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Since it proved to be a HOT HOT thing, I'm answering more questions this month.

As usual, the questions are presented the way they came in - broken English, wrong grammar and all.


QUESTION 1: Assalamualaikum...

I'd like to know the differences between unit trust and mutual fund. Thank you.

ANSWER 1: A mutual fund sells shares in the fund while a unit trust sells units. But they both work the same way: the managers collect money from investors and then invest the money to meet the objective of the fund. Usually the money is invested in stocks, bonds, money markets and properties. So for all sense and purpose, they are the same thing.

Mutual funds are not available in Malaysia – only unit trusts are. But since they are pretty much the same, there is no issue.

Now, the more important question is how do you choose one that will make money for you?


QUESTION 2.: Just want to inform you that I have followed your teachings and had most of your property books and I must say, they are awesome. I’ve got your books and recently I’ve read the “Winning at Property Auctions” gave me a superb insight. So I started to invest in a small apartment here in Penang through auction. As you mentioned in your book, find a property around your radius. Location and price wise is just great. Once I got the property, there are numerous people started to enquire whether I would want to rent the place which is great because the SPA and stuffs is not even ready yet. In your book, there is one small information which I thought that it was quite vague. The part when you got the property and then how soon you can rent it out. You touch on something like you can rent the place out once it is vacant something like that, so I just want to check with you, is that really possible? Thanks a million.

ANSWER 2: I thought it is pretty clear. Rent out your apartment as soon as you can. Normally, this means that once the place is completed by the developer or if it is empty (no one is staying there). But if the place is really hot, people may want to book it straightaway even though the place is still tenanted.


QUESTION 3: I've read quite a number of your books and do subscribe to your "MILLIONAIRESPLANET EZINE". I realized that in your Nov issue there were a lot of questions pertaining to income tax. I suggest if you come out with a book on Income Tax, it will be a definite MEGA seller.

I would like to have your advice for the followings:

1. I'm planning to buy a car in 2008.I'm considering to pay a big down payment of RM50k and take a 5 years HP (Hire Purchase) loan with 2.2% interest. Say, if I decide to settle the loan in 3 years, will the bank minus the interest which was calculated for the remaining 2 years?

2. A relative of mine had suggested against the above idea. He said there is no black & white statement saying that the bank will minus the interest. They’ll only give a small discount. Instead, he had asked me to just pay 10k as down payment for the car and use the remaining 40k to settle my overdraft for my house (roughly 6.5% interest).

3. I need to learn more about HP loan. Is any of your books covered this topic? Thanks ya.


1. Firstly, if you have to take a 5 year loan, you cannot afford the car! The RM50k is not a big enough down payment. The answer is to buy a cheaper car or perhaps a second hand one first.

2. You can afford the car once you can settle the loan in 3 years or less. (PS I only take a 1 or 2 years loans when buying motor vehicles.)

3. HP loans are calculated on a fixed interest rate. For example, if the interest is 5% a year and you take a 6 year loan, the interest is 6 x 5 = 30% from the amount of the loan. So if the loan is RM100,000, your interest payment is RM30k. Your monthly payments would then be RM1,805.56 (RM130k/72mths). Most of the early payments would go towards paying off the interest charge. That is why even if you settled the loan early, there is only a small discount given by the loan company. So yes, you would be better off by paying the housing loan in this case.

4. Of course, the better solution is to limit your loan period to 3 years or less.

5. Don’t worry about cars – next year’s model is always better!

6. Read "How to Pay Off Your House Loan in Five Years or Less" and all your questions on mortgages will be answered.


QUESTION 4: I recently purchased a home in Kelantan, later our lawyer found out that the seller had taken a second mortgage on the property. What is the significance of this (if any)?

ANSWER 4: I’m not quite sure what you meant by “a second mortgage on the property”. In the US, buyers can have two different mortgages from different banks on the same property. The second mortgage is the one that is referred to as a second mortgage. To my knowledge, no banks in Malaysia allows this sort of arrangement as it creates much problems (to them) in case of payment default by the buyer.

That is why they will only refinance the full loan from the first bank. In other words, there is still one mortgage on the property, even though it is actually the second (or third) one taken by the buyer.

There can be a second mortgage on the same property if both mortgages are from the same bank.As for the legal implications, your lawyer should be able to advise you better.


