‘Hi, I’m Mike, a 30-year old Operations Manager working at a Logistics Firm in Shah Alam. As I write, I’m earning a fixed monthly salary of RM 6,000 and now am saving 20% of my monthly income. Currently, I have accumulated a total of RM 50,000 in savings and have no outstanding debt apart from my RM 30,000 car loan where I’m servicing an installment of RM 700 per month.

I’m living in an apartment consisting of 3 rooms and 2 bathrooms, which is just 5 minutes drive from my workplace. I rented a small room for RM 400 a month. I have three housemates. John is also paying RM 400 a month for a small room. Meanwhile, Jack and Jill are paying RM 600 a month for its master bedroom.

I intend to invest in a property this year but am undecided between the 2 deals:


  1. Property 1: Celina Residence
    It is a brand new property development just 1km away from where I’m now living by a reputable developer. Its sales price is RM 450,000 for a 600 sq. ft. condominium unit which has 2 rooms and 2 bathrooms. The developer is offering a 7% rebate, free SPA, Legal & Valuation fees and the condominium unit is expected to be handed over by year 2022 and would be semi-furnished.

  2. Property 2: Damai Apartment
    I was informed of a similar unit to my current residence where its owner is selling his for RM 300,000. The unit is 900 sq. ft. and is occupied by its owner, his wife and their 2 sons for 10 years. His unit is well-maintained but I find its furnishing to be old-fashioned.


This would be my first property. Should I invest in Property 1 or Property 2?



Before I share my views, let us estimate the maximum loan eligibility amount or MLEA that Mike could qualify presently for a mortgage:


Mike’s Maximum Mortgage Installments (MMI)

= (Monthly Salary x Debt-Service Ratio (DSR)) – Monthly Debt Instalments  

= (RM 6,000 x (let’s assume it is 60%)) – RM 700 (Car Loan Instalments)

= RM 3,600 – RM 700

= RM 2,900


Mike’s MLEA:

= Adam’s MMI x the Rule of 200

= RM 2,900 x 200

= RM 580,000


Thus, Mike is eligible for a mortgage to buy any of the two properties above. As such, I’ll share 5 main considerations that Mike should consider before deciding between Celina Residence and Damai Apartment.


Consideration #1:

What are the Valuation Figures for the Two Properties?

The fastest way to value the two properties is to calculate their prices based on per square foot (RM / psf). Therefore,


Property 1: Celina Residence

= Net Sales Price / Size of the Property (psf)

= (RM 450,000 – 7% Rebate) / 600 sq. ft.

= RM 418,500 / 600 sq. ft.

= RM 697.50 psf


Property 2: Damai Apartment

= Sales Price / Size of the Property (psf)

= RM 300,000 / 900 sq. ft.

= RM 333.33 psf


On a psf basis, Celina Residence is priced more than 100% of Damai Apartment despite netting off 7% rebates from its developer. I believe, Mike may compare prices on a psf basis for other similar properties within the vicinity. If the prices for these properties are around RM 300 – 400 psf, my question is: ‘Is purchasing a unit at Celina Residence for RM 697.50 psf a good deal to you?’


Consideration #2:

But, What Would Be Mike’s Capital Outlay?

Obviously, the initial capital outlay for Celina Residence is significantly lower as compared to Damai Residence despite being higher-priced. For instance,


Property 1: Celina Residence

= (Down Payment = 10% x Property Price) + SPA & Legal Fees

= ((10% – 7% Rebate) x RM 450,000) + (RM 18,575 – Paid by Developer)

= (3% Down Payment) x RM 450,000 + RM 0

= RM 13,500


Property 2: Damai Apartment

= (Down Payment = 10% x Property Price) + SPA & Legal Fees

= (10% x RM 300,000) + RM 12,050.

= RM 42,050


In Mike’s case, it is more affordable to buy Celina Residence as his initial capital outlay is smaller and he is able to retain RM 36,500 in his savings account from his current savings of RM 50,000 presently.


Thus, from the two considerations above, I would conclude:


Celina Residence is more affordable but more expensive.

Damai Apartment is less affordable but is cheaper.



Consideration #3:

What would be Mike’s Monthly Commitment?

Excluding maintenance fees, quit rent and assessments, Mike’s mortgage would be calculated as follows:


Property 1: Celina Residence

Loan Amount: RM 405,000 (90% of RM 450,000)

Monthly Installments: RM 1,917 (Based on 35 years tenure at 4.5% interest)

Percentage of His Fixed Salary: 32.0% (Mike’s Salary is RM 6,000 a month)


Property 2: Damai Apartment

Loan Amount: RM 270,000 (90% of RM 300,000)

Monthly Installments: RM 1,278 (Based on 35 years tenure at 4.5% interest)

Percentage of His Fixed Salary: 21.3% (Mike’s Salary is RM 6,000 a month)


In the event if Mike is unable to secure a tenant, Mike would be forking out as much as 32.0% of his salary to service his installments for Celina Residence, which is hefty as compared to Damai Apartment. This means, debt-wise, Mike would be financially steadier if he opts to invest in Damai Apartment.


