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How to buy real estate?

 
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Krazynivek



Joined: 15 Nov 2004
Posts: 5

PostPosted: Tue Nov 16, 2004 6:08 pm    Post subject: How to buy real estate? Reply with quote

Hi Forumers,
I'm Kevin, 16. I'm interested in real estates. How do I buy a house? I mean not now of coz im too young. I just want to know the procedures of buying a real estate or any property. What must i do in order to buy a house?Thanks alot.

Regards,
Kevin
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Tue Nov 16, 2004 6:36 pm    Post subject: Reply with quote

Think you might have to be of a legal age for starters. Not sure if this would be 18 or 21. Don't know since i didn't do anything as a minor Very Happy

I'll try to sum it up for you in a nutshell:
Step 0: Have a game plan (income is to be sourced from rental, or capital appreciation, or from property refinancing ? etc.)
Step 1: Read a lot of newspapers, articles etc
Step 2: Talk to lots of people, surround yourself with like-minded people, share ideas
Step 3: When you can drive, drive around a lot
Step 4: Analyse the properties and source for a financing arrangement
Step 5: Be brave enough to follow through your instincts
Step 6: Cool off for a few months and let the experience sink in
Step 7: Go through from step 0 again. You may shortcut a lot of the steps if you're buying familiar properties or in familiar neighbourhoods but that's no fun is it?

The reason why i say go from step 0 again is because of my personal belief. After every purchase and the "experience sinking" period, it's good to evaluate the strengths and weaknesses of your portfolio.
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Krazynivek



Joined: 15 Nov 2004
Posts: 5

PostPosted: Tue Nov 16, 2004 10:25 pm    Post subject: Reply with quote

Hi Banzai,
That's a great idea, what is the fun if we buy the familliar properties all over and over again? At least try different type of properties right. Hurm..but i dont quite understand about the step 0, game plan? U mean planning for which side of income i want to generate from? Probably, from rental income. What is capital appreciation or property financing? Can you explain it to me? Thanks for sharing your personal believes Banzai. I appreciate that.

Regards,
Kevin
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Labbun



Joined: 12 Oct 2004
Posts: 6

PostPosted: Tue Nov 16, 2004 10:26 pm    Post subject: Reply with quote

Hi Banzai,

Is is legal to borrow money from individuals or investors to purchase real estate properties?
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wiser



Joined: 16 Nov 2004
Posts: 10

PostPosted: Sat Nov 20, 2004 10:04 pm    Post subject: Reply with quote

Labbun wrote:
Hi Banzai,

Is is legal to borrow money from individuals or investors to purchase real estate properties?




If your loan is from the bank, then the disbursement of funds for the purchase will be from the bank to the seller. On the other hand, if your source of funds is from other parties, all that you need to do is to get those funds yourself and purchase the property from the seller in cash
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wiser



Joined: 16 Nov 2004
Posts: 10

PostPosted: Sat Nov 20, 2004 10:05 pm    Post subject: Reply with quote

Labbun wrote:
Hi Banzai,

Is is legal to borrow money from individuals or investors to purchase real estate properties?


Say if you are purchasing the property in cash, I would not be bother about your source of funds.
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Labbun



Joined: 12 Oct 2004
Posts: 6

PostPosted: Sat Nov 20, 2004 11:15 pm    Post subject: Reply with quote

Hi Wiser,

Thank for your replies...

I understand what u meant, but I'm not sure if lending out money to be considered as illegal money lending?
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Khoobg
Site Admin


Joined: 06 Jun 2004
Posts: 62

PostPosted: Sat Nov 20, 2004 11:30 pm    Post subject: Reply with quote

Labbun wrote:


I'm not sure if lending out money to be considered as illegal money lending?


I think as long as you loan the money to someone base on trust, no one can stop you. However, if you wish to lend out money to the public, you will be to be a licensed lender to do so.
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Sun Nov 21, 2004 2:31 pm    Post subject: Reply with quote

Krazynivek,

Capital appreciation is straightforward. The proceeds of your property sale is your capital apprecation. You get capital appreciation if you sell your property at a profit. Generally not difficult if you are not in a hurry to sell or if you have the location scoped out correctly.

