2 days ago, I asked whether you guys keen to learn the story of this couple who regrets opening a IHC.
The post received an over-whelming reply with over 500 comments and request so Im gonna share their story here.
This couple invests primarily in residential properties and they established an IHC few years back in order to ensure they will be able to buy properties using this IHC.
They started using the IHC to manage their residential rental units to generate income.
Fast forward a 2-3 years, they tried recently to obtain borrowing using the IHC to buy a property, only to be told that the IHC cant be used to borrow even though they have declared profits in the last 2 years.
That banker told them that this IHC needs at least 1 more year before it is deemed “fit” to get a loan on its own.
Having done many 1-on-1s, I find that people have asked me alot about using IHC in property investing.
As most of them invest in residential properties, its bizarre and perplexing to see they intended to use IHC to buy apartments worth under 300k.
I dont know who has taught them this method, but IHC has very limited practical usage especially if one’s portfolio value is under RM5Mil.
You only get 60% financing buying residential properties, so unless you are wealthy enough to put in 40% down-payment EVERYTIME you buy a residential property, IHC is not for you.
And if you portfolio is small, please do note that the maintenance cost for an IHC ranges between RM4000 to RM6000 approx every year.
So you need to have min RM500 in nett monthly cashflow just cover your cost on opening up an IHC. So if your nett monthly cashflow today is not 4-figure, IHC isnt for you yet.
For now, only a handful of banks are willing to borrow money to IHCs to buy properties.
So as you can see, IHC is really not for everyone. I cover the usage of IHC in Sarjana Hartanah and I’ve attached other negatives and points to consider about using IHC as per the photos.
Now, Im not saying using IHC is bad. I know very few people who are able to use it well in their advantage. To learn how to benefit and properly use an IHC, you can attend Sarjana Hartanah as where we will be covering this topic extensively.
Lastly, you should open an IHC ONLY when you are ready and knowledgeable enough to use it to your advantage, not because it sounded cool. Good luck and I see you all in Sarjana Hartanah