Asians are obsessed with real estate.
I mean, I do get the point. In ancient civilizations, kings built themselves grand castles and the thirst for expanding their country’s borders meant more resources and power.
These days, most of us accept the fact that we would need to own at least 1 property if we were to meet social norms and expectations. Owning a house, especially for a guy, ticks off the invisible box that a man is financially capable of providing shelter and a home for his other half.
As you continue to climb up the corporate ladder, your savings might build up, and for those who visit Malaysia frequently, the itch to own a property there might crop up.
So should you consider owning a home in Johor?
Buying as a weekend home
I always have foolproof advice when it comes to buying things.
If you think you’ll be using and utilizing it, by all means, make the purchase.
It doesn’t matter, be it a car, or even items of clothing.
No matter if it’s expensive or cheap, buying and not using something is just wasting hard-earned money.
A weekend home that you would only use during the weekends, the effort to maintain and upkeep the house would really see more effort spent rather than enjoying the moment.
Then again, if you really have too much cash to spare, I guess by all means just do what makes you happy.
Buying it as a buy-and-hold investment
Maybe property investing in Singapore is fairly easier in terms of achieving returns.
But that might not apply to properties in Malaysia.
When it comes to street food, Malaysia wins hands down. But when it comes to property investing, you might not be looking at the best choices if you were to choose Malaysia because it’s affordable.
Malaysian properties are not un-investable. But it really requires a lot of studying and a bit of luck to really unearth an investment-grade opportunity.
It is never as straightforward as most of the properties in Singapore. Then again, there are many auction properties going at cheap prices but are in terrible conditions. It would take significant effort to revamp, renovate and refurbish.
Buying it for passive income
Now this is where I start to agree on the notion of buying a property in JB.
But it will be considered an active income if you decide to rent it out as an Airbnb.
I have seen and experienced plenty of Airbnb operators building up their rental property portfolio. And they are never in passive mode.
The breakeven and profit checks out mathematically and consistently, but be ready for midnight calls whenever something happens to your property. Since you would not have a service desk or a customer concierge to attend to potential complaints, you’ll need to do it yourself.
Also, be warned. If you’re purely renting long term at a lower rate, chances are you would be cashflow negative after all expenses.
It’s just like stocks – it’s not really passive till the extent of doing nothing at all. Running your JB property as an Airbnb is definitely going to be a more active process than dividend investing.
So, to buy or not to buy?
To be clear, I am not against property investing. I am against the idea that buying a property naturally comes with an easy flow of rental income, without needing you to lift a finger.
Buying a landed property does seem like an Asian allure. If you can’t do it in Singapore, then doing it in JB isn’t that bad as well.
But, if it’s just buying it just to tick off a bucket list, or just finger-crossing that all will eventually turn out well, can be a wealth-destroying move.
Even if it were to be a weekend home, it should be purely for your enjoyment and not for flaunting purposes.