My journey as a property investor

When I was a child my parents had a single storey bungalow sitting on a large plot of land. There was lots of place to run around and play and to plant fruit trees and vegetables. I enjoyed gardening as a child which might be considered unusual.

I took land and space for granted , not realising it was a luxury and not the norm.when I grew up and started working in Kuala Lumpur, I realised the value of land. Small shoe box sized dwellings were being sold and rented out for exorbitant rates.

It did not take me long to realise that I needed to own my own property for two reasons. The first was to have a roof over my own head. The second was as a form of investment as I understood the scarcity of land and the appreciation of value for an asset class that is constantly in demand.

As a young woman in the big city with an entry level salary, I could not afford to rent a house let alone buy one. I started out renting a room which costs me 10% of my monthly salary then. The rest of my salary went for transportation, food,clothing and a rainy day fund.. I had no money for holidays or Amy luxuries. This went on until I got married.

Pooling our resources we managed to buy ourselves a 2 sty link house with a small loan from our parents.
The only reason we could afford the property was because it was sold below market value. It was a house numbered 4 and had a cemetery at the back. On top of it all, it was a leasehold property. All these factors put together made it unattractive to other buyers and the price was reduced sufficiently so we could afford to buy it. We were neither superstitious nor afraid of ghosts.
Some friends and relatives poked fun at us for our choice. But a house is a house and provided a roof over our head.

Our finances were tight and we had to make do with just one car just to stay ahead of the bills. What with a mortgage , childcare, insurances etc we still could not afford holidays. It was tempting to use credit cards but I was determined from day one that I would pay up all bills every month.

So we tightened our belts and hey presto, we managed ….

With prudent spending and increased income,I considered upgrading my house. I thought that a better located property would improve the quality of our lives and provide better schools and co curricular activities for our children.

But in order to afford that we had to sell the existing house first.. Real estate negotiators were engaged to sell the house at a good price.

As expected, some buyers were turned off by the house number and location by the cemetery.
Others expressed interest as the house was in excellent condition and a reasonable size( 22’x 75′).
However, those buyers made offers that were too low for us.

Note: when selling you a property the real estate negotiater tends to downplay the negative aspects of the house i.e location and tenure. However, when you try to the same property the R.E tends to highlight those very same points as a reason the price should be reduced for a buyer who has put in a low price! As a property owner, you should check the value of the property and sell at the value that is a higher or at par with the valuations. If you need to sell quickly then you should reduce the price.
Alternatively , you could consider refinancing your property for much needed cash.However refinancing comes with costs .More about that later.


As I knew the value of my property I held on to it for more than a year from the date I put it on the market. The reason was simple. I was willing to wait until I got a fair value for my property. And I did! The buyer was a born again Christian who was not superstitions nor afraid of possible ghosts in the cemetery. He appreciated the house for what it was- a decent,good property priced fairly.

As I sold it for double my purchase price, I had sufficient money left over after the outstanding loan was paid off to place as a deposit and pay closing fees on my ne have defaulted on any loans or are a poor are likely to be told that you will be eligible for 70-85% of the value of the property you are buying.However, you should ask for a written letter from the bank that states given your income and commitments, you are available for X amount of loan that requires a monthly mortgage of XX for the stated number of years. That way you can calculate the down payment you have to fork out and the property that you can actually buy. Also take the time to shop for a bank loan that offers the best interest rates and other terms.In short, before you shop for a property, shop for a loan.

Armed with the knowledge and confidence that you can buy a property, shop for something in your preferred location. if it is out of your reach look further away.When you find something that you like ,make an offer and negotiate the price. you do not need to hesitate as you know what you want and how much you can afford. In Malaysia, i have come across property buyers who offer a ridiculously low price hoping that the owner is desperate enough to sell or has no idea of his property value. That may work occasionally but not all the time.
In most cases, property owners have the holding power. They will consider refinancing before reducing the price. They may even wait for the property to be auctioned of by their lending bank before reducing the price,not realizing that it is to their detriment to do so.
More about auction properties later.

If the price is fair, you will succeed in purchasing it. The real estate negotiator and your lawyer will help you with the next steps.








