Many of my friends who did not have higher education are all to be more adventurous and grab any golden opportunity to earn a higher income in a strong currency. Most of them went to working oversea as they think that the amount that earns working overseas in 1 year is almost equivalent to at least 3-5 years of working in Malaysia.
I hope one day I managed to accumulate extra income over RM10k per month to allow me to retire comfortably. I have promised myself that my goal is to retire debt free, which is before the age of 65. But now, I have changed my mind and set higher target, which must achieve it within the next 10 years by just property investment.
Consider between the ROI and interest cost. Assume that you are investing in low medium cost apartment below RM100k in a good location:
Average property return > 7.5% p.a.
Most banks are giving BLR – 2.2% for residential housing loan (Current BLR is 5.65%). As you can see, interest fees of bank loan < 3.5% p.a.
So, the return on investment > 4% p.a. Lets check how’s the gain:
Use Rental Fees To Pay Your Bank Installment
Normally, for your own home, you may need to have buffer to service for 3 months bank installment just in case that you lost your earning ability temporary. Yet, for the investment properties that are being rented out, you are using the rentals collected from your tenants to pay for your bank installment.
Why Borrow Money To Invest Better Than Using Own Savings?
Recently, I know 1 Master who is specializing in property investment. He is the one who did not take any loans for all the property that he purchased because he did not like paying the bank interest. For me, it is possible for me to do that also but i still have my own stand and there is one of the reasons why borrow money from bank is better:
Time factor: Imagine that it may take you 5-10 years to save RM100k, but les than 1 month to borrow the same amount of money. So, for me, it is more faster to get rich by starting your journey of investment earlier.