I am a strong believer of property investment. However, a lot has been said about this investment. If you read your local newspaper- you might find different strategies to do this- no money down, positive cash flow, auctioned property etc etc.
|Gurney Park in Penang Island|
If you read about Robert Kiyosaki books, he mentiones about positive cash flow with good return on equity. I just attended a property talk in Penang and the speaker asked us to buy only property that gives you 8% return per annum based on property price. But the reality is- Can you find this type of property in Penang Island or even Singapore??
8% return per annum, that translates to RM2000 rental income for a RM300K property!! Can you get this type of property?? I have been living in Penang Island for the past 1 and half year and personally purchased 3 properties in Penang, I think 8% per annum return is almost impossible in Penang and Singapore if you are aiming at medium cost or high cost condominium.
How much the rental now in Sri York or Gurney park condominium in Penang?Yes, you are right, may be around RM2000-RM2500 per month but the selling price of these condominiums is well above RM500K now.
Therefore, I always aim for 6% per annum and if I combine a capital appreciation of 4% per annum, I am certainly very happy to buy the property without hesitation.
But if you ask me about then how to achieve cash flow if you are talking only about 6% per annum?? Yes, there are only 2 ways to do it- extend your home loan longer or pay more downpayment!