How to turn yourself into a PROPERTY MOGUL in 2014

How to turn yourself into a PROPERTY MOGUL in 2014

RISING house prices are tempting investors back into property after a few lean years, and many are considering taking the next step and chasing bigger bucks through property development.

It can promise more riches than simple investing but has more potential traps for beginners, and a whole new world of knowledge to master.

Author, property developer and university lecturer Peter Koulizos says there is a great opportunity to make money in property development, "but there is also a great opportunity to lose a lot of money, because the risks are higher".

"Most capital city house prices are still below their peaks of three years ago and interest rates are very low, so it makes property development more affordable for the average mum-and-dad developer."

Koulizos says research is the vital first step. "That starts with the council," he says. Every council has a development approvals process and plans that outline minimum block size, minimum street frontage and other issues.

Developers need to research prices and know how much a property is worth. Koulizos says long-term investors may pay an inflated price for a property but are still winners if they hold it for 10-15 years, but a developer looking to turn it over faster does not have as much time to make up for their mistake.

"Get a fixed-price contract from a builder, and one where they guarantee the build time," he says. "In development, time is money. The longer it takes, the more your holding costs. And avoid changing plans once you have signed off on them."

Know your market: Research is key to minimising risk when it comes to property development Source: News Limited
 

Koulizos recommends writing down the worst-case, best-case and probable scenarios, and you should aim to make a gross profit of 20 per cent on the project.

Metropole Property Strategists chief executive Michael Yardney says now may not be the best time to start a new development, because house prices have already picked up and developments usually have long time frames - often a two-year process.

"A good way for the beginners to start is through renovations. It has much shorter time frames and you also learn budgeting, dealing with builders and dealing with banks," he says.

Yardney says it is vital to start small. "You are going to learn most of what you will learn in the first two or three developments. It's going to cost you more than you thought." But property development is a great strategy because you are not just waiting for the market to rise - you buy assets at wholesale prices and are able to create capital growth, he says.

Yardney says it is vital to surround yourself with a good team of experts. "If you are the smartest person in your team, you are in trouble," he says.

SOL Results property coach and developer Stan Kontos says his top rule is to ensure you make your money when you buy the property, not upon sale.

"Undertake a feasibility study for costs such as demolition, subdivision and so on, based on today's price, not a projected future price," he says.

"Don't depend on it going up and, if and when it does, consider this a bonus."

Kontos says people who do not like risks should not go into property development.

"Find a mentor, be teachable and get taught. Don't make the mistake of learning as you go."

Kontos says beginners need equity of about $50,000 to $100,000, plus a steady cash flow, and should only pick developments they can afford.

"Start by researching a specialist area," he says. "The risk is reduced when you understand the area and the council zonings, as well as any future changes."
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EIGHT STEPS TO SUCCESS
1. Before looking at land, work out your finance and team of advisers including real estate agent, solicitor, architect and development manager.
2. Check the local council's policy toward development and come up with a concept.
3. Buy land at a price that allows you to make a commercial profit.
4. Get development approval, which can take months.
5. Get working drawings prepared so you can then obtain a building permit.
6. Obtain quotes from builders and finalise finance for the construction period.
7. Next comes the building stage, lasting 7-12 months. Most developers never get their hands dirty, and are more like a producer of a movie.
8. At final completion, the project is refinanced and leased, or sold. Be sure to always have an exit strategy before you start.
Source: Metropole Property Strategists

Should you rent or buy?

January 13, 2014

There are clearly differing views on the subject, and though the considerations will always be incredibly personal; there are universal factors to consider before taking the property plunge.

 

Many people will quickly tell you that buying a home is always a better financial decision than renting. After all, at the end of the term you will own the house as opposed to paying rent which in the end leaves you with nothing.

But if foreclosures and bankruptcy statistics are anything to go by; buying a home may not be the best choice for everyone. Owning a home is a big responsibility and taking that step just because someone else considered it right is landing a lot of youths who can’t (and don’t want!) the responsibility in hot soup with their bankers.

As such, we thought we’d revisit the old question on renting versus borrowing from a different perspective than one that is merely based on money.

What some are saying
“I don’t need to buy a home. I have no dependents to pass it on to and I don’t see why I need one. I like being able to pack up and leave anytime I feel like it. I am not worried about old age. I have some savings for a nursing home,” shares Darrin, an NGO worker.