Consideration #4:

What are the Realistic Expected Rental Yields for the two Properties?

As Mike is living in Damai Apartment currently, he would have developed some form of ‘market intelligence’ and thus, is able to better estimate the amount of rental income for a unit at Damai Apartment. It is his unfair advantage. But, for Celina Residence, it is more difficult to estimate as the project is not completed at the moment. Therefore,

Property 1: Celina Residence

My question is: ‘If Mike’s installment is RM 1,917 a month, is it realistic for him to expect above RM 2,000 in rental income for his 600 sq. ft. unit?’ If Mike fails to secure a tenant that pays at least RM 2,000 a month in rent, definitely, Mike would be incurring negative cash flows every month for his property.


Property 2: Damai Apartment

Mike’s landlord is currently receiving RM 1,400 a month in rental income from Mike, John, Jack and Jill (RM 400 + RM 400 + RM 600). If Mike is able to secure RM 1,400 a month in rental income for his own unit, his gross rental yield is as much as 5.6% per annum based on his purchase price of RM 300,000.


Mike’s rent of RM 1,400 a month should be enough to cover his mortgages and his maintenance fees. He may incur a small sum to pay for his quit rent and the assessment for the property.


Consideration #5:

But, what if I’m Buying to Flip for Massive Profits?

First and foremost, flipping is not investing. Flipping is short-term focused while investing is about building wealth sustainably over the long-term. Please do not confound the two.

Here, let us assume that prices for both properties have potential to appreciate by a quantum of 30% by year 2022.


Property 1: Celina Residence

This means, Mike’s unit has appreciated from RM 450,000 to RM 585,000. Here are my views:


  1. Celina Residence is now priced at RM 975 psf. Do you believe that Shah Alam properties would rise to RM 975 psf in 2022?

  2. Let us assume that it is possible. If you choose to dispose your property at RM 585,000, it also means, you are seeking for a prospective buyer / investor who has at least RM 100,000 in cash-in-hand to takeover your property. Do you foresee that most average Malaysians would have RM 100,000 or more sitting in their bank accounts by 2022?

  3. If you managed to sell your property at RM 585,000 in 2022, you would incur 20% in RPGT which roughly amounts to RM 27,000. Thus, the net gain from the disposal of your property is reduced to RM 108,000 from RM 135,000. Of course, the net RPGT payable is subjected to your total amount spent on renovating and marketing the unit for sale and hence, it would be a lower amount than RM 27,000.


Property 2: Damai Apartment

This means, Mike’s unit has appreciated from RM 300,000 to RM 390,000. Here are my views:


  1. Damai Residence is now priced at RM 433.33 psf. Is this a realistically & achievable price point of a Shah Alam property in 2022?

  2. Assuming that you are selling your unit for RM 390,000. It means, your prospective buyer / investor would need to have, at least RM 60,000, in cash to make a deal with you. As compared to RM 100,000, I personally believe, it is easier to dispose Damai Apartment as it is more affordable and as well as cheaper as compared to Celina Residence.



Here, I’ll summarize the 5 key considerations at the table below:



Property 1:

Celina Residence

Property 2:

Damai Residence

Valuation Figures

RM 697.50 psf

RM 333.33 psf

Initial Capital Outlay

RM 13,500

RM 42,050

Monthly Installments

RM 1,917

RM 1,278

Rental Income (Estimated)

Don’t Know

RM 1,400

Capital Appreciation

Lower Potential

Higher Potential


So, if you are Mike, which of the 2 properties would you opt for? Please leave your comments below.



Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with Co-Founded, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

    8 replies to "Subsale vs UnderCon: Which of the Two Properties would You Invest Today?"

    • Teo

      Is it still possible to get 90% loan for a subsale property?

      • Ian Tai

        Yes, it is possible to get 90% loan-to-value for a property (primary or secondary) if this is your first or second property purchase in Malaysia.

    • Alfrey Mohamed Ali

      Thank Ian and kc…a wonderful insight and sharing

    • gohcc

      of course its damai. its easier to rent out and to sell off. cosmetic changes to the furnishing is easier this days. a new coat of paint will do wonders wt a feature wall. just change the cabinets, furniture and bedding. must always look at the price per sq feet compared to the area.
      tq kc n ian for the detailed analysis.

    • King

      Thanks for sharing the precious info. I am a property investor myself yet I still can learn from your detailed and logical analysis.

      Damai is the better deal of course.

      Developers have been selling future prices that is why all my purchases are subsale only. 950psf in shah Alam, maybe in 2032…maybe

    • Ian

      Hi guys, thanks! Will keep up with more articles … stay tune! Ian

    • Jeffrey

      Damai residence.

    • Gavin Tai


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