From Howard, a viewer who wrote in by email
Howard and his fiancée are 26, earn about RM20,000 a month gross between them and have about RM300,000 in liquid assets, with no debts. They live rent-free in a relative's apartment in Seri Kembangan, likely until 2027. They want a new launch of 1,100 sq ft or more at RM700,000 to RM900,000, an instalment of about RM3,500, to raise a family in. His fiancée does not want to rent, or to buy a worn subsale.
Is that price too high for their income, can he borrow in his name alone, should they buy new now or subsale later, and how can they judge a building's common areas before it is built?
“I think it's a green light to go”
They can afford it, and his RM10,000 income alone roughly qualifies at three times the instalment. Two conditions: don't pay much above the area's median price, and check that rent for similar units nearby covers about 85% of the instalment, so the home can be rented out when the family outgrows it.
Why
The 85% rule protects the upgrade
With an instalment of RM3,500, nearby rents of about RM3,000 show demand for the space. Five to seven years on, with children and perhaps a helper, they will likely want more room and can rent out or sell without a loss.
Don't overpay for romance
Paying perhaps 10% above the median for a setting they truly value is fine as an informed choice; paying well above it simply because they love a concept is not.
Banks judge today's income
Banks lend on current income, not future raises. Interest during construction can be avoided with schemes such as HouseKEY, which has fewer developer rebates.
Learn to read a floor plate
Dimensions are fixed once approved, but finishes are not. Visit completed projects, walk from the car park through the lift lobby and corridor to a unit, and compare dark lobbies and corridors with ones that have voids or daylight.
What to do
- Compare the project's price per sq ft with the area's median.
- Check rents for similar nearby units against 85% of your instalment.
- Ask developers about completed, unsold units, which offer certainty with some launch perks.
- Visit existing projects, not just sales galleries, and each list three likes and three dislikes.
- Invest some of the RM300,000 rather than leaving it idle.
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 #257 | DON'T OVERPAY FOR OWNSTAY PROPERTY
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #257. The quoted line is verbatim; everything else is paraphrased. Figures are as stated in July 2024. The episode is sponsored by The Makeover Guys, a renovation company.