Darrin comes from a new breed of young adults who don’t see the need to have a house in his name. But it doesn’t mean there aren’t those who prefer some asset security.

“Before I even bought a car, I bought a house. I was 25 and at my first job but I felt it was something I needed to do. I could still drive the old car my parents gave me but I am better off starting my mortgage payments as early as possible,” said Jeanne, a Customer Service Executive.

An ex-bank officer, Mala says she sold her house just a few years after buying it. “I bought it when I was 24 but sold it at 28. I realised I didn’t want to live in one place anymore and I didn’t want the hassle of renting it out.”

But some others weren’t so lucky to be able to make decisions on their own. A young couple in the Klang Valley bought property together only to find they couldn’t handle the responsibility of payments and were forced to sell at a loss as they were months behind on the monthly payments.

They sold within a year of buying. “I thought we could handle it but our debts overtook us.” The woman tells us.

There are clearly differing views on the subject, and though the considerations will always be incredibly personal; there are universal factors to consider before taking the property plunge.

The considerationsOf Plain Ringgit and Sen

Buying a house will definitely flatten your wallet at the get-go much more than the beginning of rental tenure.

Most banks now offer 90% financing but that means a 10% deposit from you. Even on a low cost apartment costing RM150,000; that is an RM15,000 deposit plus fees for the Sale and Purchase Agreement and stamping (1% on the first RM150,000+RM10 for stamping of each copy of the SPA + miscellaneous fees). All in all, you could be looking at a RM17,000 put down amount to buy.
 Using a home loan calculator, with an interest rate of 4.5% and tenure of 30 years; you’re looking at a monthly payment of RM684.* Of course, BLR rates fluctuate and your interest rate could climb at any time.

To rent, you will need a lump sum of one month’s utilities fees and three months full rental. Utilities are charged at half the monthly rental but some landlords actually demand a full month’s rental for the utilities deposit. For a low cost apartment, at approximately RM800 per month; you will be looking at forking out RM2400 (two months) + RM400 (utilities) = RM2000. A tenancy agreement costs approximately RM250 in legal fees, so a total of RM3050.**

Without the need for a large deposit, the upfront cost of renting is lower than buying. However, while you will save in the short run you are giving up the opportunity to own a home as opposed to just paying someone to stay in theirs. Last but not least, owning a home comes with other expenses such as quit rent (approximately RM90) and land tax (about RM900 per year and up depending on land valuation of a particular area. Kuala Lumpur assessment rates are expected to climb significantly this year).
Of Commitment and Lifestyle
Taking a purely monetary view, owning is a better alternative as you are pumping monthly payments into an asset as opposed to simply paying a charge.

However, buying a home is a commitment of 30 years of continuous payment. Owning a home also means you are responsible to maintain and care for it; whether or not you live in it. If you are looking for flexibility in housing arrangements without the added stress of property maintenance, renting is the way to go. It is definitely more difficult to sell a house as opposed to simply severing a tenancy agreement

In a Nutshell
Before buying a home the main factors to consider are:
• Do you have enough cash for a downpayment?
• Can you afford the commitment and maintenance of your own home?
• What is your preferred lifestyle (nomadic or staying put)?
• Do you really want it? The main thing about house ownership is to really want it. If you’re doing it to please someone else or conform; do think again.
The decision whether or not to buy is a big one: so don’t make it lightly.
* Calculations are based on the structure of legal fees released by the Bar Council FAQs on
Conveyancing matters and property prices at the time of writing. Agent or realtor fees are extra.
**Calculations based on tenancy securing without an agent or realtor. Realtor fees are extra.

All names have been changed.
This was brought you by Diana Chai from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.

Survey: Internet addiction affects health

January 10, 2014

This addiction trend will continue to be fuelled by children growing up with the Internet as an integral part of their lives

KUALA LUMPUR: Malaysians feel less healthy compared with five years ago and Internet addiction is a major culprit to unhealthy lifestyles, according to global insurer AIA Group Ltd in its latest Healthy Living Index Survey.

“Some 67% of adults in Malaysia feel their health is not as good as it was five years ago, with 62% under the age of 30 agreeing with this sentiment.

The survey shows that Malaysian adults also scored lower than the regional average (6.6 versus 7 out of 10) in terms of their satisfaction with their health status,” said AIA Bhd in a statement yesterday.

Malaysia scores 61 out a possible 100 points in the landmark survey of over 10,000 adults in 15 Asia-Pacific markets, which also uncovers new modern-day threats to healthy living such as Internet addiction and concerns about being overweight.

