From Mrs. Y, a viewer who wrote in by email
Mrs. Y has bought a 1,750 sq ft own-stay unit from a large listed developer in KL East, still under construction. She is now offered two 425 sq ft units at RM160,000 each in an old building in Chow Kit, completed in 2000 and refurbished in 2020. They rent for RM1,000 a month, mostly to foreign workers, with a RM130 management fee, and she works out a 6.33% return before maintenance.
With steady rent but little prospect of the price rising, is it still a good investment?
“Don't buy a property just because it's cheap.”
No. The cash flow works, but with almost no capital appreciation, a loan slot used up and only about RM200 a month to show for it, Sean says better deals are available and this one is not worth the headspace.
Why
The yield clears the bar, just
Sean's break-even is about 5.4%: a RM100,000 loan over 35 years at 4% costs about RM450 a month. At 6.33% the unit is roughly a point above that, and on a 90% loan of about RM145,000 the surplus comes to around RM200 a month.
There is almost nothing to sell later
Units like these compete on being the cheapest, for tenants who need them rather than want them, so the only buyers are other cash-flow investors and there is little resale activity. Even selling at 10% more in ten years, about RM176,000, the surplus of roughly RM2,400 a year barely returns the down payment. In the worst case it cannot be sold, and repairs after bad tenants eat the surplus.
It spends a 90% loan slot
Malaysians get two 90% loans for residential property. With her own-stay unit, this would use the second, so any better deal later could only be financed at 70%. Paying cash would be worse still: EPF pays about 6% with less risk.
Better deals are out there
She has not compared it against 20 other properties. Sean finds deals from branded developers with higher returns and no upfront deposit, so an old, cheap unit like this would need a double-digit return, 10% to 15%, before he considered it.
What to do
- Visit at least 20 other properties in your price range, across new, subsale, auction and bulk purchase, before deciding.
- Ask a bank for its valuation first, to see whether it would value the unit at the asking price.
- Don't pay cash for a property like this; compare its return against EPF at about 6%.
- Keep your remaining 90% loan slot for a deal with both cash flow and room to grow.
- For an old, low-priced building, look for a double-digit return of 10% to 15% before considering it.
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 #311 | THE GOAL IS NOT TO GET THE CHEAPEST
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #311. The quoted answer is verbatim; everything else is paraphrased. Figures are as stated in May 2026. Sean buys through FAR Capital's bulk purchases as a client, not its owner.
