There are huge opportunities that we can gain from auctioned property but remember that there are huge traps too. As a general rule, any investment that give an opportunity to make a lots of money also have a high risk of a losing lots of money too.
So, remember that if you want to make money from property auctions, you must know what you are doing. Otherwise, you could lose it all and get a major problem.
First trap – Poor Location
Some of the properties being auctioned off are very cheap. Some properties being auctioned off for less than RM20,000. That is less than the price of some second-hand cars.
I believe most of you know that we are eligible to withdraw EPF or KWSP money from account II for the purpose on buying new house or reducing loan amount or monthly loan repayment. I believe this is great facility offered by EPF.
However, I am shock when I come across an article where someone claim that EPF scam us if we withdraw money from Account II for monthly housing loan repayment.
Mortgage Life Insurance is an insurance that loan owner purchase when buying a property. It is designed to settle the outstanding loan balance in the event that the borrower dies or suffers from total and permanent disability (TPD) prior of settling the loan.
Basically there are two types of mortgage life insurance that are available in the market. There are Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA) and Mortgage Level Term Assurance (MLTA).
The table below shows the different between MRTA/MDTA and MLTA
Property auction is an event where foreclosed properties are sold to bidders at a price that is much lower than the market rate. Property auction is fast gaining popularity among investors in Malaysia.
To facilitate the auction, auction houses will manage the auction events and assist the direct transactions between buyers and sellers.
In Malaysia, the supply of foreclosed properties comes from the Loan Agreement Cum Assignment (LACA) auction. A LACA property auction is conducted by banks for properties without an individual / strata title while a Non-LACA property auction is conducted by the High Court for properties with an individual / strata title.
It is crucial to find out whether the property that is going under the hammer is a LACA or non-LACA property because the bidding procedures are different.
The 5% real property gains tax (RPGT) announced during the 2010 Budget last October will now only apply to property sold within 5 years from the date of purchase. Finally, our Prime Minister listen to the complains from the many property buyers which stress their unhappiness through many medium such as newspaper and blogs.
This is indeed a very good news to property buyers or investors in Malaysia.
Prime Minister said that the decision would cause the Government to lose about RM200mil in revenue. However, the benefit of this decision country we will see a stronger growth in the property sector.