Putting It All Together
Throughout this level, you have learned about finding deals, negotiating, and understanding transaction costs. Now let us walk through a complete deal analysis from start to finish, combining everything into a real-world case study.
The Property
Location: 3-bedroom condo in Ara Damansara, Petaling Jaya
Asking price: RM 520,000
Built-up area: 1,100 sq ft
Title: Strata, leasehold (75 years remaining)
Condition: Partially furnished, needs minor renovation
Days on market: 85 days
Step 1: Market Research
You research comparable sales and find:
- Similar unit (1,100 sq ft) sold 2 months ago: RM 490,000
- Similar unit (1,050 sq ft) sold 3 months ago: RM 475,000
- Similar unit (1,150 sq ft) currently listed: RM 510,000
Estimated market value: RM 480,000 - RM 500,000
The asking price of RM 520,000 is above market value.
Step 2: Negotiation
Armed with your comparable data and noting the property has been listed for 85 days:
- Your opening offer: RM 460,000 (with comparable data attached)
- Seller counters: RM 500,000
- You counter: RM 475,000 with furnishings included
- Seller accepts: RM 475,000 with all existing furniture
You negotiated RM 45,000 (8.6%) off the asking price and got free furnishings worth approximately RM 15,000.
Step 3: Transaction Cost Budget
| Item | Amount (RM) |
|---|---|
| Earnest deposit (3%) | 14,250 |
| Balance deposit (7%) | 33,250 |
| SPA stamp duty | 8,500 |
| SPA legal fees + disbursements | 5,500 |
| Loan stamp duty (0.5% of RM 427,500) | 2,138 |
| Loan legal fees + disbursements | 5,000 |
| Valuation fee | 1,200 |
| Minor renovation budget | 8,000 |
| Total cash needed | RM 77,838 |
Step 4: Rental Income Projection
Comparable rental listings in the building show RM 1,800 - RM 2,200/month for similar units.
With the included furnishings and minor renovation, you target RM 2,100/month.
| Income/Expense | Monthly (RM) | Annual (RM) |
|---|---|---|
| Gross rental income | 2,100 | 25,200 |
| Less: Maintenance fee | -330 | -3,960 |
| Less: Sinking fund | -33 | -396 |
| Less: Quit rent + assessment | - | -500 |
| Less: Insurance | - | -400 |
| Less: Repairs (5% of rent) | -105 | -1,260 |
| Less: Vacancy (1 month) | - | -2,100 |
| Net rental income | - | RM 16,584 |
Step 5: Return Analysis
| Metric | Calculation | Result |
|---|---|---|
| Gross rental yield | RM 25,200 / RM 475,000 | 5.3% |
| Net rental yield | RM 16,584 / RM 475,000 | 3.5% |
| Net yield on total cost | RM 16,584 / RM 505,338 | 3.3% |
| Cash-on-cash return | RM 16,584 / RM 77,838 | 21.3% |
The net yield of 3.5% is moderate, but the cash-on-cash return of 21.3% is strong because you are using leverage (only RM 77,838 of your own money to control a RM 475,000 asset).
Step 6: The Verdict
Pros:
- Bought below market value (RM 475,000 vs. RM 490,000 fair value)
- Free furnishings save RM 15,000
- Solid cash-on-cash return of 21.3%
- Good rental demand area near LRT and commercial hub
Cons:
- Leasehold with 75 years remaining (affects long-term value)
- Net yield of 3.5% is moderate
- RM 77,838 cash outlay is significant
Decision: Proceed with the investment. The below-market purchase price, strong rental demand, and high cash-on-cash return make this a solid deal despite the moderate net yield.