My road to riches

On September 2006, i went to a property auction and won an apartment approximately 4 km from where i live. It is a 9 year old condominium called Sri Suajaya Condominium (quite near karak highway).

My auction case was rather unique as i was won the the property at reserve price of RM 95,000 (Market value of property is RM 130,000 - which gives me an upfront profit of RM 35,000).

Here are some tech details:
3+1 rooms, 2 bath (with attached tub), comes with kitchen cabinet. Area is 970 sqft.
Situated on the 8th floor facing KL and swimming pool.

When i took over the property i had to remove the existing tenant (1 month), and renovated the place (2 weeks). Gave it a new coat of paint, fixed all doors, repaired the kitchen cabinet and renew the wiring. Total cost: RM 3800.

I managed to secure 85% financing from HSBC - RM 81,000 loan for 30 years at 5.75% p.a. This works out to be approximately RM 420 per month installment.

I thought about refinancing it after 5 years. It is currently rented to a newly wed couple for RM 700 a month since February 2007.

So here is the breakdown of this property’s month cash flow:
Rental              RM 700 (translates to 8.8% per annum - very nice)
Mortgage         RM 420
Maintenance    RM 136

Nett cashflow   RM 144 / month * 12 months = RM 1728 per year. Or roughly by renting out this property, the income is paying off my mobile phone bills.

Note that the calculations exclude the annual assessment and quit rent.

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Ever since that faithful day, i have been to 5 other auctions and i ended up losing all of them (some very good ones too). The next big one will set upon me soon =)

I made it a point to acquire one property per year, so lets hope this one works out fine.

This entry was posted on Saturday, May 19th, 2007 at 1:17 am and is filed under Property Investment. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.