[True Owner Cost]: Under-Con Property Investing Journey in Malaysia

9 min readMay 17, 2020


Buy a property, everyone seems to say, its a good investment.

I’m fed up with the rosy advice that only tells you the bright side of property investing (making a profit when you sell it years down the line) but never sharing what you have to go through in between.

I’ll share my personal experience of what I’d had to go through when I bought a property under construction or colloquially known as ‘Under-Con’ and what I had to go through to eventually secure a tenant.

I’m not comfortable in reveling my exact property address nor the price. But the numbers provide you with a rough idea of what to expect when you get an Under-Con property yourself.

Low Cost of Entry

It’s easier to buy an Under-Con property compared to a used (Sub-Con) property as you don’t have to fork out the 10% down payment and legal fees, which makes this a popular choice for young adults and couples low on cash reserves.

Typically for Under-Con properties, you’ll only have to pay the booking fee, which varies from as low as RM 1,000, all the way up to RM 15,000. The rest of the 10% charges and legal fees are typically ‘rebated back’ by the developer.

But you’re smarter than that and won’t be fooled. The developer is not giving anyone free money. All the money that you’re supposed to pay, the 10% down payment, legal fees, rebates, cashback, and free furniture are secretly marked up in the selling price and end up in your mortgage loan.

Progressive Payments

It takes 3 years for the developer to build your property from scratch. During construction, you’ll have to pay the progressive interest to your bank.

What that means is, your bank will release money in scheduled stages to the developer. 10% + 15% + 10%…. all the way till they release 100% of the loan amount that you agreed to borrow.

The interest payment keeps increasing every a couple of months until 100% of the loan amount is released to the developer, at which, you’ll have to start paying the full monthly mortgage of RM 2,000.

Mind you, during this whole 3-year construction; you can’t do anything to the property. Can’t rent it out, can’t sell it. So you’re stuck paying the monthly progressive interest and pray to dear god that the developer doesn’t run away with the money or go bankrupt.

Checking for Defects

After paying interest for 3 years, you finally got your keys! But hold your horses pal, you’ll need to inspect your brand new home to check for any manufacturing defects (there’s usually many) as it’s still under warranty.

Some defects are easy to spot. Like shoddy paint jobs:

Low-quality paint work in my bathroom

I’ve only noticed about the uneven walls after I’ve installed blackout curtains and the downlight on the ceiling:

Uneven workmanship on wall
Repairs done by developer

Some defects you’ll only realize at night, some only when you take a shower, and some only when you try to cook. It’s a good idea to spend a couple of nights actually living in your new home to get a feel of the place.

After a few backs and forths with the management office for repairs, and cleaning up the mess, its time to install lights, ceiling fans, curtains, and furnish the place up.

Shopping for light fixtures

This calls for several trips to the lamp store, IKEA and other furniture stores. Do not underestimate the amount of time and energy needed for this. All this will take up another 1 to 2 months to complete.

Renting the New Property Out

Can you rent your place out at the same price or more than your mortgage (RM 2,000)? The only way to figure that out is to check the market price on iproperty and propertyguru.

At first, you’ll notice that all landlords are setting their rental price as close to their mortgage payment as possible (let’s say RM 2,000 in this example).

Putting yourself in the shoes of the tenant, they are shopping around for the best deal. They know that all of the owners just got their keys and are all finding a tenant. The ball is in their court.

With the current oversupply situation, consider yourself lucky if you can get a tenant within 1 to 2 months of advertising.

How to Stand Out

From my observation and experience, most landlords in Malaysia put in minimal effort and money into furnishing their properties. Because from their point of view, the property is an investment, the less money they pour into it, the better.

Because of this, it usually doesn’t take much for you to one-up your competition. With a little bit of common sense and researchable taste, you can easily distinguish yourself from the pack.

Rather than being the cheapest on the block, tap into the emotions of the tenant, and you can potentially secure a rental on the higher spectrum of the market curve.

From my experience in finding a tenant family, it would be easier to capture the emotion of the woman over the man. Guy’s usually don’t care so much about interior designs.

Featured Wall: I painted a featured wall to bring out some life in a bland white living room. The total cost for me was only RM 60. The time it took me to paint alone: 2 hours.