The survey said 73% of adults interviewed agreed that their online activities and social networking are becoming addictive, ranking Malaysia among the highest percentage in the region, and 81% of respondents said that spending time online is a barrier to them getting enough exercise and sleep while also affecting their posture.

“This addiction trend will continue to be fuelled by children growing up with the Internet as an integral part of their lives,” said AIA.

Malaysians do not exercise regularly with 32% of adults admitting so and all these unhealthy habits are aggravated by a preference for sedentary means of stress relief such as watching TV and/movies (67%), playing computer or mobile games (50%) and spending time online (48%), said the survey.

Concern about obesity is one indicator of the impact of poor health habits – 64% of Malaysian adults say they want to lose weight, above the regional average of 53%.

Some 93% agree that obesity among younger people is a worrying trend, suggesting that the problem is likely to grow as it has been reported that more than 40% of Malaysians are obese with about 15% of the population diabetic, presenting a potential health timebomb in the future.



The survey showed Malaysians are concerned about cancer (50%), heart disease (45%) and being overweight (25%) with the former two being above regional averages.

Despite these concerns, only 50% of adults had medical check-ups in the past 12 months and 89% feel that employers should help employees live a healthy lifestyle by providing free health checks, not subjecting employees to undue stress and ensuring workloads are not excessive.

In Budget 2014, healthcare spending increased by 14.5% year-on-year to RM264.2 billion or 8.4% of the total budget planned.
This content is provided by FMT content provider The Malaysian Reserve

FOR THE MAN IN THE STREET: Tips on how to ride out the patchy 2014 economy

FOR THE MAN IN THE STREET: Tips on how to ride out the patchy 2014 economy

This is the time of the year when we shall reflect on the past and the future. A new year is a great time for us to revisit, recharge, recalibrate and reposition our course, be it on personal or financial matters.

Below are seven of my reflections on the 2013 economy that will haunt us in the year ahead.



1. Stick to your budget
A Budget is a tool to plan the ‘in-and-out’ of your ringgit. If you spend less than your income, you will have a surplus that leads into savings and investments. If vice versa, it’s a deficit that requires borrowings. In reality, you will ride a cycle on which you will land on a balance, surplus and deficit budget. But if you continuously sit on a deficit budget, say for 18 years (and prolong it till 2020), you are heading into a big trouble. We need a (fiscal) discipline.

2. Grow your income
When you have so many people to greet in your party, you need to enlarge your cake, larger than that of last year. With a bigger pie to be shared equally (and equitably), people won’t make much noise as previously. If you think a 5% growth is adequate, a 1% drop is to be avoided. Increase your ingredients - floor, butter, sugar - for the cake, and improve your value drivers – consumption, investment, government spending, net exports – for the economy. Growth reflects prosperity.

3. Control your spending
Needless to say, spending depends on affordability and rationality. Cut wastage and leakage. There is a saying, “Too many people spend money they haven't earned, to buy things they don't need, to impress people they don't like.” Do you need an Auditor General to prove otherwise?

4. Save for the rainy days
There are two types of rainy days. Predictable rain is when you know it will fall. When you just don’t know when or how bad they will be, it is the unpredictable rain. By saving each month, you won’t be blindsided when something happens. This applies to our family, and of course, our country too.

5. All going up except the rain
In Malaysia, there are two explanations given when prices increase, profiteering by sellers or subsidy rationalisation by government. Inflation could be due to cost-push or demand-pull factors. An increase in prices will bite into our purchasing power. A RM100 spent today can buy less items than it could last year. RM100 for next year? Your guess is as good as mine.

6. Be honest with yourself
It's your money – it makes no sense in lying to yourself about your money. The only person you hurt when doing this is yourself. If you have no idea on your spending, take a break. And please don’t lie when dealing with others’ money.

7. Integrity and accountability
If you spend your own money upon yourself, it is prudent. If you spend your own money for others, it is generosity. If you spend someone else’s money for someone else’s interest, it is a trustee, and this is what government is. A fiscal policy full of integrity is vital for Malaysia.

As another year ends, another history, another transition, and a new beginning dawns. Malaysia is certainly at a crossroads. A fundamental change is required, not just on economic resilience but also on social justice.