Good to know

Bear in mind that when you make an offer to purchase with an earnest deposit and the vendor accepts it, you are bound to proceed with the transaction.
In the event that you are unable to secure a bank loan the earnest deposit will be forfeited unless otherwise stated in the letter of offer to purchase. Once again, I stress the importance of sorting out your finances and having sufficient funds before property shopping.


Property financing

Banks typically are happy to loan you money for a property purchase if you can show a steady , reliable income and a good debt servicing ratio. This simply means that if you have a lot of debt/ loans that need to be repaid every month, you are unlikely to be able to pay a mortgage. As such the bank will have to repossess your property and auction it off at the best price. This is something the bank is not interested in doing. However, if you are of good financial standing the property makes an excellent collateral for the bank.


Lawyers are an essential part of any transaction. In addition to the sales and purchase agreement and the loan agreement, lawyers also handle other tasks such as discharging properties that are still not fully paid up. handle the contracts involved and ensure all parties keep to their end if the deal.
Choosing a good lawyer ensures the smooth running of the transaction with fair terms and conditions. Lawyers mostly charge legal fees based on a schedule provided by the Bar council to ensure uniformity and fairness. However, they have been known to make exceptions on a case by case basis! Please

House renovations


Everyone loves to live in a comfortable and aesthetically pleasing house.To that end some renovations may be necessary on your property whether it is an old or new property.

When renovating a property it is important to have a budget and not get carried away. Expensive renovations are fine if you intend to spend the rest of your days there or if you have a lot of cash to spare. If you intend to sell the property after a few years or intend to rent it out, renovate prudently.

It has been said that kitchens and bathrooms are two of the most important place in a house. Don’t scrimp here. Flooring throughout the house is important and of course the walls . These days there are many inexpensive ways to dress up your house without breaking the bank. For example there are porcelain tiles that resemble marble and can have the same desired effect as marble if laid properly. Similarly there are wood like tiles that is such a good replacement for hard wood floors and easier to maintain too. The trick is choosing the right type and laying them right. Choose a good contractor or regret it later.

Clean , uncluttered rooms with tasteful pieces create a much desired ambiance. Avoid too many things and large pieces in small areas. Yes you may be a collector but restrain yourself. Buy only good pieces that mean something to you or tell a story. If you really need a lot of stuff, then save up and get a bigger place.

Don’t keep stuff just because it was your wedding gift. It is alright to get rid of stuff you have out grown or dislike. You may even consider selling them through a garage sale or on line.Beats having a cluttered house.

A bigger house means more maintenance. It is fine if you have the energy or the help to do the work. Otherwise it is best to choose a house and renovation that suits you and easy to maintain


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Should I buy land?

I have been asked this question by property investors. My reply is always ” What is your objective?” You have to be clear of what you hope to achieve.

Buying land and holding it for the long term  is a good strategy. This is because land is limited( unless you create more habitable land through land reclamation). However, there are a few questions to ask yourself before you buy yourself a nice plot of  land:

1) How will you finance the purchase of the property?

2) Do you have sufficient cash? If you are taking a bank loan, do bear in mind that for land purchases the margin of financing provided by banks is typically 70% or less This means that you have to have sufficient cash to pay the difference in addition to all closing costs.

3) Do you have sufficient cash flow to meet your monthly repayments? Bear in mind that if you can lease the land to someone you may be able to recoup some of your cash outflow. If the land is not leased out the market monthly negative cash flow may put a strain on your finances until such time it is sold with capital appreciation.

Leasing of land often results in lower returns compared to a building.  A lot depends on the location and use of the land as well.

Buying a bungalow plot

My search for a suitable family home which met my criteria ended in vain. There was nothing that met my full requirements.Bear in mind I went house shopping with a list  in hand. I knew what are the must have criteria  and  nice-to have  features. No ambiguity there.After one year of house hunting I could not find my dream house. Should I settle for something that fills most of my requirements and renovate to have the rest? I did the math – it was just too expensive. So I did the next logical step and bought a plot of land and built my own house.

Firstly I had to find a suitable plot of land in a location that is good and familiar to me. I chose a piece of land that was slightly raised,facing east and close enough to Kuala Lumpur with good road connections and MRT in the future. I negotiated the price for a significant reduction because the market was soft and I understood that the pool of buyers in that location was still limited as the township was not fully developed and the margin of financing low.

