Organized by BLT and Pulse Asia, the BLT Live! 7717 property outlook was held at Mercu UEM in KL Sentral on 7th January 2017. More than 500 attendees graced the one-day affair; which saw various talks, panel discussions and an app launch.
Lending an exciting spin to the day, attendees were invited to ride the newly completed MRT to the event venue, alongside the BLT trio and other industry experts including Ishmael Ho, CEO of Ho Chin Soon Research and KC Lau, financial author and speaker.
The B in BLT, Miichael Yeoh, CEO & Founder of GM Training Academy PLT
The highlight of the day was the launch of the second edition of the BLT book – “Size Up Your Return With Bank Law & Tax”. A few autographed copies were given out during the lucky draw sessions. Next up was Chris Tan, Founder & Managing Partner of Chur Associates, who spoke on legal risks in property investment in Malaysia and how to deal with them. The third talk by Richard Oon, Managing Partner of ConsulNet Tax Services Sdn Bhd highlighted on pertinent taxation matters property investors should look out for this year.
The audience were kept on their toes with a series of engaging forums after each session. The discussions which covered financing issues, investment do’s and don’ts, land lording tips and much more saw various industry experts as its panellists.
Attendees gleaned valuable tips and tricks from the likes of Dr Daniele Gambero, Co-Founder & CEO of REI Group of Companies; Adrian Un, CEO of Skybridge International; Charles Tan, Founder & Editor of KopiandProperty.com, Prudence Wong; Shaan Saeed, Rozalina Rahim and Tan Hwa Chuan; among others. BLT 7117 was held in association with iProperty.com Malaysia and lending support as sponsors were Matrix Concepts Sdn Bhd, Tropicana Corporation and IQI Group Holdings.
The event was well-received by those who attended, as witnessed by the lively Q&A sessions and the strong crowd proved that despite the slowdown in the real estate market, Malaysians are still very much interested in purchasing properties.
How To Make Sure The Banks Lend To You In 2017?
Miichael Yeoh details the borrowing scene in 2017 and shares mortgage planning tips for aspiring property buyers.
With Bank Negara Malaysia reporting a further year-on-year decline of 3.5% in home loan approvals in 2016 (January-October), potential home buyers will have to step up to the plate and take charge of their financing needs.
The following tips will go a long way in getting your property loan approved.
1. Do not be a guarantor
Signing on to be a guarantor is a huge commitment because if the borrower is unable to meet the repayments, you will be responsible for repaying the debt. The situation might be direr for those who offer up their own property as additional security, as it can then be sold to repay part of the debt.
So think twice before jumping in to help a friend or family member to purchase a property.
2. Beware of multiple financing/compression method
Many over-eager investors who plan to purchase a few units/properties at one go usually try to find a loophole in which to avoid the 70% loan margin for the purchase of the third and subsequent properties. Hence, these individuals will apply for different loans from multiple banks at the same time in order to obtain a 90% loan for ALL of their planned purchases. The banks will assume that you applying a loan for the same property when really, you are applying loans for a few different properties simultaneously.
However, it is not so easy to leverage on this loophole any longer, banks now will check your CCRIS report before granting the loan and they will have the right to restructure your loan margin downwards to 70% as per the letter of offer. The investor will then find himself in a fix as he has to fork extra cash to cover the difference.
3. Be punctual with loan repayments
This is especially important for credit card holders. Many do not make their monthly repayments on time – not only will this lower your CCRIS score, banks will classify you as a poor paymaster as well.
The same rule applies for other loan obligations such as vehicle, personal and PTPTN.
Purchasers must maintain a healthy CCRIS report to ensure that their debt to service (DSR) ratio does not exceed 70%. One tip to boost your DSR score is to only apply for a personal loan after you have gotten your home loan approved.
4. Prepare the right documents
The main reason for most home loan rejections is the incorrect submission of documents. Many fail to deliver the required paperwork or make errors when filling in their loan application form. Do remember to submit a copy of your NRIC, sales and purchase agreement, individual title (where necessary) and income documents.
