From Peggy, a viewer who wrote in by email
Peggy is 41 and has saved steadily for 20 years. She has fully paid off a leasehold apartment in Petaling Jaya, bought for RM620,000 and now worth about RM600,000, and finds the nearby MRT noisy. She has about RM600,000 in cash, spends RM500 to RM600 a month on commuting and parking, and could rent near work for RM3,000 to RM4,000. Her child may go to university in five to eight years, and her partner lives 30 km away.
Should she sell the leasehold flat or rent it out, and rent near work or buy another property, new or subsale?
“I don't want to fix a temporary problem with a permanent solution”
Keep the flat and rent it out rather than sell before an expected upturn. Rent a place near work rather than tie a long loan to a job that may change; if she buys, buy a subsale near work as an investment, with a yield of 6% or more.
Why
Leasehold matters less for high-rise
Owners have converted leasehold blocks to freehold or renewed leases for RM1,000 to RM2,000 each, and Sean doubts any state government will take back occupied land. The real limit is financing, since banks restrict loans on short remaining leases.
Paying off early has trade-offs
It saves interest for someone who would not invest the cash, but rent from a paid-off unit is taxed in full, with no loan interest to deduct. A flexi loan with savings parked in it cuts interest while keeping the cash available.
Refinancing releases less now
A paid-off RM600,000 flat could once release about RM480,000. With cash-out now assessed over 10 years, it is closer to a third of that.
Rent where you work, buy where tenants would
Living near work saves hours and money. The same reason others would rent near offices makes a well-priced unit there a good investment, rented out if she changes job.
What to do
- Rent out the PJ flat and hold it rather than selling now.
- Rent close to your workplace for a year before deciding whether to buy.
- Shortlist five to eight properties near your office and work out each yield: monthly rent times 12, divided by price.
- Buy only if the yield is 6% or more, and prefer a subsale you can negotiate.
- Keep property in your own name so you have security of your 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 #263 | RENT WITH THE INTENT OF INVESTMENT
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #263. The quoted line is verbatim; everything else is paraphrased. Figures are as stated in October 2024. The episode is sponsored by The Makeover Guys, a renovation company Sean says he works at.