Then there was the search for an architect.Through recommendations I found an architect to design my home. Time and energy was spent discussing my wish list for the house. A  sizable garden  and kitchen was a must. A swimming pool was optional but I later included one because it would provide good exercise and good feng shui. Besides, a pool party was on my list of nice- to- have items. Approval and building permit was duly sought.

Then there was the matter of financing the construction itself. A few tenders were received. The prices quoted were quite shocking and out of my budget. Even if I had the money for it, it seemed to me that I was being overcharge for what was to be a fairly simple house. After much looking around and negotiation, I found a decent contractor who was willing to reduce his margin of financing.  An agreement was signed using a contract prepared by the Malaysian Institute of Architects. So began my experience in construction.My building contractor, an engineer himself, was competent and reliable.He knew his job. I didn’t. So I trusted him and the architect to do the needful.

When constructing, a house it is important to know what you want.  Fickle mindedness leads to variance orders in the construction. Variance orders can be positive( costing more) or negative (costing less).So when construction costs deviate from the original,typically more, it is most likely due to the fact that property owners request changes that cost an additional sum.

However, if changes are necessary, making them as early as possible in the construction process will save time and money. If too many changes are made from the original, it is necessary to resubmit plans for reconsideration and approval.

The finishing for the house and the choice of accessories are purely personal. From imported marble to  simple tiles, the choices are unlimited.Again bear in mind budget and practicality so as not to regret.


Other types of land

Land usage is clearly stated on the title – for agriculture, industrial,commercial,recreational etc. When buying these types of land, be mindful of what is needed to develop the land for specific use. Apart from capital,necessary permits have to  to be obtained.

If the intention is to buy and hold, there should be no concerns beyond paying quit rent and assessment charges while waiting for a profitable sale. Your neighbours and local council would appreciate it if you kept the land clean and clear  of overgrown bushes and mosquitoes.















Looking for a property to buy


When looking for a property to buy, it is important to list down the criteria and budget. Otherwise you will be shooting in the dark with no idea and wasting a lot of time and money.
List down the criteria and budget. Look into possibilities of increasing your budget if you find something you really like that does not fit your original budget.You could even take your payslip and list of commitments to the mortgage officer and ask what is the maximum loan you can get. The bank will also run a credit check on you to know if you have defaulted on any loans or are a poor are likely to be told that you will be eligible for 70-85% of the value of the property you are buying.However, you should ask for a written letter from the bank that states given your income and commitments, you are available for X amount of loan that requires a monthly mortgage of XX for the stated number of years. That way you can calculate the down payment you have to fork out and the property that you can actually buy. Also take the time to shop for a bank loan that offers the best interest rates and other terms.In short, before you shop for a property, shop for a loan.


Armed with the knowledge and confidence that you can buy a property, shop for something in your preferred location. if it is out of your reach look further away.When you find something that you like ,make an offer and negotiate the price. you do not need to hesitate as you know what you want and how much you can afford. In Malaysia, i have come across property buyers who offer a ridiculously low price hoping that the owner is desperate enough to sell or has no idea of his property value. That may work occasionally but not all the time.
In most cases, property owners have the holding power. They will consider refinancing before reducing the price. They may even wait for the property to be auctioned of by their lending bank before reducing the price,not realizing that it is to their detriment to do so.
More about auction properties later.

If the price is fair, you will succeed in purchasing it. The real estate negotiator and your lawyer will help you with the next steps.


Dealing with emotions
Although properties are innate objects made of bricks and mortar, they have their own energy. Also ,people tend to get very emotional when selling or buying properties.

John and wife went shopping for a property close to the wife’s work place. They found a lovely house which they liked. The problem was it was out of their budget.So they sought to borrow money from relatives.The relatives were good people who were ready to help if there was a need but some questioned the need to buy a house that was clearly out of the couple’s budget. Furthermore, the couple already owned a house and were merely upgrading. it is one thing to loan money to someone who is starting out and needs a rood over their heads. it is another to loan money to someone who wants to get a property he can barely afford. Would you loan money to someone who wants to upgrade from a Myvi to a Toyota Camry. I know I wouldn’t.
Buying a property is important and a big commitment so one has to be rational not emotional.