QUESTION 5: What are REIT's?

ANSWER 5: REITS stands for Real Estate Investment Trusts. They are pretty much unit trust funds that invest in properties instead of stocks, bonds, etc., etc. They used to be called Property Trusts but since they are as popular as cold pisang goreng, it was rebranded a couple of years ago to become REITS. For a comprehensive answer, please read my latest Handbook “Growing Your Money”. Ordering details are available on the website:


QUESTION 6: I have a few questions concerning my housing loan which I hope you would be able to answer and advise:

I have 3 properties at the moment. One which I bought when I started working sometime in 1989. I have been renting the house since and I have no problem with it.

In 2004, I bought a condo in Damansara Damai. The condo costs RM160,000 and withdraw my EPF amounting to RM82,000 to settle part of cost. The balance came from a loan from Bank Muamalat. I rent out the condo.

Early 2006, I bought another condo at Wangsa Maju costing RM250,000. I now staying there. I took up a loan from ING, which allows partial payment (in multiple of RM5,000) in the agreement. Now, I have been thinking of settling the loan as soon as possible. I have a few options here and they are as follows:

a) I have approximately RM40,000 now which I can use to settle the loan.

b) I thought I could apply EPF to reduce my loan for the condo in Wangsa Maju. But, I was told that, EPF only allows me to apply and reduce the loan for the first house only.

c) I think with discipline, I maybe able to pay that extra RM5,000 every 4 months interval.

d) To withdraw all dividends and bonuses that I receive every year from ASB (and maintain the capital) that would be around RM20,000 yearly, if the economy remains as it is right now.

With the above information, could you please advise me the best options for me to apply. Please take my age into consideration, I am already 46 years old.


1. Firstly, there is no one best answer. To give the ‘best answer’, I will need a lot more information – your risk profile, your net worth, your commitments, your hopes.

2. But from what you have given, I must say that you have done pretty well in acquiring the 3 properties and having money in the ASB. Keep up the good work.

3. You could use the RM5,000 to reduce the housing loans (any of the loans but preferably the house that you are
staying in). Paying off loans is always a good move and I always recommend it. There are two ways to increase your
net worth: (1) make more money, (2) reduce your loans.

4. However, let the dividends and bonuses remain in the ASB so it will grow to a much bigger amount. If you keep taking the money out, all you are left with is the RM200,000, while being better than nothing at all, will not make you rich. You want to grow that initial RM200k to a much larger figure, and the way to do it is by leaving all the money there – your deposits plus all dividends and bonuses.


QUESTION 7: Dear Azizi,

I have bought all your books and find them marvelous and very helpful. I have a question for you about getting a positive cash flow for each property.

You mention that we should:

1. try to get as much and as long as the bank would lend us i.e. so as to pay minimum down payment. This would mean that
the monthly installment would be high.

2. try to get as high a rental as possible.

But in real life, it would be difficult to achieve a positive cash flow with the above scenario.

What would be your advice then?

1. To increase the initial down payment amount? Or

2. To increase the rental? this may not be possible unless your property is in very hot spot.

please advise. best regards


1. Firstly, thank you for your support. And I am very happy that my books have helped made your life a little bit easier.

2. Yes, I recommend taking a large loan so it will free your capital for other investment, which may include buying more
properties. Properties is a numbers game – the more you own, the wealthier you will be. Also, having one or two houses
will NOT make you rich. Having five or more will make you a millionaire.

3. At the same time, taking a large loan will mean higher monthly payments, which can lead to a negative cashflow
situation where the rental collected is lower than the payments. While most of us can have one or two negative cashflow, it is obvious that we cannot have too many of them. Ideally, all our properties should be giving us positive cashflow.

4. This will mean that you will have to juggle your finances. Take a large loan, yes, but ensure that the monthly payments will be lower than the rental collected, even though just slightly. This will usually mean a larger down payment.

5. As you have correctly pointed out, it is not easy to get to situation 4. But then building wealth is never easy (if it was easy, then everyone will be multi-millionaires). So you will have to juggle your finances, tweak with them as you go along while getting better along the way.

6. If the property is not in a hot location, why buy them? Let the people who do not subscribe to this e-zine buy the properties in the hulus!

Copyright © Azizi Ali 2006

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