More often, we hear stories of people reaping profits in property investment despite the market condition.
They can be the regular people who dwell amongst us or experienced property experts. However, many do not share their experiences with others especially when they make losses due to the recession or other unavoidable circumstances.
But one thing is for sure! Each and every one of us has to go through the bitter-sweet experiences before succeeding in the end.
My property journey is somewhat a case of hope, fear and joy, but most importantly a never ending journey – which is worthy and profitable once you know how to play the game well.
My First Seven Years: 2001 – 2008:
Aimed for a Good Start
I bought my first property in the year 2001, a double-storey link terrace house, when I was only 22 years old. I was working as an engineer then. It was not an easy decision to make as a young chap, as I was well aware of the financial burden it would bring upon me.
It affected me psychologically as well since I had to get a mortgage loan which would be over RM100,000. But I was motivated by my dad, who encouraged me to buy a developer unit at Kinrara, Puchong.
It was a normal Sunday morning when I went for a short drive with my family. And we chanced upon a signboard for a property sales gallery. We visited the place that was overcrowded by potential buyers, trying to get information about the upcoming project.
The show unit was not ready at that time, however, there were scale models. We placed the booking on the same day, despite the layout and unit type due to its cheap price tag. With zero experience and low knowledge on property investment, I signed the dotted line in the hopes of finally being able to afford my first home. My first property was truly a beautiful 22 x70 double-storey terrace link house!
I still remember my father’s advice, “Buy early, pay off the bank loan early, and you’re set for life!” Sounds familiar anyone?
Well, that was the perception in those days during our parents time. And fortunately, Gen Ys now have access to a variety of opportunities such as property workshops, mentors to learn from prior to investing, not to mention the vast amount of knowledge from the internet.
My Worst Nightmare
The construction of my home took almost two years to complete. I was excited and worried at the same time, as the house was nearing completion and I had to start paying for my bank’s progressive payments.
However, I had already started preparing earlier and saved up my yearly bonuses. I also frequented the construction site quite often to check on the progress. The house was scheduled for completion in the year 2003, where my anxiety turned into fear as the Certificate of Fitness (CF) was not ready. Due to this, the developer was unable to handover the keys to the units.
I still remember those days! I had to visit the developer’s office every day to chase for my keys. In the end, I had to lodge a complaint to the Housing Tribunal to seek legal aid on the matter, as the developer failed to give me proper feedback.
This issue dragged for two years before it could be finally resolved. It was 2005 and I was already set back with wasted opportunity to rent or sell my property!
Thrilling Roller Coaster Ride
My first experience in property investment affected me greatly. The incident kept on repeating again and again in my mind. I was staying in Old Klang Road at that time, and the upcoming Puchong was a great topic around my neighbourhood.
“Was it the lure of cheap pricing, or pure hype and euphoria that got me into this mess,” I wondered to myself. But I was still thankful as the project was not abandoned, but only delayed.
However, I did notice that the mistake lies in my part as I failed to investigate the developer’s reputation, location, mortgage and other factors which include Feng Shui. Honestly, I took an Islamic financing without even knowing its benefits in the first place!
In the year 2006, I put up a ‘To Let’ notice in my home, while working together with Real Estate Negotiators to ensure my unit was successfully tenanted. But sadly, I was unable to find any renters or even buyers for the next two years.
And the worst thing happened when the empty space right in front of my house, which was supposed to house a playground, was later changed into a dump site instead. The bad odour, lingering flies and intolerable sight shattered the opportunity of selling or renting my house. All hope seemed to be lost then.
Seeking desperate measures, I ended up learning what other touted as superstitious belief into my gains, as I leaped into the world of Chinese Metaphysics of Feng Shui. I also spent some monies to learn the art of getting what we want by harnessing the surrounding energy or “Qi”.
To cut the long story short, I managed to optimize the house for immediate rental for below market rate. I was making a negative cash flow with the rental, as I still had to fork out money on my own to pay for the monthly installment!
Second Seven Years: 2008 – 2015:
Light at the End of the Tunnel
It was in the year 2008 when the economy crisis struck. Many properties were auctioned off, offering irresistible deals for potential buyers. But my past experience was haunting me! After much thought, I realised that I had to leave the past behind and move on! And it was necessary for me to get it right this time as a redemption for my first mistake!
I came across a three-bedroom apartment which was about to be auctioned. The reserve price set for this house was already 30% below market value, which gave me the confidence to bid. It felt like a good deal as I could later sell it off and make an immediate profit, or rent it to students from a nearby institute.
But I wanted to get things right this time. After my due diligence, I found out that the owner was still occupying the house with her kids. However, the positive side to this is that the house would be maintained well as it was occupied by the owner itself.
