101 Ways to Massively Increase the Value of Your Real Estate without Spending Much Money

Over BFM Radio this morning, there's a Property Show with Dolf de Roos , a property investment guru from the US. Some of his investing principles are interesting, and they include:

1. Never sell any property that you have purchased

• When you sell, you pay Capital Gains Tax(or in Malaysia's terms, the Real Property Gains Tax) and agent commission which could reduce your overall returns. RPGT could be quite substantial, and in Malaysia it's been increasing over the years because more and more people flip their purchases, and thus inflating the property prices artificially, making affordable homes out of reach for many Malaysians. 
• Here's the rate you pay if you sell within a certain time frame in Malaysia:

• You will be only be taxed on the positive net capital gains which is disposal price less the purchased price less the miscellaneous charges such as;( stamp duty, legal fees, advertisement charges ,etc). Additionally, a waiver on the taxable amount is granted to individuals (but not companies). The holding period is from the date on the S&P agreement till to the disposal date. For a simple and a quick calculation, the formula is;
  
  Chargeable Gain = Disposal Price - Purchased Price
  Net Chargeable Gain
  = Chargeable gain - Exemption Waiver (RM10,000 or 10% of Chargeable Gain,whichever is higher)
  Tax payable = RPGT rate (based on holding period)* Net Chargeable Gain 

• Read more about Malaysia's RPGT here. Of course there's also some exemptions that a property investor can utilise,
•  Exemption on gains from the disposal of one residential property once in a lifetime to individual (Please utilize this once in lifetime opportunity wisely!)
• Exemption on gains arising from the disposal of real property between family members (e.g. husband and wife, parents and children and grandparents and grandchildren)
• 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable
  Good news! There are exemptions allowed for RPGT. Among the exemptions are:
  1) Exemption on gains from the disposal of one residential property once in a lifetime to individual (Please utilize this once in lifetime opportunity wisely!)
  2) Exemption on gains arising from the disposal of real property between family members (e.g. husband and wife, parents and children and grandparents and grandchildren)
  3) 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable
  - See more at: http://loanstreet.com.my/learning-centre/rpgt-in-malaysia#sthash.kCLaWDN4.dpuf
  

  Good news! There are exemptions allowed for RPGT. Among the exemptions are:
  1) Exemption on gains from the disposal of one residential property once in a lifetime to individual (Please utilize this once in lifetime opportunity wisely!)
  2) Exemption on gains arising from the disposal of real property between family members (e.g. husband and wife, parents and children and grandparents and grandchildren)
  3) 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable
  - See more at: http://loanstreet.com.my/learning-centre/rpgt-in-malaysia#sthash.kCLaWDN4.dpuf
  Good news! There are exemptions allowed for RPGT. Among the exemptions are:
  1) Exemption on gains from the disposal of one residential property once in a lifetime to individual (Please utilize this once in lifetime opportunity wisely!)
  2) Exemption on gains arising from the disposal of real property between family members (e.g. husband and wife, parents and children and grandparents and grandchildren)
  3) 10% of profits OR RM10,000 per transaction (whichever is higher) is not taxable
  - See more at: http://loanstreet.com.my/learning-centre/rpgt-in-malaysia#sthash.kCLaWDN4.dpuf

2.Since you can't sell out your properties and realise your gains, what do you do to have additional funds to purchase your next property?

The answer lies in the power of refinancing your property. Once the first investment property has been purchased and its price has inflated to perhaps 1.5x to 2x, you can then ask your bank manager to assist you in refinancing that property and use the extra cash (essentially taking out more loan from your first property; which means you now have to pay a higher monthly loan installment too!) to purchase the next property. In that way, you do not have to sell out your first property which is bringing you monthly rental income stream as well as capital appreciation over the years, as well as expensive capital gains tax and agent commissions.

3. It's better to invest in REITs as compared to never investing in any property at all.

4. de Roos believes in diversification. However, he does not believe in diversification into other asset classes apart from properties ( such as buying stocks, commodity, etc). He believes in diversifying within the property sector itself. Hence he suggests two ways:

• Property type diversification - residential and commercial properties
• Geographical diversification - apart from your own country, you can invest in other countries in the region ( of course everyone who has the money has already done that, looking at the number of international property fairs being run in Malaysia!!!)

If you're interested in Dolf's work , here are some books he has written over the years to educate your further:

• 101 Ways to Massively Increase the Value of Your Real Estate without Spending Much Money
• Real Estate Riches