Let me explain a bit more about rental income. Passive income derived from rental goes towards 3 items:
1) monthly expenses (interest expense, monthly maintenance, agent's commissions etc.),
2) debt reduction (principal repayment)
3) the remainders into your bank account

Monthly expenses is basically something you pay and never see back again. It's in your best interest to reduce this. Ultimately of course, if you have done your homework, most of this is of course borne by the tenant.

Debt reduction goes towards reducing the amount to your bank. When you reduce the loan principal, you can "withdraw" this subsequently when you refinance (remember, as long as you break even in your property financing, the tenant pays this loan off for you).

Anything excess of these, is your net cash inflow (what most investors look out for).

Remember, this is your passive income. As long as you have a tenant, you have these and you get it regardless whether of whether you are asleep, on vacation etc.
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Krazynivek



Joined: 15 Nov 2004
Posts: 5

PostPosted: Thu Nov 25, 2004 10:03 am    Post subject: Reply with quote

Hi Forumers,
Let say if I want to buy a real estate or some kind of property, is money loan from the bank is the best method? Or, is there any where i can get the money from to buy a real estate?
Ok then let say i want to buy a property via bank loans, how do i arrange with the bankers so that the bankers will loan it to me the money to purchase the real estate. Is there any such thing of 0% down or 0% closing cost?
Regards,
Kevin
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Sun Nov 28, 2004 10:42 pm    Post subject: Reply with quote

How about your parents? Having loaded parents help

Krazynivek wrote:
Hi Forumers,
Let say if I want to buy a real estate or some kind of property, is money loan from the bank is the best method? Or, is there any where i can get the money from to buy a real estate?
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wiser



Joined: 16 Nov 2004
Posts: 10

PostPosted: Mon Nov 29, 2004 7:54 am    Post subject: Reply with quote

Krazynivek wrote:
Hi Forumers,
Let say if I want to buy a real estate or some kind of property, is money loan from the bank is the best method? Or, is there any where i can get the money from to buy a real estate?
Ok then let say i want to buy a property via bank loans, how do i arrange with the bankers so that the bankers will loan it to me the money to purchase the real estate. Is there any such thing of 0% down or 0% closing cost?
Regards,
Kevin


16 seem to be a young age for purchasing a real estate to me. Well if you wish to take up a bank loan, identify a property first and then you can make application to the bank for a loan. The bank will look at your monthly income to determine your ability to repay the loan and of course the stability of your job. Quite unlikely that you can loan up to 100% of the property value.
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Labbun



Joined: 12 Oct 2004
Posts: 6

PostPosted: Mon Nov 29, 2004 8:36 am    Post subject: Reply with quote

If I can provide income and expense data for a property, and assuming that income > expense, will the bank place less consideration on my own income?
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wiser



Joined: 16 Nov 2004
Posts: 10

PostPosted: Mon Nov 29, 2004 11:14 am    Post subject: Reply with quote

Labbun wrote:
If I can provide income and expense data for a property, and assuming that income > expense, will the bank place less consideration on my own income?


Before the bank make any decision to lend you any funds for property purchase, they will first need to make a valuation of the property you intend to purchase. From there, they decide the maximum amount to financea and the next step, they will check your ability to service the loan and this will depend on your current income from your current job or business. You most like have to prove it with your incometax statement that will show your income for the pass years.
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chrdikla



Joined: 19 Jul 2004
Posts: 10

PostPosted: Wed Dec 29, 2004 12:29 am    Post subject: Two properties available with zero down-payment. Reply with quote

I have two properties which you can buy with zero down-payment. You just pay monthly payments for 20 years or less. We calculate interest payments with agreed purchase price and we can transact the deals.
especially, if you are foreigners and cannot get a bank loan, then this deal can be a good alternative.

Both my properties are under bank loans now. All you have to do is agree to pay RM xxxx per month to my bank loan account (not to my own account). This will be safer for you as it is direct proof that the bank is being paid what is promised in the loan agreement.

Call me 016-6104439
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alfredyong



Joined: 21 May 2005
Posts: 2
Location: Kuala lumpur

PostPosted: Sat May 21, 2005 3:34 am    Post subject: Reply with quote

hi,everyone. i want to buy a house with range between 250k to 300k.may share with my sister cos i just work for a year and my yearly income is 31k only, how many downpayment i have to pay? and it is possible?
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wise



Joined: 21 Jun 2004
Posts: 13

PostPosted: Sat May 21, 2005 8:37 am    Post subject: Reply with quote

alfredyong wrote:
hi,everyone. i want to buy a house with range between 250k to 300k.may share with my sister cos i just work for a year and my yearly income is 31k only, how many downpayment i have to pay? and it is possible?