Charles and wife had lived in a spacious home with a big garden for most of their adult live. When their children left the nest and with old age making it difficult to maintain the place, the most logical thing was to downgrade to a smaller home. That involved selling the current home. Unfortunately, they had to many fond memories in the house to be able to sell it. Furthermore, moving to a smaller house was perceived as “losing face” and selling a house implied that they could no longer maintain it. When dealing with a matter as personal as this, I can only say ” to hell with what people say or thing”. You are responsible for your life and your property. selling a property you have difficulty maintaining and moving to a smaller home that suits your needs is not a sign of defeat but of practicality and sensibility.Proceeds from the sale of the bigger house can be used to buy/rent a smaller house and enjoying your golden years.


Sam was single and very house proud. He owned a home which he had painstakingly renovated and maintained in a manner worthy of home decor magazine. He stayed there alone and frequently entertained guests in the spacious dining room and patio. Two years later, he was offered a good job overseas. He did not want to rent out the property for fear of the damage that would be done. He decided to put the house up for sale. Buyers came and were pleased with the location and the condition of the house. They checked the value of the house and offered a price accordingly. But Sam could not bring himself to accept any of them because he thought his house was worth much more than that. The truth is while the value of a property increases with renovation, it does not increase to the amount the property owner THINKS it should. A buyer may offer fair value and proceed with his own renovations if he wishes too. Sam’s renovations may mean a lot to him but not to the valuers and the purchasers. So that is something that house owners should consider when they renovate their homes with the intention of selling in the near future.

Middle Class Housing

Maria (not her real name) went shopping for a house. Nothing fancy, just a decent middle class home to meet the needs of her family of four. With two working adults in the family,she figured they could afford a house costing RM 700,000.
A double-storey link house in the suburbs was what she had in mind. It would take her and hubby about 30 minutes to commute to their place of work. The children could go to the neighborhood school. A baby sitter could be arranged for after school hours until the parents got home.
So every weekend they would bundle into their car and go house hunting. Here is what they found out:

1) You can find a landed 2 storey house in the region of RM700,000
2) The houses are located a good distance  away from any big city.There are small towns located nearby
3) The sizes of these houses are 20×70 or smaller
4) The conditions of these houses are not always good
5) The surroundings are not always pleasant
6) There is insufficient space to store things ie books,toys,bicycles,suitcases etc.
7) Just not suitable for  a middle class family

The typical houses had 3 bedrooms and 2 bath rooms on the top floor. There is usually one bedroom and bathroom  on the ground floors with hardly a patch of land to call a garden.
In Maria’s words, “In few of the newer houses I looked at, the bedroom downstairs was the size of a broom closet without space to place a bed. Where should my relatives or friends stay when they visit? I can’t make my mother-in-law sleep on the couch when she visits!
As for the bathrooms,there is hardly room to move  in it. The kitchen is small and narrow and just not big enough for a family.”

I have met others who share Maria’s lamentations. So what do they do?  Well, Maria decided to move even further away from her place of work in order to afford living in a decent sized house.”If I am going to spend my hard earned money paying for a house for the next 25 years, I should be happy and comfortable with my choice”. She does not see a way out of the long commute and the fact that she will hardly see her kids except on weekends.

She accepts things as they are.

My question to you is do you accept this? Is your life about making long commutes in order to own a home and decorate it as you please? Is the middle class being short changed by property developers and the government that does not regulate the housing needs of the people enough?

I would like to see decent housing for all levels of society. I understand that property developers are in the business  to make money but there is a fine line between running a business  and being greedy. Government regulation is needed not just for low income housing but also for the middle class. Really it is a win-win situation for all, not just for property developers.

Can You Afford Not to Buy a Property?