After considering the outstandings in terms of quit rent, assessment and maintenance fees, I decided to proceed by placing a small deposit of 10% from the reserve price. Meanwhile, as an avid Feng Shui practitioner, I also considered the Feng Shui elements of the house before bidding for it.
As I was really confident in my choice this time, I raised my bid one shot and won without any competition. Hooray, that called for a celebration! And I was right, the unit was in an almost perfect condition when I received the keys.
Low Entry, But High Yield
After buying the property for below market value, I did some basic renovation and furnishings. Then, I rented all three rooms separately to students, which gave 13% return per annum.
For the first time ever, I received positive cash flow from my investment. This boosted my confidence and I kept moving forward. I refinanced my Puchong house and use the money to buy auction properties from the year 2009 to 2012. Even though I have sold some of the properties for immediate profit, yet I received returns between 16% to 20% per annum, as well as, over 100% capital gains for the properties I kept unsold.
I used the similar method to purchase properties thereafter.
What Followed After…
Moving forward, I showed great importance in performing due diligence before acquiring auctioned properties. There were many unforgettable moments during my hunt, which are worth mentioning. As much as some units are good in terms of location, the actual condition can be quite daunting. So it is necessary to check things on-site before committing.
Moreover, vandalism and poor maintenance were among the common problems to be faced and don’t expect a pleasant welcome if the units are not in vacant possession.
As I was about to take a look at a unit which was about to be auctioned, the owner got furious and stopped me from getting close to the unit thinking that I was an agent trying to get a glimpse at the property. But I pretended to be a despatch boy who got lost and tried to ask for direction, as I was well aware that these owners who were about to be forcefully vacated would not be amiable.
There was also this particular incident which in fact encouraged me to keep moving in this particular industry as an investor, despite the challenges which deterred me so far.
I received a call from a Malay lady who introduced herself as a teacher in Kedah, who thanked me for purchasing her property which got defaulted, as she had to take care of her cancer-stricken mother. She thanked me for buying her house, which helped her with her mother’s medical bills. If I had not purchased the property then, the next auction date could have been postponed after six months.
That’s when I realized that buying an auction property can also help to rescue a family from deeper financial mess!
The on-going years: 2015 & beyond:
Compassionate Investing
Over the years, this thing always pops up in my mind!
“Was it a coincidence that I had such ‘downfall’ in my property investment journey; to only count my blessings each day now that I managed to redeem myself, after paying a’ hefty price’ in my early years?”
I believe in the greater good of life, which unfolds its new chapters daily, as long as we continue to walk the journey. While I am still investing in properties to accumulate wealth, I realised that the little knowledge I know and share can be a useful guide for those who are willing to learn and walk a similar path.
I started out by forming small groups to share the knowledge, and now I am conducting two-day workshops to guide potential investors to make the right move in buying auctioned properties.
By adding value to the course, I’ve been blessed to give and to receive at the same time. While it is overwhelming to receive recognition from those who trusted me in their property investment journey, I am also surrounded by helpful people who continue to spur me to be a better version of myself everyday.
They can be unnamed low profile friends who have a huge investment portfolio; fellow speakers and the who’s who in the industry who have given me assurance and most importantly accepted my hard work and contribution thus far.
For this, I thank all these stakeholders from the bottom of my heart. My vocation of touching lives and inspiring people to believe in their own betterment in life through properties is now becoming a reality.
Looking back, I wouldn’t want to change any of those experiences that I’ve gone through. It was meant to be the lessons from where I learned.
But what’s important is the fact that without proper education and knowledge, investing in property may set you back for five to ten years! If you truly treasure your time, do not wait.
No, I don’t mean you need to invest straight away, but quickly gather the information required to be a smart property investor especially if time is on your side, being young with lots of leverage capability. Banks love young customers anyway! And with anticipation of dark clouds hovering our nation’s economy, what would be wiser if not for opportunities that you can grab with lower entry, but higher yield.
For your information, property auctions are being held almost daily with over hundreds of properties from banks and auctioneers. Wishing all of you a smooth, safe and speedy journey in property investment, just like how I finally found my own flight to freedom incidentally.
Alan Poon is the founder of Superior Wealth Mastery, a boutique wealth education provider. As an avid observer of the property industry and investor himself, Alan is sought after as a speaker in major real estate events nationwide. He has appeared on multiple TV, radio and online talk shows, is featured in major dailies and regularly contributes column and commentaries to property magazines. For feedback and opinions, please feel free to write to me via my personal email at alanpoon.official@gmail.com or get connected on social media at facebook.com/AlanPoon.Official.
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