Blessing in disguise perhaps? Never had a car loan cause couldn’t get one.

Fortunately, the property is revive and was build-up pretty well IMO. Probable because the property is sitting in prime commercial [...]]]> Scenario
Abandon Service Apartment for the past 7 years (estimate) as of this writing. “black-listed” in CCRIS & owe the bank RM 55k in interest.

Blessing in disguise perhaps? Never had a car loan cause couldn’t get one.

Fortunately, the property is revive and was build-up pretty well IMO. Probable because the property is sitting in prime commercial land.

Solution
Call up my bank financier for this abandon property. Told them it’s now alive and kicking. Request for 100% interest waiver although it’s unlikely that will happen.

Ding-dong here and there thru couple of phone calls with the credit officer.
Credit officer mention will try waiver ranging from 10% – 50% but no promises.
Eventually, receive feedback from bank with virtually “zero” waiver and ask to pay up.

Wrote an email directed to Bank Negara and CC Bank customer-service.
All $ amount is fictional & names removed but the letter content remains about the same.

Sample

With reference to the above subject, we would like to appeal to Bank Negara to assist  and issue a letter to <bank name>, Kuala Lumpur  to waive the interest charged for nearly 6 years due to the abandoned project by the developer, <Developer> Sdn Bhd. The above mentioned interest does not cover the amount in the principle loan and instead is an additional interest charged.

We have stopped paying the bank since August 2002 due to financial constraint. We have written to the bank twice and went to see the loan officer to waive the interest but the response is not encouraging.

The bank officer informed us that the interest alone for the past 6 years is around RM55,000.00 and we still owe the bank the principal amount around RM82,0000. Beside this we still need to top up 20% (RM18,580.00) for the revival of the project by Price Water House. We really faced difficulty in settling the amount since we have other commitments.

This situation we faced is due to the developer’s fault for abandoning the project and  buyers should not be charged and we hope Bank Negara will help us to waive the interest.

<Bank Name 1>,<Bank Name 2> & <Bank Name 3> had waived the interest after the buyers had approached them, and from the website of Mr Lee Hwa Beng, we know that Datuk Ng Yen Yen had a meeting with Bank Negara recently regarding the waiver of interest for the buyers involved.

We hope  to hear from you regarding our request soonest possible since the project has been completed recently and in order to get the keys we have to settle the outstanding amount owed to <bank name>

What’s the outcome of this email appeal?

A mail from the bank’s lawyer giving waiver of late charges of about RM 3.7k ……
Obviously that ain’t gonna cut it.

Apparently the bank officer call-up not sounding too happy that an email was sent to Bank Negara….
But heh!…  The wavier you appeal for me is ridiculous.

Send a “counter-offer” email.
Sample…
 

This is in response to <bank name> letter titled “Appeal in Respect of Abandoned Housing Project – <property name>” dated 16 April 2008.

Below is <bank name>’s offer base on the original loan amount of RM 84,800.00 (Acc # x-xxxxx-xx)
Balance (30/04/08)                   = RM 135,919.61
Add Unreleased claim               = RM     4,640.00
Less upfront payment                = RM   20,000.00
Less late charges rebate            = RM     3,798.89
RM 116,760.72
Interest Rate (15 years loan)    = BLR + 0.28% per annum

Based on the above, it means that the “Total Interest”<bank name> charges us is RM 51,119.61 in a period between 5-6 years (# years since house project was abandoned)
It’s unfortunate that the above proposal by <bank name> shows “little or no attempt” in easing the plight of the customer who is already faced with an unfortunate event of an abandoned project.

Late charges rebate of only RM 3,798.89 and an interest rate reduction which was not even lower than the average housing interest rate published in <bank name> website (example BLR-1.65%) proved the above point.
We urge <bank name> to approach this case with a “Real Attempt” to reduce your customer’s burden.

