A RM13,000 Hotel Property Investment in Malaysia
Surely, it’s a little hard to believe that you can own a hotel property investment in Malaysia for a mere RM13,000 up front? Let me explain how, once again – Genting Highlands, makes fantasy become reality.
As an additional segment to my post on the best area for property investment in Malaysia for 2018, comes another planned development that is scheduled for completion in 2022. This development however, is a little higher up past Gohtong Jaya and closer to the peak.
It’s not too late to join the party that is taking place up in Genting Highlands as NCT Group adds to their Genting Highlands property development portfolio via their ‘Masterpiece in the Sky’, that is Grand Ion Majestic.
Basically, Grand Ion Majestic is the second addition of blocks to their Grand Ion Delemen Hotel. NCT Group is promising a slightly grander set of hotel units comparatively this time though. The units are priced about RM300 psf higher, fetching a price of RM1400 psf before the rebates. (Still cheaper or on par with anything in the golden triangle in KL)
The deal being offered is basically the same as Grand Ion Delemen such that they are offering 7% GRR for the first 3 years followed by profit sharing for the next 3. Instead of 10 free days of stays however, they give you 5 days free with 20 days at 50% off each year.
Refurbishment charges are also taken out every 3 years at the cost of 4 months of your GRR returns which will be offset at the end of the 3 years. This payment is to ensure that the unit is always furnished to the standards of the hotel and it does not end up getting run down.
The major difference here, from Grand Ion Delemen, is that the units are now going to be managed by Wyndham Group, a NYSE public listed company that operates more than 8400 hotels across the globe.
It does make you wonder though whether the company will stick to this hotel group this time, as for Grand Ion Delemen, which was previously being operated by Best Wester Premier, have since parted ways with NCT Group, leaving them to manage the hotel there themselves.
I have not been up to Ion Delemen since Best Western has vacated, but based on the reviews on booking.com and other travel websites, they are in fact doing a better job than Best Western was, sporting better reviews and greater overall guest satisfaction.
I am unsure of what the reason was for Best Western leaving but the staff who were previously working for Best Western Premier at Ion Delemen were carried over en masse and appears as if the entire operations and setup were bought over by NCT Group.
Will this happen again with Wyndham Group? Only time will tell, but if it does, based on what is going on at Ion Delemen, I can’t see it being a bad thing either.
So, just how does something like this cost you only RM13,000?
Well, they have very small units compared to Ion Delemen, meaning the entry price for the units here is significantly lower. With type A1 and A2 rooms being just 380 and 400 sqft, it makes the cheapest units here about RM550,000.
With the 12% rebate, your down payment is taken care of and they give you another 2% back to you once you get your keys. So, this means, there’s no down payment and as with most new developments there are no SPA and Loan Agreement legal fees.
This leaves you with just your Memorandum of Transfer (or your Property Stamp Duty) and Loan Agreement Stamp Duty to pay for, which come to just about – you guessed it – RM13,000.
With a booking fee of RM 10,000 you’ll only need to top up another RM 3,000 for your initial payment.
This gets your foot in the door and leaves you to service interest on the loan up till 2022. Which should start at something like RM300 and go all the way up to RM1500+ just before completion whereby you would then have to pay your full loan repayment amount.
There will be a few extra things that you will need to pay for further along the way though such as miscellaneous costs (they will charge you for things like fire insurance, 4 months’ advance payment of service charges, water and electricity meter installations – these charges amount to about RM2,000) and your cukai tanah and cukai taksiran.
There is something very cool about 7% GRR though. 7% is the magic number at current interest rates that means you can completely cover your loan repayments! Yes, you read that right, 7% GRR leaves you with sufficient returns to completely take care of your loan repayments and even have some excess to spare.
Waiting for 3 months after Vacant Possession, you’ll have to let them furnish the unit before anyone can physically book a room and stay there and another 3 months before your first GRR payment (As GRR payments are paid out every quarter).
Once you get your first GRR payment, you’ll be able to use it to start paying off your property loan monthly repayments and always have enough inside to continue to pay it off. (and even enough for you to pay for the refurbishment costs at the end of the 3 years) It lets your property investment continue to grow on its own without you ever having to top up the account ever again.
It gives new meaning to ‘planting the seeds of wealth’.
The exact GRR payment schedule will be given to you once you sign the documents for the final handover of your keys in 2022. Even if you only get to touch your keys for a brief moment before they are returned to NCT Group for hotel management, it signifies that you are ready to start reaping some delicious returns on your hotel property investment in Malaysia.
Also, once the GRR ends, the real earnings will begin with profit sharing of the entire development for the following 3 years with the option to renew for another 3 years after that. The profit sharing works on the basis that the management side will take 30%, while the owners will take 70%.
The greater the occupancy the greater the returns! If the occupancy rates are anything like what they are like at Ion Delemen now, you can expect monthly yields of 8 – 10% even. Those are some very sexy returns.
I would advise caution when looking at GRR deals however, as there is as always, the chance that the developer will face problems paying it out. The thing about this development that makes it different though, is its very promising location and the fact that their already existing hotel blocks are already performing very well.
I’m sure that there will be a lot of doubt on whether Genting Highlands will remain the hot spot tourist attraction that it is now but personally, I feel it’s not even reached its full potential yet.
You can read more about this in my previous post on Genting Highlands property – here.
Feel free to comment if you agree or disagree, I am very interested to hear your thoughts.