If ‘MakCik Kiah’ sounds like a friend of yours, let them know to be self prepared. Real Estate Fraternity need to be resilent in times to come.
At the offset i confess that even though many in the real estate fraternity is privileged to share a ‘MakCik Kiah’ income level; likely not many of us is able relate exactly. This post intends to serve as reminder to ‘stay hungry’ & ‘brace yourself’.
Time is of the essence in this all-out-war against Coronavirus, and on last Friday (27 March) Prime Minister Tan Sri Muhyiddin Yassin introduced a 2020 economic stimulus package that shines a light on those who resembles the persona of ‘MakCik Kiah’. Is the initiative really enough for us to ‘ride-out’ this Covid-19 Economic Fall out? Assuming that it will take about 3-6 months after the flatten curve of infection rate.
Firstly, we cannot help but to wonder if our government has put enough juice into the economic stimulus to outlast the Coronavirus Pandemic period. Assuming if there’s still no cure and we may not have the right execution to curb the virus, are we able to dig further into our reserves to stimulate growth or this ‘MakCik Kiah’ analogy is all there is for all Rakyat to fall back on? Truth is that even though we are touted to recover from the Coronavirus Pandemic by June 2020, the same don’t apply for economic theories. Many of us should be aware that we need approximately 9-months for markets to recover.
Also there is just a lack in multiplier effect apart from the direct spendings that we would have to spend anyway in any economic conditions.
Secondly, let us dive into this widely popular #MakCik Kiah analogy for those who are in the real estate fraternity. Assuming that John fit the analogy but instead of selling Pisang Goreng that nets around RM1,500 a month.
John is in the real estate fraternity that earns a gross income of approximately RM4,000 per month but fluctuates periodically. In the last economic slowdown which we thought it had bottomed out, earning RM4,000 wasn’t easy.
Unfortunately John is self-employed and a contract for service professional that risked a fixed pay lifestyle to participate in Malaysia’s real estate market hoping to earn a better living standard for himself. But being in the real estate fraternity has already ruled him out from the RM 1,800 Prihatin Package;
1. BSH Balance of RM600
2. Pension Aid of RM 500
3. E-Hailing Cash of RM 500
4. Rela Aid of RM 200
It is great that this package allow John to defer his fixed repayment up to 6-month. Therefore extending John’s loan maturity date for another 6-month. With the entitlement for RM500 in M40 Bantuan Prihatin as a single. That is payable by 2 trenches April & May. Preached amongst the real estate fraternity is an eye of the tiger mindset, John stayed strong.
However lets have a look at John’s Coronavirus expense briefly.
1. John owned a 1.3L G-Manual version of the brand new Perodua Myvi 2018, which has a price tag of RM44,300 and on a 90% loan John is responsible for a RM767.50 loan repayment a month.
2. John is fortunate to be able to spot an excellent apartment back then for RM350,000 and on a 90% loan John is responsible for RM1,394 loan repayment a month.
3. John is careful and subscribes to a Medical Card (Insurance) for protection. In case if any accidents were to happen he is taken care of with RM100 monthly premium.
4. John has got a credit card debt of RM500, accumulated from his credit card which promised petrol rebate at Shell, BP & occasional Japanese restaurants.
John thought that since he was able to defer RM2,261.50 GREAT!
To be able to defer all above to 6-month, John only needs to worry about his credit card liabilities. Assuming that John was lucky to have earn RM4,000 during march prior to MCO. In April with government’s Bantuan Prihatin Package of RM250 & 50% savings John now have a budget of RM2,250 to get him through. Because April Sales paycheck is gone by now. Fair enough?
Now John next 50% savings of RM2,250 with Bantuan is crucial for May. It leaves John with no option but to make it or break it during May 2020…
Little did John know, MCO is over and he failed to generate a May paycheck and forced to dip into the remaining reserve of RM2,500.
John start falling short and start scrambles with his remaining savings of RM2,500 with May’s Bantuan Prihatin Package. Loan deferment is still in play. Eye of the tiger mentality, John is hopeful of the situation, but credit card interest is accumulating. When will it be sunshine and rainbow?
Because in June, it will be John’s end-game in terms of contingency plan. What should be John’s next move? Will the economy fire-up now after RM250bn stimulus plan? Or perhaps Government will consider relooking into a ‘KisahJohn’ analogy for the real estate fraternity?
Accepting the fact that John had to live hungry during June, he is already exposing himself in an uncomfortable position for the subsequent months. All this while the RM250bn stimulus is in play.
With a flick of a switch John realised that in order to ‘ride-out’ this economic fallout, he needs a refreshed mindset. To be wise in spending, keep business account on a separate tab, be really frugal, working harder and smarter after MCO period is lifted.
John keeps his eye on the goal all the way through, he learnt that he needs to reinvent himself in order to continue closing deals in the real estate fraternity.
Looking ahead after the situation has cleared, John would remember the measures he took at this time to SHIFT into the right gears. Also there is absolutely nothing stopping John with his tiger eyes and anew mindset.
John start seeing sunshine and rainbows after immediately diving into learning and grasping new skill sets and techniques to generate sales digitally in 2020.
John with a great self-reliance forged ahead anyway.
Bumbung.co’s Local Expert
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We recently wrote a piece about the BNM’s 6-month loan deferment, smash the picture to read more;