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Tuesday, April 19, 2011

Property that is above the Market Valuation

Here's a real experience of making an offer for a property where we had very little bargaining power.
The prices quoted here are all for illustration only:
Commercial Properties

There was an advertisement for a commercial property, with very few transactions in that area.  The asking price was RM590k, but bank valuation was only RM450k, on top of that, the rental yield was about 4.9% only.  However there was potential for further capital appreciation, seeing that there are new development in that area. Based on that, we tried to make an offer for 450k, with the option of going up to 500k.  However, the agent told us that we have very little bargaining power, the seller was really "not desperate" and would sell to whomever offers the highest price. 450k was impossible, not even 500k, because the owner already got offered >500k.
So we decided to back out.  Low rental yield and low bank valuation means that we have to come out with substantial cash.
2 weeks later, I called the agent just to check if the property was sold, and it was.  The actual transacted price?  >RM 600k, higher than what the agent had advertised.  No doubt there was potential for capital appreciation, but is it worth to pay a premium price now itself, before the actual valuation, and the rental just equal the loan instalment? What do you think?

Thursday, April 7, 2011

Tax Filing

It's that time of the year for income tax filing, and my property investor friends and I "sama-sama pening" because of the complexity.

Now, with the self-assessment system, tax returns and supporting documents must be kept for 7 years.  Also, all rental income should be declared in addition to our salary income.   Of course,the good part is some expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent’s commission.  I also learnt an important point, which is if I start to rent out an apartment in Oct 2010, then the rental expenses that are deductible against the rental income are only for Oct-Dec 2010, for example, the loan interest expense.  Even though the loan was taken earlier, interest expense for months earlier than October cannot be deducted.
So it has been a few days of (non-continuous) tabulating and still not completed the filing yet.  I hope to complete it by this weekend!

Friday, April 1, 2011

Closing an unused savings account

As part of my initiative to unclutter my life, today I decided to take time off to go this bank in Subang Jaya.  This is the bank that I took my first housing loan with 13 years ago.

At that time, I was working as a salesperson.  Even though I live in KL, I thought it would be easy to do my banking transactions in SJ because my sales area was there.  Years passed by and SJ became a place that I hardly visit.  So having a savings and loan account there is really troublesome for certain transactions that require me to deal with only the home branch.
Firstly I changed my address with them.  Changing address was one of those things that you must do in person at the home branch.
Secondly, I closed the savings account, it was becoming inactive as I was directly transferring the loan installment into the loan account.  Not bad, I still had RM48 inside.
So I heave a sigh of relief.  All these small but troublesome things, can really nag at you: things that you have to do one of these days.  Now that it's done, one small decluttering effort in my life is achieved.