Sunday, January 10, 2010

Secret Of Property Millionaires

There is nothing so special about property millionaires around us. They are normal human being who uses simple strategy in accumulating their wealth. They continuously grow their wealth beyond our imagination through property which I will share with all of you now.

Property investor at all times looking for opportunity to leverage whenever they have the chance. With RM100K cash in hand virtually they can leverage up to RM800K worth of property or even more. This will give them significant room for purchasing more property compare to cash buyer. This is what happens to one of my business associates who purchase 3 units of KK Taipan (3 storey shoplot) in Inanam 3 years ago. His average cost price per unit is RM800K with down payment expenses added up to RM200K (all legal fees and stamp duty). In additional to that he also pay approximately RM1500 per month interest to the bank throughout the 36 months of the constructions period. So his total costing per unit added up to about RM200K+RM54K = RM254K. When he sold one of the unit for RM1.2M, he makes gross profit of RM 560K (RM1200K-RM640K-owing to the bank). His net profit is about RM306K (RM560K-254K-invested money). This is only for 1st unit. Imaging is he sold another unit at the same price that means the 3rd unit is virtually purchase for RM188K. Since there is at least 4 banks expected to open branch in this new area, the rental expected for whole block 3 storey is to be not less than RM5K per month @ RM60K per annum. If you compute against the 3rd Unit, the rental yield is reaching 31%!! That mean you are going to pay off your entire loan for 3rd unit after 36 months. Nothing happier than seeing your passive cash flow reaching RM5K per month which is better than a lot of professional who need to work whole month to earn that much.

Beginner of property investor is highly advice to avoid “alligator” in their portfolio. A wild alligator will eventually eaten their potential growth and thing will get worst when the rental expected is not coming in. So whenever you start investing in rental property, please start from small investment. The ideal property investment for rental is property value less than RM200K as the rental is between RM800-RM1200 which is affordable to middle class executive and this property must be within 8KM radar from KK City centre. Of course these alligator including under construction property which you cannot avoid the completion risks. Last few year, there is program call developer interest bearing scheme (DIBS) which has push up the property prices further. This is where; the developer will absorbed all interest costing before obtaining of Occupancy Certificate. You only need to pay for the first 10% as down payment and the rest of 90% will be take care by developer until they deliver the key to you. Are you thinking of getting free lunch? NO my dear friend. As what people alway say if you got free lunch, be prepare for expensive dinner. The developer eventually has factor in all the interest costing incurred in constructing the unit. But the good thing about this programme is that the completion risk is take care by developer itself and you only need to wait for 3 years maximum to move in. In normally situation, the developer will try to complete the house soonest so they can save some interest costing which will push up their profit margin.

Smart property player will always accumulating property at prime location. Prime here refer to residential and commercial that near to schools, government department, general hospital and heavy commercialization activity area. This eventually will help you to get good tenant especially doctors, teachers and family that wish to stay near to their work place for convenience purposes. In Kota Kinabalu, matured residential area will be at Likas, Damai, Lintas, Kolombong and Signal Hill area. All this while Likas is the dominant market for teachers and doctors tenant due to center location. I always presume teacher and doctor is good tenant as they are well educated. If they are not, don’t blame me. I don’t take the responsibility as some people are really not educated to respect other people money and I prefer to curse them. There is strategy that I always advise my client to use whenever they purchase residential property that is counting on numbers of traffic light that tenant need to pass through whenever they send their kids to schools. The lesser the better. Imaging if you are staying at Lintas (Taman Bestari) and your son is studying at Lok Yuk Secondary School Likas. How many traffic light you need to pass to reach school every morning? If I’m not wrong it will be not less than 5. If each traffic light you need to wait for 5 minutes that mean you need to go out 30 minutes earlier otherwise your son will be late. What happen if more than 5 traffic light? So next time if you considering investing in residential property, please count the numbers of traffic light as this will badly affecting your rental yield and potential capital appreciation. I believe most of millionaire’s property did take this point into consideration before they confirm the unit.

Another character of property millionaire is to keep their eyes and ears open on the surrounding development. Self awareness is the skill that I learn long time ago and trying to related everything back to my property so that I can add some value into it whenever I want to dispose it. You can call this general knowledge. Just like Likas area, are you aware that the Ministry of Education is building high rise office next to Shan Tao School? This will create another office crowd that benefiting Indah Court, Lucky height Condominium and Radiant Tower owner.
At least 10 Condominium Development within LIKAS & SIGNAL HILL Next 24 month

At least 10 Condominium Development within LIKAS & SIGNAL HILL Next 24 month

Another new development under planning stages is the land next to Indah Court measuring around 16 acres, bought by Sandakan Oil Palm tycoon for almost RM40M. I heard he is planning for few block of high-end condominium plus some commercials. I think he is capitalizing on the area as 70% of school either government or private in KK are located at Likas. Moreover, the abundant mall known as Pacific Parade which is still under court case will be finalized soon. The mall is sitting of 25 acres flat land, the last and the biggest pieces available in Likas. This mall will draw crowd mainly from Likas, Damai, Lintas and Signal Hill area. Few new high rise building has been approved at Signal hill area and the total added up unit will be easily exceeding 1500 units in coming 12 months launching. This will add more spice and enhance the value further as a whole for Likas. This is definitely benefiting existing property owner like Indah Court, Lucky Height Condominium and Radiant Court residences. So please open your eyes and ears as all information around will make you richer..

So how you feel now? To be rich and happy is easy right? My friend, you just need to make your first property investment right.. Yes that all. Hope all of you will make 2010 a year of great success. Let us make it a history to be remembered. Happy Investing.


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Was established since 20th Rejab 1430.
Just to educate myself.
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