Me painting the feature wall myself

I got my inspiration from Pinterest. Just type in ‘ featured wall paint,’ and you can visualize which color suits your property and style. Or you can visit my pinned board of wall paint color ideas here:

My saved pins on Pinterest for inspiration

Fully Equipped Kitchen: What do families who cook need? a fully equipped kitchen, duh! I got a decent sized 2 door fridge (don’t get the single door), microwave and cooking utensils.

I bet no other owners provide ovens for their tenants. So I got one (RM 399). During the viewing, sell the story that they can bake cookies or cakes over the weekend to have some quality family time. This taps into their emotions and usually gets them.

Doing all this will not guarantee you a high rental rate, but it definitely will help you to stand out and not be a commodity. Justify if you’re willing to put in the money and time. Everyone is different.

In the end, fully furnishing a 1-bedroom apartment from scratch cost me RM 10,000 in total, and that’s from being really calculative with what and where to buy my items.

How Market Price Adjust to Market Demand

As time passes, the oversupply situation realization will reach most owners. More and more owners start to lower their prices, bringing the average market rental down. After a month or two, with everyone adjusting their prices down, the average rental is now RM 1,800.

At this point, you’re probably paid the full mortgage of RM 2,000 for a minimum of two months now (that’s -RM 4,000 in total). If you can’t afford to keep going on like this, you’ll need a tenant right away. So what’d you do? You’d lower your rental, of course!

You send a quick message to your property agent to tell him or her to advertise slightly below average, let’s say at RM 1,700. Observe if your ads are getting any calls. No calls? You might want to consider lowering your prices again 🙁

After a few price experimentations, viewings, and negotiations through your agent, you secured yourself a tenant! Yay! Final rental price: RM 1,600.

But wait, is this a good idea? You’re losing money. True, but most owners have the same mentality where they’d rather cut their loses and get a tenant in ASAP to cover most of their mortgage. Then they’ll consider raising their rental as the year comes.

Alright, not the most ideal situation, you’re at a deficit each month of RM RM 1,600–2,000 = -RM 400.

  1. The property agent’s one month fee.
  2. The management maintenance fees (usually free for a year or two).
  3. Quit Rent (cukai pintu).

Phew, that’s a lot of stuff, no one will ever tell you about all of these before you sign the Purchase Agreement.

Your Real Profit & Loses

Property Agent : You can save money by not using an agent. But when you advertise your property online, 1st, it costs you money, 2nd, most people that call you from your ad will be agents anyway!

Also, not everyone has the time or want to entertain viewings.

Management Maintenance Fees : These are the fees that the building management collects from all owners to pay for their salaries, maintenance of elevators, general upkeep, and security personnel.

Typically (but not always), developers pay the maintenance fees for owners for the first one or two years.

According to this table, you’re actually at a RM 763 deficit each month. In a year, that adds up to RM 9,156!

In the future, you’d need to rent out your property at RM 2,763 just to truly break even.

This will be tough (although not impossible) because RM 2,000 is already at the edge of what most Malaysians can afford to rent.

Let’s recap your loses:

Table of Truth

Now this doesn’t seem to be like such a good of investment now, is it?

Light at the End of the Tunnel

  1. Hope that the area and property become more populated (demand > supply) so you can raise the rental price.
  2. Hope that eventually after many years, the market value of the property increases, and you’re able to sell it more than your accumulated deficit.
  3. If all fails, you can stay in your own Under-Con property while you wait for the above to happen.

Key Takeaway

There you have it. This is the real cost of buying an under-con property & renting it out in the current oversupply Malaysian market. Below is the timeline:

This is my personal experience. I bet there are people out there that are making money through property investments. But for most people starting, I think they’d be in a similar boat as me.

In my opinion, the only way you can make money with Under-Con property nowadays is to:

  1. Buy an auctioned property and pray you don’t get a damaged unit (I have no experience in auction, but will be looking into this for my next property purchase).
  2. Buy property during a recession (like right now due to the pandemic).
  3. I think in some cases, it would make more financial sense to buy Under-Con property for your own stay over investment.
  4. Invest in REIT’s instead which is like stocks, but for properties (again, no experience, but interested).

Do share with me in the comments if you have any interesting story of your property investment journey!

Originally published at https://balkonihijau.com on May 17, 2020.




Hi, I’m Helmi Hasan. I create relatable content around personal finance & earning online.