I was at a Chinese New Year Party recently when a young man of about 30 years old named Paul asked me about property prices. He wanted to know if they are going down any time soon. I gave him a truthful answer that is I have actually seen property prices lowering due to various reasons. However, in some areas in, the Klang Valley prices of landed property has not been affected by the doom and gloom that we read and hear about.
He lamented that young people like him would never be able to afford to buy a house today. He was a university graduate, working for a few years in a multinational company and got to travel a bit with his work. On week-ends he conducts martial arts classes because that is his passion. Besides, the money is good too!
He is a good Asian son who still lives with his parents and recently took them on a holiday abroad. There was no sign of a girlfriend. My guess is he is happy with his present lifestyle and living arrangements. He is comfortable and does not need to think of much besides his work and hobby. As long as this is the way you think, then you will not own a property.
However, if you consider the following, then you may not be satisfied:
  1. Will I be contend staying with my parents for the rest of my life?
  2. Will I stay with my parents after I get married? Will my spouse agree to that arrangement?
  3. When my parents pass on, what will happen? If the property is sold or shared between my siblings what will I do?
  4. Am I happy to stay in a rented house for the rest of my life?what happens if my landlord increase the rental or chooses to sell the property? Will I be able to find another house to rent in the same location? At what price?
The reality is owning a roof over your head is not a luxury regardless of what people may tell you. You need to buy a property (house/apartment) no matter how small because a roof over your head is an absolute necessity. Granted you may not want to live on your own right now but it is still yours to do as you please, when you please. No one can take that away from you, unless you fail to make mortgage payments.
The price of property is dependent on location, size, landed or not. History has proven that the value of property increases over time simply because land is scarce and building costs rise over time.
So bite the bullet, invest some time and money in choosing the best property for you and just do it. Otherwise you might find that your money has been spent and you do not own a property simply because you were waiting for the right time. The right time, young man, is now.

To Borrow or Not to Borrow?

I have actually met people who do not buy property because they do not want to be indebted to a bank. They wait until they can afford it, usually when they are close to retirement or even retired. They then withdraw their savings, gratuity and EPF to purchase a house. Not a wise move considering that the life expectancy for Malaysians is in the region of 75 years and they still need a considerable sum of money to retire on. There is such a thing as good debt and bad debt. Property loan certainly qualifies as good debt provided you are able to make your monthly obligations.

Now that you have made a decision to buy a property, the next step is to decide on a mortgage. For some there is a question of whether you should make a cash purchase or take on a mortgage. A cash purchase is fine if you are cash rich and the property is for your own stay. However, if you are buying a rental property as an investment or for your own business purpose, it is better to consider a mortgage for the following reasons:
1)   For cash flow
2)   For higher yield and leverage
3)   To  acquire  leverage  and enable you to buy more property in the near future.
When you place a large sum of money into one property it is an opportunity cost in the sense that you are unable to use the money for any other good investment, education expenses, medical expenses. You should also make sure you have at least 6 months  worth of mortgage in hand to pay for mortgage and property related expenses in the event the property is not rented out or if your business is not doing too well.
For example you purchase a property at RM 500,000. Legal fees, stamp duties and loan agreement will add up to about RM 50,000. This means that your total cost is RM 550,000.
If you rent it out at RM 1500, your yearly  income would be RM 18000.That would mean that you will be earning 3.6% on your capital of RM550,000. It would take 27.7 years to recoup your capital.
On the other hand if you took a loan for 90% your initial capital outlay will only add up to RM100,000. With the same rental you will be receiving a return of 18%.In addition you stand to gain from capital appreciation when you sell the property in the future. Assumption: the price of the property rises significantly enough to cover your capital outlay,mortgage and other holding costs.
As you can clearly see by taking a loan of 90% of the purchase price you are getting better returns on your property.
With the extra cash that you have in hand you can go ahead and buy another property and repeat the process of getting higher returns on your investment instead of cash purchase. By leveraging on other people’s money (OPM) you can invest in more properties.
However, be careful that you do not stretch yourself too thin. For every property that you buy you must set aside a reserve of about 6 months mortgage and property related expenses to tide you over in times when you do not have a tenant. For that reason also when buying a rental property only do so in areas that are easy to rent out. Not all properties for sale are worth the risk of purchasing and borrowing.

Is This a Good Time to Buy Property?

I have been asked this question a lot, especially in 2015.  Heck, even my tailor asked me to look out for a good property for him in his location of choice. He said that he trusted me not to hike the price up as other RENs sometimes do. I was flattered. Unfortunately, his location of choice was out of his budget. So I suggested some areas close to his place of work where he could get good value for money.

