loan. And I only paid RM1000 for the deposit!

2010 is a breeze for me. I acquire a one acre land at my hometown. As a Muarian, it is normal to buy a land at our hometown. Normally, a Muarian will build a house at their hometown upon retirement. Thus, the land acquisition is a mere additional option for me. Originally, the land was planted with fruit trees (Dusun). But, I converted the plantation to palm oil. Income from a Dusun is inconsistent and getting lower every year. And since I live far away, I have no time to take care the Dusun. By converting to palm oil, I can easily contracted the work to a third party. And I get a consistent income every month.

End of 2012 was a busy schedule for me. Although I already have 4 properties, I don't feel I have reach financial freedom or independent. My investment income is still far away from my monthly salary. I also kept wondering, what was going on. A few of my friends already very successful in their property investment. Thus, I started reading about property investment from Internet or bought a few books. Finally, I decided to attend a property seminar. The first seminar was presented by Mr. Milan Doshi at Mid Valley Mega Mall. He is well known from his property investment books and seminars.

It was an eye opening. Although, it was only 4 hours, I learned a lot from the seminar. Even though some of the material are known to me, the seminar enforce my strategic thinking. I have thought some of the tactics and strategies, but without any friend with common interest, there was no one to discuss the matter and bring them into realization. From there on, I have attended several more property seminars. All were conducted in KL. Meanwhile, I already booked an SOHO apartment in KL, next to Sg Besi highway toll. The price was RM570,000 but it was difficult to get the loan at the time.

With all the seminars I have attended, doubts were still lingering in my head. Then, I remembered an old friend from JB town. He was already successful with more than 30 shop lot units. I seek and managed to have a long and hard discussion with him for more than 3 hours. My first question was how he make money in property investment. And his first answer was even surprise to me. I cannot said the exact words, but the gist is successful people never hide their successful formula.

Based on this discussion, I have decided to focus my property investment in JB. I cancelled my SOHO apartment booking. Instead, I booked a shop office at Taman Pulai Utama, and another shop office at Taman Seri Pulai Perdana 2. I have to decide which one from the two should I buy. I decided to bring my wife into the planning and discussion. My first shop was bought without discussing the issue with her. Now with enough experience, she is ready to be my partner for discussion.

When, I bring my wife to the developer of Taman Seri Pulai Perdana 2, the saleswoman also promote the houses. It was a pre-launch sales. As part of our hobby, we decided to take a look at the houses. To our surprise, the architecture design and workmanship was excellent. It was a gated guarded houses. A couple of months before, my neighbor who are graduate students were robbed at around 10pm. From that day, I was thinking to buy a house in a gated guarded environment. Since, my wife and me like to plant some trees, we decided to buy a house with vast area of extra land. We have to choose: a RM640,000 or a RM560,612 houses.

Upon coming back from the window shopping, I made a detail calculation whether it is possible to buy a shop and a house at the same time. At that time, BNM just introduce a new regulation where the third house to be loan can only have 70% margin. The solution to the problem was to made full settlement to our first house at Pasir Gudang. Then, I also have to calculate the worst case scenerio where there might be hidden fee since it involves commercial unit. Based on my part time projects projection, it is possible to buy a shop and a house.

The house loan application was a breeze. The loan was approved on 29 March 2013 at IBR - 2.5. It was 90% loan for RM504,550. The monthly payment is RM2,641 for 28 years. However, my shop loan got stuck at the bank application. Due to incoming General Election, it was harder to get a loan especially commercial loan although the shop was only at RM528,000. The developer kept insisting me to pay for the full 10% since there are other buyers ready to take over the shop if I cannot get the bank loan. Thus, before end of May, I paid the 10% deposit. It was a huge gamble since if my loan is not approved, the 10% deposit is not refundable. Due to this pressure and to ensure my reapplication for loan is approved, I have decided to include my wife's income to apply for the commercial loan. We got the loan approval on 3rd June 2013. It was a huge relieve! The approved loan amount was RM448,800 with BLR-2.2. The monthly payment is RM2,585 for 25 years.

The next headache was how to prepare the remaining deposit money and fees.