Should I get the dream bungalow

This is a nice read - "Should I get the dream bungalow - Head or Tail?"

The writer faces a dilemma.
You are approaching 40, with wife n 2 kids.
You have found the perfect home, a 1.6m bungalow in a perfect location.
You know you can afford, but barely. Meaning, savings need to be cut down, overseas vacations will be limited & instead driving a 5 series beemer, u have to settle for a 3 series.
Is it worth it?

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Personally i think overseas vacations & luxury cars are the 'wants' in life. Things that we can live without but nice to have.
Retirement savings, kids education, insurance are the ones that need to be factored in. If you earn 10k, and your dream home requires a monthly commitment of 4k - ideally you need to have the comfort of allocating at least 1k for savings & if possible, 1k for your parents (Yes, its top of my priority list). Then, the balance 3k can be used to pay off bills, groceries & other misc stuff - including cars. Car is a wasteful liability. Try not to overspend on it. Unless, you got a really good bargain like I had :)

With that being said, the decision is not quite straight forward. I had the same dilemma before. Based on what I need - a standard 2-storey terrace will do me & my family of four just fine. But paying more than a half-million ringgit on a landed property without land?? Hmmmmmmm

Lets consider a 2-storey house in Bandar Utama. The built-up is 2000sf. The current market price is RM700K. So, the price is RM700000/2000 = RM350psf.
The cost of building a bungalow house with basic finishing = RM150psf (Few contractors even quoted me RM100psf - RM120psf).
Meaning - the land value for the Bandar Utama house must be somewhere around RM200psf.

I bought my land for RM465K (RM50psf x 9300sf)and that was 2 yrs back. The market value now is RM665K (RM70 x 9500sf).
The house will cost me another RM500K (its just a small bungalow around 3500-4000sf). So, in total my cost will be RM465K + RM500K + RM35K (Architect fees) = 1 Mill.
My total loan will then be 80% of initial land cost + house cost = RM370K + RM500K = RM870K. Assuming that I'm eligible to apply for a 1.2 million loan, I will get a total cashback of 1.2M - 870K = 330K!
Yes, i need to pay RM5000 for the next 40 years. But in return, i will have my dream bungalow & RM300K++ cash!
Imagine this - in 5 yrs time, if i'm able to sell it off for 2 Mill. That's an additional 800K cash in hand!

So, in my case - is it worth it? Time will tell :)