This is Grandeur Tower – where my first action on property investment is. I have heard many people, when their ideas and thoughts were being implemented by others, they said “Oh I knew it, I thought of it before!” or “That’s my idea they stole to implement!”
While many people THINK of ideas and toy around TALKing about ideas, very often these ideas were not put into actions. I learnt my lessons too. When I was in the IT line, my ideas were aplenty, from this portals to that portals. One by one the portals came up – Catcha, Bluehyppo, Jobstreet. The more I said, “hey, that’s my idea” the more I felt embarrassed.
When I was only in college, I started reading Robert Kiyosaki’s books. It was by accident that I found “Rich Dad Poor Dad” from a small grocery store at Jasmine Tower, SS2. I remember reading the book back to back and finished it in 3 days – in the midst of having examinations. I did not do revision but the very book caught my attention. And then I read Azizi Ali’s “Millionaire Landlord”, “How to Win at Property Auctions” and “Property Millionaire”, attended property classes, property seminars/talks and all these happened for 2 years – 24 months!! 104 weeks!! I think it is TOO LONG to learn without taking actions!
I can literally tell anyone how to make money with property and it was in one conversation with Edmund, a friend who has a computer business in Teluk Intan, he said, “Hey you know a lot about properties, why don’t you start investing in one?” As a college student – a college student investing in a property was never heard of at that time, at least in my perspective. Edmund said he too never thought of being in business but it was almost by force and he only learnt about the business as he runs his business daily. Learning is always by DOING.
So there you go – a motivation to act. Sure enough I went on to research on properties – visiting one condo/apartment per week – asking what price did the people buy their homes there, what was the maintenance fees, other costs etc. Over time, I had in my research, information of over 20 apartments/condos.
It is also interesting to know that once I have set my target on buying a property, when I first started working, I set aside RM1,000 per month for investment. I was only making RM2,500 per month at that time. With RM1,500 left and car installment was RM350 + petrol RM300 + phone bills RM150, I was left with only RM700 per month to live. Don’t ask me how but the RM1,000 set aside was the biggest torture and turn out to be a blessing.
I “met” my first prospect property in an auction site – the reserve price was roughly RM89,000. By that time, surprisingly I already have RM13,500 in my investment account (including some interests from unit trust investments and an 8% growth from share market). It was a 947 sqft apartment with 3 rooms-1bath. Next to Steven Corner, Pandan Indah and people refused to buy the properties there because it was almost like a budget hotel where couples rent on a nightly basis (ahem, you know what I mean!) The investment also drew negative remarks from my family members. One uncle said is difficult to be a landlord – pouring cold water before I even bought my property!
The calculation below will hopefully shed some lights.
I can’t remember much of the figures so is all estimation. That was the first thing I learnt – filing system for your investment and a tracking of each individual property of its income and expenses is very important.
I got the property at RM93,400 and to my surprise as I went in to my very first property, 2 rooms were equipped with air-conds, one room with built-in wardrobe, kitchen cabinet, water heater and plaster ceiling. Rented to one great tenant I forever treasure – I would recommend her to anybody but not now! Sirilah has never paid rental late but once and that was also because she was in the hospital, not on purpose. Millionaire landlords love good paying tenants like her – she stayed there till now and even increased the rent amount herself when she knows the rental value was appreciating at that apartment.
COC by the way is cash on cash – the calculation I use to calculate how much cash returns I gain from the cash I put in. My first property so the mistake was I did not account for so much expenses and the excitement of having the first property – that made me spent almost RM20,000 – which I don’t know where it goes.
It is MORE interesting to know what I did with this property only a year and half later. Police stood at the guard house every night to ensure the place is safe. Remember, it was almost like a brothel and people shun away from the apartment and market value depreciates. Then, there was a change of management taken over by the residents who did great job in transforming the place. In 2009, the market value was about RM130,000 and rental rates shot up too. I only added RM50 per year for my tenant so the rental was RM800. I refinanced the property and got RM27,000 cheque so my total cost is a negative figure!
So I have no cash down for this property and still making RM8 per month. The RM27,000 – I used it to buy my second property and I will share later. It is more interesting to know this….
With the market value at a conservative RM200,000 and my liability is only about RM113,000 (as of 2012), I have a RM87,000 net worth for this property. So in my last blog, I said I am richer after the 13th General Elections – is all because my net worth increase with the increase of market value of properties I own.