Sell to buy more or keep getting rental surplus?

During Ho Chin Soon’s latest book launch recently, I was chatting with a fellow property investor who told me that she was facing a dilemma. She has an apartment which has appreciated in value which is great. The apartment  can be easily rented out as it is nearby a private university. She does not know if she should keep renting and get the small surplus every month or sell and perhaps use it to buy another potential unit. Just relying on savings from her salary would mean she needs to wait for many more years before she could buy another.
I shared my views as below. We should focus on having good rental income one day. Yes, I repeat, one day in the future. For example, when we are 45 or when we are already very comfortable and may not want anymore risks, even calculated ones. As of now, since I have yet to reach 45 years old, I would focus on increasing the number of properties first. Thus, it’s calculated risk and a focus on the potential capital appreciation instead of being too fixated on the surplus or the negative numbers every month. Note, if we already have say 10-15 properties with rental incomes, I think it’s best not to do much. Just sit back and relax. However, if we have just started, it is better to own more units instead of staying stagnant and hope.
Last year, I sold a leasehold condo which has appreciated nearly 2.5 times from the price I paid for 7 years ago. The rental was giving me a surplus of around RM200 which I think is considered extremely good. If I sold, I could have enough capital to buy two other units of affordable secondary condos or even apartments. Thus I sold. Yes, it’s also possible to refinance and that’s an option to consider as well. If you feel that the potential for capital appreciation is still there for your property, then perhaps a refinance may be a good strategy. If however you have identified some other better properties and your current property is already pretty highly valued, it’s best to sell and buy two more higher potential ones instead.
Do note that there is no such thing as the best strategy. Understand what you are aiming for, do the calculations and make your decision. Worst case? You did not sell, you did not do refinance and you continue to enjoy that surplus of RM200 for another 5 years and suddenly realised you have wasted many productive years. I am only speaking for people who maybe less than 45 years old. Truth is, once I reach a certain age, I think I would prefer a rental surplus instead of taking more calculated risks. We shall see at that time. Happy deciding.
written on 111 Dec 2015
Next suggested article: 4 Considerations – Condo for rental yield


  1. Jeffrey Ong avatar
    Jeffrey Ong

    Hi Sir, this article really enlighten me. While still young, it is wise to focus on increasing the number of properties rather than rental. However, you mentioned that we could opt for refinancing. But as what I known, now the duration of refinance is 10 years max. Hence, how refinance can help investors because the monthly instalment will be skyrocketed and is unable to be covered by your rental income.

    1. As at today, refinancing is still maximum of ten years. I do not foresee BNM relaxing this rule anytime soon. Nevertheless, the decision should be based on the potential of the property you are holding or the property that you are buying. If you think the price is already extremely high, it may be better to sell, takethe profit and buy others. If you think there is still lots of potential, then you can think about refinancing. Note, my preference is always sell because I always like to buy more undervalued properties instead of keep hoping what I have will appreciate till it reaches the moon. 🙂 Happy deciding yeah.

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