Amortized Purchase Costs
Purchase costs for a property include Stamp Duty Land Tax, third-party professional fees (legal and surveyor, pre-letting expenses (including furnishing) and other third-party costs relating to purchase.
We amortize (depreciate) the purchase costs over the period to the first ‘five year anniversary’, which means we spread the cost over five years.
Capital Gains is the difference between the sales proceeds and its investment cost. If sales proceeds are lower than Investment Cost, then the Capital Gains are negative (a ‘capital loss’). Capital Gains does not account for any Dividends Received or any Transaction Fees.
Dividends are the amounts paid, on a monthly basis, to all investors in a property. Dividends are calculated as Gross Rent, less deductions for:
- Property related costs (including property management, maintenance and insurance)
- Estimated void periods (i.e. when there are no tenants paying rent)
- Corporation tax
Dividends Received are the cumulative Dividends received. The investor sees the amount on their personal dashboard.
Dividend Yield is: the annual Dividends from a property, expressed as a percentage of the Total Cost of investing in that property. The Dividend Yield assumes investment at the Latest Valuation.
For New Listing opportunities, the Dividend Yield is from the completion date of the property’s purchase, or a later date if specified in the property description.
All properties listed on Property Monster are acquired through a Special Purpose Vehicle (SPV), which is a Malaysia limited company.
Deferred Tax is the accumulated capital gains corporation tax within the SPV resulting from an increase in the value of the property since purchase. Deferred Tax only becomes payable if and when the property is sold, and is considered a potential liability until that point.
Gain / Loss
Gain / Loss is the difference between the sales proceeds from an investment and its Total Cost (which includes any Transaction Fee). If sales proceeds are lower than Total Cost, then the amounts are negative (a ‘loss’).
The funding target of a New Listing, which forms the basis for the share price, consists of:
- The property’s purchase price
- Plus all third-party purchase costs and additional funds required for furnishings and repair
- Less any mortgage
Gross Rent is the forecast or actual rental income received, before any deductions. For example, if we estimate that we can let a property for RM 5,000 per month, then forecast Gross Rent is RM 60,000 per annum.
Net Rent is the Gross Rent less all property-related costs (e.g. maintenance, void periods, insurance, letting & management of the property).
Net Rent is presented before the deduction of Corporation Tax.
Gross Rental Yield
Gross Rental Yield is the forecast Gross Rent, expressed as a percentage of the Latest Property Value.
Investment Cost is the price paid for your investment excluding Transaction Fees.
Latest Share Valuation
The Latest Share Valuation is the Latest Valuation on a per share basis. Each property (held by an SPV) has 1,000,000 shares.
The Latest Valuation of any investment consists of the Latest Property Value, plus the Unamortised Purchase Costs, and less any other liabilities.
Latest Valuation Gains
Latest Valuation Gains are an estimate of gains or losses based on the Latest Valuation.
Specifically, they are the difference between the Latest Valuation and the valuation at the time of purchase.
Latest Property Value
The Latest Property Value is the most recent estimated valuation.
For New Listings, this will be the proposed purchase price, which in turn is supported by a Surveyor’s valuation.
Thereafter, desktop evaluations are done on a half-yearly basis and we update the valuations on or about June but this may change at Property Monster’s discretion. Every five years, a Surveyor’s physical inspection and valuation is performed to provide a further update. This valuation is the basis for the five-yearly exit process.
“ New Listing” opportunities are properties for which we have negotiated an option to purchase at an agreed price. The funds to purchase these properties are live funded on our platform within a specified time period.
New Listing opportunities are presented on the platform along with a Surveyor’s valuation, solicitor’s conveyancing report and forecast rental information.
When you commit funds to a “New Listing”, your Property Monster account balance will decrease but no money will actually leave the monies to the account until the live funding target is reached.
Where the funding process fails, all committed funds will be released in the respective customers’ accounts i.e. the funds will never leave your customer account. This applies to 100% of committed funds – Property Monster will obviously not charge or receive any fees and any costs that have been incurred (for example, surveyors and solicitors) will be borne solely by Property Monster.
The maximum number of shares that you can purchase in any property is 200,000 which is equivalent to 20% of the SPV. The cap on percentage ownership is to ensure no individual owns a beneficial interest greater than 20%.
Premium/Discount on Purchase
The Premium/Discount on Purchase is the percentage difference between the amount paid for a Subsale investment and its Latest Valuation at the time of purchase. It is positive (a ‘premium’) when the amount paid is greater than the Latest Valuation at the time of purchase and negative (a ‘discount’) when the amount paid is lower.
For example, if you purchased a Subsale investment for RM 10,500 (share price of RM 1.05) but the Latest Valuation of the shares acquired was RM 10,000 (share price of RM 1.00), then the Premium paid would be 5%.
“New Listings” are available in “Pre-Order” for a set period of time, with the remainder of targeted funding (if any) moving to a live funding process (new listing).
Pre-order ensures a window of at least several days for everyone to participate in a New Listing, meaning you can digest the information in your own time and won’t miss the opportunity to invest. You will be able to see the pre-order closing date in each property page.
We may need to scale-back orders if they exceed the Funding Target for a New Listing.
“Subsale ” opportunities appear on the platform when another Property Monster investor chooses to sell their investment. We also refer to this as our secondary market.
The selling investor can choose what price to sell at, but we will provide information to help you perform the diligence required to determine whether or not you wish to sell or purchase the investment at that price.
Half-yearly we provide an updated valuation for the properties on our platform. A desktop valuation is published on or about June but this may change at Property Monster’s discretion. A comprehensive Surveyor’s physical inspection and valuation is completed every five years.
Scale-back may be applied if pre-orders are oversubscribed. When investor commitments exceed the Funding Target for a New Listing, your commitment may be reduced on a pro-rata basis. For example, if the funding target is RM 1,000,000 but we received pre-orders amounting to RM 2,000,000 (excluding fees) then you would receive 50% of your initial order.
Each special purpose vehicle has 1,000,000 shares, and each share has an equal standing in terms of rights and economic benefits.
Special Purpose Vehicle
Property Monster, through the Website, provides information on properties which you may be interested to invest in by acquiring shares (“Shares”) in a newly established special purpose company, which will be established for the sole purpose of acquiring and owning properties on your behalf (“SPV”). SPV will be wholly owned by the Nominee. You may subscribe for Shares through the Website.
Stamp Duty Land Tax
Stamp Duty Land Tax is an amount payable to Inland Revenue Board of Malaysia on the purchase of property or land in Malaysia.
Total Cost is the aggregate cost of acquiring a Property Monster investment. The amount includes Investment Cost and Transaction Fees.
The Total Return of a Property Monster investment is the total gain or loss generated from holding an investment. The Total Return includes all Dividends Received, Capital Gains generated and Transaction fees paid.
It is expressed as a percentage or a total amount. For example, if RM 10,000 was invested in a property and the Total Return 5 years later was 50%, then the investor would have generated a Total Return of RM 5,000 from holding the investment.
Transaction Fees are recognized as a one-off deduction when you make a Property Monster investment. Property Monster’s one-off transaction fee (at 2% of the Investment Cost)