Most importantly, do not submit more than what is required – over eager applicants make the mistake of trying to please the approving officer by sharing additional and unnecessary information, which might backfire.
5. Proof all income source
It is especially important to maintain a clear income trail; aspiring purchasers must ensure that all sources of income are banked in accordingly every month. Never set aside additional earnings; for instance, rental income from your tenant – make sure to bank them in systematically. This will show the bank that you possess income stability.
5 Legal Risks In 2017 And How to Deal with It?
Chris Tan tells us how to get comfortable with the riskiest property investment portfolio that you can tolerate.
A good property investor recognises opportunity while taking note of the risks involved. A savvy property investor, on the other hand, will determine his risk profiling and learn how to profit from them.
The 5 main risks investors should familiarise themselves with are:
1. Legal risk
This involves the compulsory acquisition by the government for infrastructure development, zoning issues from the local authority, your own business’ bankruptcy or winding up risk as well as tenancy issues when purchasing a piece of land or building.
It is wise to identify any arising concerns and carry out the necessary due diligence before deciding on purchasing, selling or renting out a property.
2. Liquidity risk
A property’s affordability actually depends on whether you are able to make the monthly repayments or not, i.e. your holding power.
Many only consider the property’s price tag and fail to determine whether they will have sufficient holding power in the event the unit remains vacant for a certain period of time.
Owners/Landlords must remember that it takes time to secure a buyer/tenant. Hence, one must prepare sufficient funds to see through these ‘downtimes’, if any or otherwise, risk foreclosure.
3. Leverage risk
Borrowing or leveraging does not only apply to banks; investors should be aware of the leveraging potential that other parties can offer. For instance, an investor can leverage on a younger partner’s profile to secure a more sustainable property loan.
Do take care to consult a lawyer for professional advice when deciding to do so, as there may be legal implications involved.
4. Large sum risk
This risk applies for big-ticket items, namely commercial properties or high-end residential units. The higher the price tag, the bigger the risk you will be undertaking. But then again, riskier items generate higher returns, if managed well.
One way to mitigate this risk is to get insurance coverage, taking up a Mortgage Reducing Term Assurance (MRTA) will lessen your burden significantly.
5. Long-term risk
Seasoned property investors usually hold their units for many years before selling them off for a profit. However, the accumulated gain in capital gains could sometimes be offset by economic uncertainty and future market conditions.
Hence, investors should keep their finger on the pulse of the industry to determine when it will be most profitable to cash out.
Tax Facts & Myths About Buying A Property
Richard Oon busts taxation misconceptions and sheds light on how to best navigate tax issues when investing in real estate.
The top 3 tax uncertainties plaguing the real estate market are:
1. There are no tax benefits when investing in a property as my rental income will be taxed.
While it is true that rental earnings will be taxed, aspiring investors have to consider that they will be earning passive income through rental each month – these earnings will then go towards paying off their monthly instalments. In actuality, interest expense is the largest cost when purchasing a property, as depicted in the slide below:
2. I will get into trouble with the tax authorities when I buy a property for investment purposes.
When purchasing properties, buyers can get into trouble if they do not declare their income sources correctly, regardless whether the unit is for own use or is to be rented out. Both investors and home buyers should utilize the equation below when calculating their income tax:
3. The Goods & Service Tax (GST) has somewhat dampened interest to invest in properties.
While it is true that commercial properties will now be charged with a 6% GST, this does not mean that aspiring investors should despair. The sale, purchase and rental of residential properties are exempted from GST and with this year being a buyers’ market, there are many good deals out there.
Purchasers should take note that commercial properties include shop lots, shop offices, small office virtual offices (SoVos) and small office home offices (SoHos) units. Also, investors should be aware that GST is imposed on residential properties when they are disposed of as commercial properties.
This article was first published in the iProperty.com Malaysia February 2017 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!