The journey will be long and arduous, God willing, we will succeed.
- Harakahdaily
 

Toyota to launch ‘car of future’ in 2015

January 8, 2014

The vehicle, yet to be named, would be a zero-emission, electric-drive, mid-size, four-door sedan

Toyota said Monday it plans to launch a fuel-cell car in the United States next year, declaring the hydrogen vehicle with zero emissions “the car of the future.”

Toyota Motor Sales vice president Bob Carter said the initial market will be California, together with an initiative to establish hydrogen refueling stations in key regions of the state.

“In 2015, we will bring this car to market,” Carter said in the announcement at the Consumer Electronics Show in Las Vegas.

The vehicle, yet to be named, would be a “zero-emission, electric-drive, mid-size, four-door sedan.”
“Functionally, this is a regular car,” he added.

The streamlined design is to maximize oxygen intake for the fuel-cell process. It will be able to travel 300 miles (480 kilometers) on a single fueling, which would take three to five minutes.

While carmakers have long touted the advantages of fuel cells, high production costs and a lack of fuel stations have held back the technology.

Carter said however that Toyota had been getting results from its major investments and added that “we believe we can bring it in at a very reasonable price for a lot of people.”

Government initiatives in California were making progress in getting hydrogen fueling stations in needed areas, he added.

“The issue of infrastructure is not so much about how many, but rather location, location, location,” he said.

“Fuel cells will be in our future sooner than many people believe… and in much greater numbers than anyone expected.”

Toyota unveiled a prototype last year at the Tokyo auto show, but on Monday offered more details for its plans for the US market.



Honda is also expected to roll out a fuel-cell car in the US market in 2015, and other automakers are working on the technology, which emits only water vapor as exhaust.

Honda already has a fuel-cell car, the FCX Clarity, available on a small scale in a limited number of markets.

Carter said that Toyota and California officials plan to add 20 new fuel stations by 2015 to the 10 existing ones. The goal is to have about 100 in the state, and to have a station within a six-minute drive of an owner’s home or business.

“This infrastructure thing is going to happen,” he said.

“I believe this vehicle will be the car of the future.”

It is expected to launch in Japan at about the same time.
- AFP Relaxnews

7 things that will get CHEAPER in 2014

7 things that will get CHEAPER in 2014

Despite huge discounts and a shopping season that began well before Thanksgiving, holiday shoppers this year just aren’t spending the way retailers had hoped. After slogging for years through a sluggish economy, who can blame consumers for holding tight to their wallets?

There are some signs that shoppers are starting to come back to life. Increases in household income and wealth thanks to raises, rising home values, and a strong stock market are helping boost consumer confidence. Consumers may have a few more reasons to smile in 2014, with lower prices on a host of everyday items.

The CPI inched up just 1 percent in the 12 months ending in October, the smallest 12-month increase since October 2009, and economists expect an increase of about 3 percent next year, although certain categories such as housing may grow at a quicker pace.

With such modest inflation predicted for 2014, any relief for consumers would be welcome. After all, every dollar saved on gas prices or a technology purchase could help a consumer’s bottom line, or maybe help push up the consumer savings rate. In October, that rate stood at 4.8 percent. That’s up from the dismal 2- and 3-percent rates seen before in the years leading up to the Great Recession, but it’s still down from the double-digit savings rate seen in the 1970 and early 1980s.

1. Used Cars

Getty Images/Justin Sullivan

In November, used car prices fell 3 percent to about $15,600, the lowest price since the third quarter of 2009, according to Edmunds.com. Analysts at the auto site expect prices for used cars to remain soft, after years of above-normal prices. Prices for new cars may decline slightly as well, since dealers will need to compete with a flood of recently returned, leased cars in relatively good condition.

2. Oil
The continued domestic oil boom is increasing the U.S. oil supply even as demand declines due to greater fuel efficiency, a move away from oil heat, and a shift to natural gas. That’s putting long-term pressure on the price of oil and the gas it produces. The U.S. Energy Information Administration expects prices for a barrel of West Texas Intermediate Crude Oil about 3 percent to $95 per barrel, and gas prices to decline about 2 percent to $3.42 per gallon.

3. 3D Printers
Interest in 3D printers has become mainstream, but with price tags of several thousand dollars, the machines have until now remained out of reach of the average consumer. That could change next year, following the expiration of several key patents that enable 3D printers to work. The cheapest printers to hit the market next year could cost just a few hundred bucks.

4. Tablets

Sorry, Apple, you’re not the only game in town any more. Cheap, Android tablets are continuing to flood the market, and they’re starting to make some headway in terms of market share, pushing prices down across the board. Companies like Acer and Lenovo have introduced tablets priced below $150.