It is definitely possible if you buy it jointly with your sister and go for longer loan terms since you are still young. Most of the time you are require to pay a downpayment of 10 ~ 20%.
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Banzai



Joined: 25 Oct 2004
Posts: 3367

PostPosted: Sat May 21, 2005 9:38 am    Post subject: Reply with quote

Alfred, i dislike the idea of "sharing" the properties with 3rd parties (and yes, to me sister/father/mother etc is considered 3rd party). Sharing here can be
1) the ownership (S&P in both names) or in
2) terms of loans (loan documents are done up with a joint applicant

Typically, persons in your scenario will go with (2). Downpayment is typically 10% if you buy from developer although other % are known to exist. If you buy off the secondary market, you can attempt to structure the deal such that there will be minimal cash down.

Where possible, i recommend to avoid sharing. It complicates matters. If you sell, it will be a problem because you need your sister to sign off. If you want to refinance, you have to rope in your sister again. If you must share, make sure you document down the terms of sharing so that there will be no complication or misunderstanding later, should some unfortunate incidents happen. I also do not recommend buying beyond your means.
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alfredyong



Joined: 21 May 2005
Posts: 2
Location: Kuala lumpur

PostPosted: Tue May 24, 2005 12:08 am    Post subject: Reply with quote

thanks banzai and wise Very Happy i know sharing is not a good idea but with my financial strength now i think i have no choice.maybe i will wait for few more years. i have a few questions here:
1. what does it mean by secondary market?
2. what is the difference between fixed interest rate with the others?
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mikewong



Joined: 02 Jun 2005
Posts: 7

PostPosted: Sat Jun 04, 2005 12:48 pm    Post subject: Reply with quote

alfredyong wrote:
thanks banzai and wise Very Happy i know sharing is not a good idea but with my financial strength now i think i have no choice.maybe i will wait for few more years. i have a few questions here:
1. what does it mean by secondary market?
2. what is the difference between fixed interest rate with the others?



hi alfred,

secondary market meaning 2nd hand sales or you call them sub-sales...most of the ads you see in the classified section is basically 2ndary market sales.

Fixed interest rate is usually compared to floating interest rate. Fixed interest meaning your interest say 6% is fixed for the term of the loan. Compared to a floating rate say BLR+0.5% , when the BLR goes up...your interest is effectively higher or lower if it goes down.
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candic3



Joined: 07 Jun 2005
Posts: 96
Location: Alliance (Mortgage)

PostPosted: Tue Jun 07, 2005 7:34 pm    Post subject: Re: How to buy real estate? Reply with quote

Krazynivek wrote:
Hi Forumers,
I'm Kevin, 16. I'm interested in real estates. How do I buy a house? I mean not now of coz im too young. I just want to know the procedures of buying a real estate or any property. What must i do in order to buy a house?Thanks alot.

Regards,
Kevin


Hi Kelvin, minimum of age to get a loan is 18 years old. But if you going to buy the property, your guardian must enter to the contract as well.
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candic3



Joined: 07 Jun 2005
Posts: 96
Location: Alliance (Mortgage)

PostPosted: Tue Jun 07, 2005 7:42 pm    Post subject: Reply with quote

alfredyong wrote:
hi,everyone. i want to buy a house with range between 250k to 300k.may share with my sister cos i just work for a year and my yearly income is 31k only, how many downpayment i have to pay? and it is possible?


If only you contribute the income,
31k / 12 mths = 2583.33
1/3 income = 861.11 (max installment / month)
loan amount that you entitle is RM 136236.92 (tenure = 30yrs, interest = BLR + 0.5%)

Income documents recognise by bank
1) Form J / BE
2) EA Form (for MNC)
3) EPF Statement
4) payslips (carbonise copy)
5) payslips / payment vouchers + bank statement (to verify monthly income that you received)
6) Fixed Deposit Certificate (interest earned / month will only take into account)
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