The property market in 2015 has been what industry experts call “cold”. What that means is that there have been fewer transactions. What does that mean?
It means that fewer people have been buying properties. The reasons are many: from not confident enough to speculate, loss of jobs, poor business, higher cost of living and therefore less money to take on a mortgage, lack of confidence in the way the country is run and   poor investor sentiments. I could write paragraphs about this but I think you get my drift.
I have also seen many properties being sold below market value because the owners can no longer afford to hold them. It could be because they were speculators who hoped the rental would help cover at least some of the mortgage. Neither could they sell the property at fair market value.So as a last resort they dropped the price. It is either drop the price or risk an auction.Not wanting to lose out on all payments made to date and wanting to save themselves the embarrassment of having a property auctioned, dropping the price seems like a good option.
Or they may have lost their job and can no longer afford to maintain one or more properties. Maybe they have to move in with the parents in order to meet all other financial obligations.
The fact remains that buying a property is a long term investment. As such you should clearly determine your purpose and budget. (Please refer to blog post on ‘Buying for your own stay or for investment” dated Nov. 11).
Yes, now is a good time to buy property if you can find one that suits your purpose as you are more likely to find one that is fairly priced or even below market value. Remember that property owners in choice locations have higher holding power and are not likely to lower their prices too much- only if they really need to sell.
Now is not a good time to sell your property as it is likely to stay on the market for a long time. Purchasers are likely to want to negotiate more too. But if Lady Luck is on your side   and you have a good property to sell, you might just get your asking price. All the best!

Buying From The Developer

Everyday our newspapers and magazine advertise all sorts of new property development. The pictures are colourful and glossy, the details perfect. If your attention was captured, you may care enough to go for the open day and visit the showroom. Refreshments and perhaps a barbecue await you. Friendly sales staff are there to attend to all your queries. The show unit is lovely, the furniture and décor just to your taste. Free legal fees are provided for your Sales and Purchase Agreement and mortgage officers eagerly await to give you a loan, if you qualify of course. What more can you ask for?
I hate to be the party pooper but really there is plenty to ask.
Here are some questions you may wish to ask when buying from the developer?

1) What are the actual dimensions of the show unit? Is it the same as the actual dimensions of the property on sale?
2) In the event that the property is not completed as scheduled, what is the compensation that you the purchaser is entitled to?

3) What is the value of the property according to a professional valuer? In this instance, you may wish to check the value of the property with an independent valuer, not one engaged by the developer. If the property has yet to be built, the valuer may use similar neighbouring properties for comparison before providing a value. Banks today ask for at least two valuers who should concur on the value of the property. It is better to be prudent then sorry as neither the bank nor the buyer should be dealing with loans on overvalued properties.
4) If free items such as kitchen cabinets, air conditioning units and zero moving cost have been provided by the developer, has the cost of these offer items been added to the price of the property?

5) If the price of the property is already higher than the provided by the value provided by the independent valuers , what are the chances of property price appreciation? Should the you decide to sell the property, will you make a profit after taking into account your payment for legal fees, stamp duties on both the S&P Agreement and the loan agreement, balance of mortgage payable to the bank and Real Estate Property Gain Tax(RPGT)?

6) If the you intend to rent out the property, will the rental be sufficient to cover mortgage payment, quit rent and assessment fees, maintenance and repair fees if any? If not how do you intend to meet your property expenses in addition to other financial obligations you might have?

7) If you intend to stay in the property, does the location, size and surroundings suit the needs of your family and your extended family if they intend to stay with you? Don’t by a property just because it is cheap of free gifts are given. You are better off renting until you find a property that meets your needs and budget.

Property developers are in the business of building to provide housing that meets the needs of the clients they serve. Good developers seek to provide quality buildings that are safe in a suitable pleasant environment. Unscrupulous property developers give you poor quality building in a location with poor access while promising you an access road and school in the future. However, both good developers or unscrupulous ones have something in common in that they seek a healthy profit margin. That is among the reasons why developers build three storey houses with special offers because they are able to charge the client a higher price for a larger built up space. A discerning buyer would ask himself if he would be able to climb up to the top floor of the house in his old age. He would also ask if the room on the ground floor is large enough for him or his aged parents. Is the maid ‘s room provided large enough for the live in maid to fit in a bed and a closet. Most of the maids’ rooms built in houses today are fit for brooms and mops and perhaps an ironing board. Maids are people too who deserve decent living quarters too.
In recent times there have suggestions by the developers to bring back the Developer Interest Bearing Scheme (DIBS) to make houses more affordable to first time house buyer. In reality the DIBS only serves to delay the time in which the purchaser starts making his first mortgage payment ,while the price of the property remains unaffordable. It is obvious to me just bring back the DIBS is not going to solve the question of affordability. Isn’t it obvious to you?