Here’s our proposal which we believe <bank name> can accept
Balance (30/04/08)                    = RM 135,919.61
Add Unreleased claim                = RM     4,640.00
Less upfront payment                 = RM   10,000.00
Less late charges rebate             = RM     3,798.89
Interest Waiver 50%                   = RM   25,559.80
= RM 101,200.92
Interest Rate (30-year loan)       = BLR – 1.65% per annum

We also suggest the following for us to work together more efficiently.
1) Please provide me your direct email address so we can work through this at a faster rate.
2) We received <bank name> letter on 22nd April asking for our response by 24th April.
Appreciate either <bank name> courier letters to us or provide more lead time for response.

We are not here to demand but to ask for an appeal from the <no.> largest bank in Malaysia with an asset totaling RM111.6 Billion.
From a ROI point of view, what’s a couple of millions set aside to help common Malaysian buyers like us & others to gain a customer caring image for your bank.
If you’re not in the position to accept our proposal, we would appreciate you refer it to the right person.

Outcome from this 2nd email appeal?
Didn’t exactly get the 50% interest waiver … but it is close. RM 21k.
Deal accepted.

I applaud the bank on willing to waive this significant amount of interest.
Feedback I got is this sets a new precedent and it never or hardly ever happen (at least to us common folks). Perhaps thanks to the politicians who lobby for us? I like to think so.

Either way, I gain respect for this bank in their ability to reason with their customers.

So I registered online making sure I get a seat to this expo. You never know! Especially since they have a pretty impressive list of speakers at [...]]]> Decide to have a look at the property expo organize by iProperty.
It’s theme “iProperty.com Expo – Luxury Collection 09” held at KL Convention Center
on the 24 – 26 July 2009.

So I registered online making sure I get a seat to this expo. You never know!
Especially since they have a pretty impressive list of speakers at this event….
like Milan Doshi, Renesial Leong, etc.. just to name a few. The crowd could be huge!

The day came, park my car at KLCC and begin walking thru the tunnel.

I see the huge banner pointing to the expo. Just one Hall for this event.

Quite a number of prominent developers set up booth…
like Sime Darby, Titijaya, Glomac, etc..

Even non-developers took the opportunity to sell their services…
like banks, water purifier and even a radio station.

Despite the theme “Luxury”, not all property showcase are in the Millions price range.
“Luxury” is misleading since there are residential, commercial, retail lots, land, etc…
at mid-range price. IMO, better to just drop the “Luxury” word or replace it with “Rojak”.

There’s not much of a crowd in this event. Maybe because most of them are
all cramp in the speaker area. Plenty of seats arranged but most are already taken
by people or “magazines & papers” (a way of “booking” seats).

The speaker I listen to briefly was Yap Ming Hui (book author on financial stuff).
Not bad despite the half-an-hour delay due to technical issues.

Frankly I was a little disappointed, besides the impressive speaker line-up
there’s really nothing much else to see.

Could it be, my hopes was too high and expecting an event like PC Fair or Microsoft TechEd with lots of booth babes & free gifts? Still, I do feel there’s more stuff to see at similar events like MAPEX usually held in Mid-Valley.

Oh well, at least I got free mags from iProperty.

The questions asked are generally the same ones I ask myself during my search for a home loan that offer the best deal.

It’s like shopping for vegetable groceries, trying to find the best deal in town [...]]]> Many questions is asked about home loans during loan enquiries with loan agents, casual conversations with friends, local forum posts, etc….

The questions asked are generally the same ones I ask myself during my search for a home loan
that offer the best deal.

It’s like shopping for vegetable groceries, trying to find the best deal in town ….
Carrefour, Jusco, Tesco or Local wet market?
Hmmm…. where do I buy the freshest and cheapest “Siew Pak Choy”? Organic or non-organic?

Of course, home loans can be a little bit more complicated… throwing you jargons like flexi-loan,
OD facility, MRTA, lock-in period, ceiling rate, BLR, BFR, Islamic & non-Islamic (when did loans became religion related?) etc… and the list goes on…..

Scenario
Hence, as I begin purchasing my first property… I decided to understand the world of home loans and dive into the various jargons that’s thrown to me…. To boldly go where several have gone before….
So, with my calculator and the internet as my guide… I journey into this world….
to seek new life styles and new civilization…… (ok, enough with this star trek crap..)

Solution
The first most obvious question I ask (like most do) is…
What’s the interest rate?

