Friday, June 25, 2010

Property 101 - What Is Your Property Investment Target ?

Friend of my ask me, how much you plan to earn by investing in property? There are two type of return

a) Rental
b) Capital Appreciation

Let discuss on capital appreciation for now. This is very different depends on different indiviual. For me

Property between RM100k -RM200k: Profit of RM20k - RM50k between 3 to 5 years...
Property between RM200k -RM400k: Profit of RM50k - RM100k between 3 to 5 years...
Property between RM400k -RM600k: Profit of RM100k - RM 300k between 3 to 5 years...

Property between RM600k -RM 1mil: Never try before....

Let me do some sample calculation for Amaya KL Service Apartment

Below is calculation of estimated profit if sell after 5 years, using assumption of 7% of capital appreciation per year.
Based on assumption and calculation above, it is still possible to achieve RM100k profit within 5 years of investment.... if all assumption is work as it is :)

1 comment:

  1. For time being, I think "pure" Cheras resident will not pay this price for a house "in the air" except for the following types of buyers:-1) buy for own stay and 2) investor.
    Type 1 should be existing Cheras folks who stay nearby for many years, say 20-30 years. Possibly younger generation getting married and want to stay near to parents. Affluent parents may provide down payment. Suitable for couple with high disposable income, want to live near to their office to avoid long travelling time due to traffic jam.

    Type 2 investors who want capital gain will sell immediately after completion. Some investor wants passive rental income.
    As the development may take more than 3 years to complete (eg Pandan Axis, 1 Shopping Mall), the surrounding landscape may change. Eg proposed development in the old Sg Besi Air Base and the financial business hub around Jln Imbi and Jln Tun Razak. These places are quite near and opportunities may arise. Who knows eventually when things are taking shapes, the apartment can fetch high yield similar to those in Mt Kiara.

    Currently people may not see the value, but the area is really just a stone throw away from KL city centre. What is important is developer must upgrade the immediate surrounding esp Jln Peel and Jln Shelly.