TO RENT, OR TO OWN: Malaysia 2021

Ok, I also kinda figured out the rough opportunity cost calculation for deciding whether to switch from renting to buying another flat. (Wish I did this before booking my first flat at RM80k in 2011.)

(Caveat: unfactored ... de/appreciation, insurance, loan disbursement fee)

Current rent is 650-1050 RM/mo, which at a 3% interest rate equates to the service for a 260,000-420,000 RM loan.

Update 1:

Factoring in 0.30 RM/ft^2 maintenance for 535 ft^2 totalling 160.5 RM/mo, and utilities (I currently pay 0 for utilities) of 150 RM/mo ... let's recompute the opportunity cost of renting. Now we're looking at a reasonable loan of [135,800 ... 295,800] RM only.

All of this only works reasonably well if I find one of those "flexi"-brand loans where cash in the current account discounts the principal amount 1-for-1, for the purpose of monthly interest accrual calculations. Got to read a lot of fine print for this ... grbajzgdjenskahdbsbd ...

Update 2:

Assuming the city council's assessment tax rent assumption is 900 RM/mo and 2% tax for flats, that's 216 RM/y.

KL parcel tax for residential freehold is 26 sen/m^2, so that's 13 ... but the policy floor brings it up to 25 RM/y. 

Now the opportunity cost of renting to ( [650 ... 1050] - 160.5 - 150 - (241)/12 ) / 3% gives us a reasonable loan of ... [127,767 ... 287,767] only.

Ideally we want that loan to completely cover all (seller's take + transaction costs).

Stamp duty on loans is 0.5% of loan value.

Stamp duty on MOTs is 1%@[0 ... 100,000] + 2%@[100,001 ... 500,000] + etc.

Legal fee for SPAs is 1%@[0 ... 500,000] + etc.

... for an SPA under 500,000 RM, we can abstract this to a total of roughly 3% of loan value.

Now, if you want to do one of those marked-up SPAs to engineer say, 100% financing, then the SPA needs to be ... assuming the bank can only loan you 90%@SPA .... (seller's take / 90% * 103% = seller's take * 114.44%).

Which brings the reasonable seller's take to [111,645 ... 251,456].

Lo and behold, there are only a handful of properties in my shopping list where the seller's take approaches 250,000 RM. So this is going to be an easy decision, I guess.

Let's just forget about MRTA/MLTAs and home insurance for the time being.