I found out it’s usually a “BLR +/- a percentage figure”. Like BLR – 1.5%
BLR means Base Lending Rate… but what’s more important is the rate itself.
As of this writing… Bank Negara BLR guideline is 5.55%.
Meaning given the example above,
The interest rate is 5.55% – 1.5% which equals to 4.05%.
So, in “simple” calculation if I borrow RM 100,000 I will be paying RM 4050 interest per year.

Also, the higher the loan amount the cheaper the rates.
So banks will usually breakdown it down like…
If loan <= RM 150,000 then BLR – 1.5%.
If loan > RM 150,000 but <= RM 1 million then BLR – 2.0%

An then… to make things more complicated, interest rate are often
offered thru a tier system like,
1st year = BLR – 2.5%
2nd – 5th year = BLR – 2%
5th – 15th year = BLR – 1.8%
Thereafter = BLR = 1.5%
I usually opt for the simple 1 tier or at most 2 tier rate system…
else I will choose the lowest interest rate within 5 year period
due to the average lock-in periods (more on that next time)

Probable most people assume that BLR is the same across banks.
My-self included. Well… it’s not.
Most banks follow the standard BLR guideline but not all.
Example (as of this writing),
Citibank BLR is 5.6%, Affin bank is 5.50%, most other banks is 5.55%.
Hence, I do make sure to confirm the BLR rate instead of assuming it follows the standard.

While some home loans do not use BLR as their floating rate,
but instead uses BFR (Base Financing Rate) which most Islamic Home Loan uses.
To my knowledge both rates are usually the same.
One advantage is that it’s usually cap at a certain ceiling rate.
Meaning the rate won’t go higher then… say 8%.

And then there are those who are more imaginative…
Standard Chartered offers a Home Loan which uses the KLIBOR rate.
KLIBOR rate is usually lower like 2.5% but the catch is that
the other interest rate charge is higher.
So, it would be like 2.5% + 1.0% which ended up pretty much the same
for rates using BLR or BFR.
KLIBOR is also said to be more volatile… meaning the rate changes more often.

After finding out all the above…I start adding up the numbers
and find the “best deal” in terms of interest rates.

Anway… if there’s going to be more floating rates introduce in the future
and things start getting even more complicated….
Maybe next time I will just opt for a Fixed-Rate Loan

Solution Rhythm Avenue at USJ 19 is the first choice I made. Kind of funny since it is this same property that went abandon about 7 years ago which got me into trouble. but…Here’s why I made the decision.

The [...]]]> Scenario
Invest in a residential property to gain positive rental income and capital appreciation… hopefully.
First step … picking the right property

Solution
Rhythm Avenue at USJ 19 is the first choice I made.
Kind of funny since it is this same property that went abandon about 7 years ago which got me into trouble.
but…Here’s why I made the decision.

The revival was done up pretty well just like most newly completed condo… by Malaysian standard.

The property is sitting on prime commercial land at USJ 19.

It would be better if it’s on residential land since that would save me on bills, fees and others.
But it does have it’s benefits if they have key tenants taking up the retail lots.
Which they have!

Carrefour & Digital Mall which of course consist of many mini-tenants.

I believe this the only condo in USJ having such key anchor tenants right below it.
It’s also just minutes away from Taipan and near the LDP & Utara-Selatan highway.

Of course… being in a prime location and having good anchor tenants would mean nothing
if the “price is not right”.

So, is the “Price Right”? Does it bring in positive cash-flow?
Here’s a basic calculation base on my purchase

Base on a similar unit I rented out for RM 850 per month.
I consider it partial furnish.
Didn’t do much…. just the grills, lights & fans.
Furnish with fridge, wash-machine, bed-room set, sofa & portable kitchen cabinet.

Principle paid is average out within 5 years loan period

That’s RM 3840 per year from an initial investment of

For the lawyer’s fee, I receive a 50% discount for Stamping (Thx to budget 2009)

So, that’s a ROI of 16.3% per year.
I didn’t even calculate property appreciation.

Anyway… the bottom-line is, the price definitely is right base on the rental it can bring in.
It’s pretty obvious actually… a decent condo in USJ at RM 145k is a steal.

