From Double O, a viewer who wrote in by email
After nearly two decades abroad, Double O is relocating to Kuala Lumpur and plans to invest a sum just under seven figures in property, and worries that a condo held for 30 to 40 years will suffer shabby lifts, cracks, run-down facilities and high maintenance fees with few owners paying, and that unlike a landed house it cannot simply be rebuilt.
How are investors with many ageing condos supposed to exit, and who will buy them?
“my very simplified low-level thinking strategy is to hold it forever”
Sean buys condos expecting to hold them for good: if rent covers the instalment, the tenant pays off the loan and the unit is his in 30 years, so any price growth is a bonus. Ageing is manageable when owners live in or rent long-term and pay maintenance; buildings full of short-stay investors are the ones to exit early or avoid.
Why
Condos pay three ways
Capital appreciation, rent, and equity built as the tenant's payments reduce the loan. Early on, about 88% of each instalment is interest, so equity builds slowly at first.
Rent sets the resale price
A RM500,000 unit renting for RM2,750 can be sold at RM600,000 and still give the next investor a 5.5% yield, about break-even with the loan. Every RM500 a month of surplus rent supports roughly RM100,000 more in price.
Everything but the structure can be replaced
Lifts, pipes and pools can be renewed if the management collects enough. Buildings where most owners live in or rent long-term stay well kept, as in many 15- to 20-year-old blocks in Mont Kiara.
Short-stay buildings need a fast exit
Only investors will buy a unit in a short-stay building, and only while the yield holds. Once rates fall, everyone sells together and maintenance collection collapses.
What to do
- Buy below the median price per sq ft of nearby transactions.
- Aim for a yield of about 6%, at which rent roughly covers the instalment and costs.
- Favour buildings where most units are owner-occupied or rented long-term.
- Join the management body or AGM to keep maintenance collection healthy.
- If you buy a short-stay unit, plan to sell while its returns are still high.
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 #268 | EXIT STRATEGY
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #268. The quoted line is verbatim; everything else is paraphrased. Figures are as stated in December 2024. Sean says he follows FAR Capital's seven investment criteria; he is a member of the bulk-purchase club, not its owner. The episode is sponsored by Versa, a savings app.
