From Vu, a viewer who wrote in by email
Vu is 36, married and earns about RM12,000 a month. He has about RM700,000 in shares, ETFs and funds and about RM400,000 in EPF. He owns two properties: one rented out since handover three years ago, with rent covering about 90% of its instalment, and one under construction.
If he wanted to buy four more investment properties, how would Sean go about it?
“The goal is never to buy cheap properties”
Buy only units bought with little cash whose rent covers the instalment, and get around the 70% loan limit on a third residential loan in one of several ways. But replace 'four more' with a target value or rental income, keep building the share portfolio that is already working, and buy one when a good deal appears.
Why
Leverage is the point of property
Banks fund 90% or more, a tenant pays the loan, and your own capital can be invested elsewhere or parked in the loan account to cut interest while staying withdrawable. Sean would not buy property outright in cash.
The third loan is capped at 70%
Each Malaysian gets two residential loans at up to 90%; from the third, it is 70% however high the income. On a RM500,000 unit that means RM150,000 in cash.
There are ways around the cap
Commercial-title suites can be financed at up to 85%; bulk-purchase discounts of 20% to 30% cover the gap; equity in older units can be refinanced after 10 to 15 years, though cash-out is now restricted; and refinancing existing loans with an insurer-linked lender can, Sean says, free the 90% slots again at a higher rate. Or pay the difference in cash.
Unit counts lead to bad buys
An arbitrary target, such as six properties by 40, pushes people to buy whatever is available. A target like RM20 million in value, or a monthly rental income, rewards buying fewer, better units.
What to do
- Set a target value or monthly rental income with your spouse instead of a number of units.
- Only buy units needing little upfront cash, with about 6% yield or rent above the instalment.
- Compare commercial-title financing, bulk purchase and refinancing before paying 30% down.
- Keep growing the share portfolio that built your wealth.
- Don't announce how many properties you own.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
ASKING SEAN #269 | BUILDING BEYOND THE 3RD PROPERTY
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #269. The quoted line is verbatim; everything else is paraphrased. Figures are as stated in December 2024. Sean is a long-term customer of FAR Capital, a bulk-purchase club, not its owner, and refers viewers to a contact for insurer-linked home loans; the episode is sponsored by Versa, a savings app. A subsale method he describes, financing at a bank valuation above the agreed price, is left out here.