The disadvantage is that it’s pretty hard to get a decent loan from the banks.
Decent meaning…  good rates, term period & margin of finance
Probable due to it’s abandon history, hence you must shop around.

Oh yah… did I mention it’s Freehold.

After reading a couple of “Get rich & become millionaire real-estate” books, which constantly warn about the horrors of getting the wrong tenant…it kinda freak me out.  Hence, I became really careful on picking the right tenant, which ended up my property being [...]]]> You see… this is the 1st time I am actually getting a tenant.

After reading a couple of “Get rich & become millionaire real-estate” books, which constantly warn about the horrors of getting the wrong tenant…it kinda freak me out.  Hence, I became really careful on picking the right tenant, which ended up my property being empty for a good 6-7 months….
It may have been the rental rate… I don’t know.

I try to follow their “teachings & theories” pretty diligently. Some are pretty interesting.

An example, is requesting for a “standing-instruction” from potential tenants in monthly rental income.  IMO…. It doesn’t work. Well, at least for me.
The dealings end up feeling “picky” and demanding.  This is one example of good in theory bad in practice. Sure… biz is biz…better be safe than sorry… but I will skip this step.

Another theory is giving a rent discount, say RM 50, if rental is paid early…
I get the idea of using incentive to ensure tenants pay. But IMO it’s added process and subjected to create confusion. I say the simpler the better.

Anyway… good news is I manage to get a good tenant (so far).
But… made a major mistake with a rather unscrupulous Agent and here’s what went wrong.

Scenario
Property dormant for 6-7 months even though engaged several agents.
Desperation sets in. Mom finally found Agent whom found tenant who’s interested.

Significant rental price reduction due to desperation & realization that my “fully furnish” property ain’t exactly “fully” after all, compare to the market. It’s more like “partial furnish”.

I requested for a “meet-up” before any offer is accepted.
Met up with Tenant & Agent…. Good vibe with the Tenant.

Here’s where the mistake is made.
Agent requested for a booking fee from Tenant.  About 90% of monthly rental…
Tenant paid… we both sign “booking” papers. The tenant requested to move in asap like next 2 days,
which is fine by me.

The next day, Tenant “bank in” the 2 month deposit + ½ month utilities to me
and 10% of the remaining monthly rental to the Agent to cover the agent fees.
Agent gave keys to Tenant. The End.

Find the problem with this process?
.
.
.
.
.
.
.
.
.

Problem -> there’s NO Tenancy Agreement sign at all and yet the Agent is fully paid and Tenant having keys to the house.

Here’s what happened.

It didn’t help that the Tenant just handed me the money with no document sign for Tenant’s own protection and mine. Besides….. the Tenant shouldn’t be passing the 10% remaining amount to settle the agent fees.

Although it’s the job of the Agent to prepare and ensure a proper & fair Tenancy Agreement is in place and sign before handing out any money or keys….. it wasn’t done.

There’s now no incentive for the Agent to “finish up the agreement” since she’s gotten the money.
Basically she could just walk away.

When I confronted the agent on the process…. she has the guts to tell me it’s a normal process
and she’s been doing this for the past 13 years as an “experience” agent.
I just told her…. “You should change your process”.

Later I found out she wasn’t even from the “well-known” real-estate agency she claims to be in.
She quit 3 months back but was still using the name card and “booking” papers with the company letter head. I was really tempted to report her….. but ….

Solution
Just constantly pressuring the agent to get the Tenancy Agreement ready & stamped.
I now do more “running around” to minimize delay since I want the Tenancy Agreement ready, stamp and sign asap.

Remember…  The agent has no incentive any longer for serving me.
(besides reputation, long-term client prospect, etc… which I believe she didn’t care)
She got the money.

Lucky thing the Tenant is good and the Agent is “manageable” hence no serious damage was done but a possibility nevertheless.

I definitely no longer want to the same mistake again!

Key Learning
-    There’s no need to sign “booking” papers for tenancy deals. This isn’t buying a property dealing. If Landlord is comfortable with the Tenant and vice versa… all money and keys exchanges can be done once Tenancy agreement is ready to be signed.  No need the extra “booking” step.