5. Credit Card Perks
Continuing a trend that started this year, big banks next year will continue making formerly elite perks more accessible to a broader audience. That means that incentive programs such as trip insurance and rental car discounts, which were previously available only to cardholders who paid an annual fee, will now be offered to no-cost cardholders.

6. Coffee
After record coffee production by Brazil last year, overall prices for java beans have fallen throughout the year and are projected to continue to decline.  Prices for a pound of coffee have already fallen more than 12 percent so far this year, and there’s no end in sight to dropping prices. Don’t expect to see a price cut on a latte at Starbucks, though, so far the retail chain has pocketed a bigger profit without passing along the savings to consumers.



7. Bonds
With interest rates expected to start to climb next year as the economy continues to stabilize and the Fed begins to taper its bond-buying program, the price of bonds will likely begin to fall next year. That doesn’t matter for folks who own individual bonds and plan to hold them to maturity, but weak prices will hurt the value of bond funds. Switching from intermediate- to short-term bond funds will shield you from interest rate hikes but will also bring a lower yield.
 - The Fiscal Times

Money resolutions to make with your children

December 31, 2013

Here are some ways you can save with your children.

 

By Michelle Brohier
When it comes to the New Year, everyone is eager to start it off with resolutions to improve themselves throughout the year. The most common are: getting healthier, starting a new project or getting financially fitter.

For those with children, New Year resolutions doesn’t have to be limited to having your children make sure they keep their room clean or behave themselves: why not teach them to manage money?

Making a resolution to manage money better together with a child will not only force you to make the right money moves in order to set a good example; but will also teach young children the importance of being prudent from the get-go. The tag-team concept will also keep both of you in check!

Here are some ways you can save with your children.
Start saving
Everyone needs savings and you can teach your child how to save up for items and experiences they want. Set up a junior savings account for your children where they can keep the money they receive during festivities, birthdays or even money saved from their allowance. Bring them to the bank and show them how the money is deposited and let them watch the account grow. The satisfaction they gain will hopefully curb high spending tendencies!

Lead by example: Take this chance to save money in your own savings account too. Show your children that you are also working hard to save for the future just like them, and this will encourage them to keep at it too.

Set up different piggy banks
Children may still want some money for little treats that are easily accessible. The mad money jar is a concept both children and adults can utilise to fund small indulgences every now and again. Set up a jar or a piggy bank in their room for them to dunk in spare change and small savings. Allow them to label the jars with removable sticky notes based on what they are saving up for. They can even stick pictures to motivate themselves. The visual reminder of the item will encourage them to practice prudence in order to get it.

Lead by Example: Set up your own jar for your little indulgences. Of course, instead of coins, you will probably have larger notes for those nice dinners, spa treats or shopping. ‘Mad money’ jars allow you indulgence without the guilt.



Give them spending experience
It’s important to teach children how to control the money that they have. When you go out for shopping, show them the cost of the items spent and how much the total is to put food on the table and buy them their treats. Allow them to participate by giving them a budget and asking them to choose their favourite foods within the budget. This will teach them how much things cost and if they want the sugared cereal, they may have to forego the chocolate bar. It also makes them more appreciative of the food they are given at home.

Lead by Example: Keep track of your own finances and see where you can cut corners to bring down your grocery and other bills.

Teach the difference between needs and wants
Children need to know the difference between a need and a want. Just because they want something, it does not mean they should have it. Discuss the item with them and what they intend to do with it. It’s not about making the decision for your child but leading them to make the right choice themselves.

Lead by Example: Show your child you practice what you preach. It’s pointless to tell him/her that the new toy is unnecessary whilst you buy more gadgets or designer items for yourself.

Earn through the little ways
Give your children the opportunity to earn their own money. Give them chores around the house and offer a token sum if it’s done well. Do not, however, reward them for things they must do (such as study or go to tuition class) as this will make them assume that even necessary behaviour is rewarded.

Earning this way will teach them that money can come through effort, hard work and some amount of skill.

Lead by Example: Are there more ways you could be earning more? How about a part-time job or consultancy work? If it doesn’t go against your current employment contract; you can offer to freelance too.

Money management is a life skill best learnt early. Embarking on a new year of better financial management with your children can be satisfying and useful. Make the best out of the New Year and have a great 2014!

This was brought you by MICHELLE BROHIER from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.