Building Bricks To Property Success
Property Insight speaks to Tony Yap and Caleb Chin, Authors of Buy Bricks Sell Bricks, Sun Tzu’s Strategic Plan for Gen Y Property Investors who have known each other since they were 16 years old. Together, both of them have undertaken property consultancy work while coaching people on real estate investment, financial consultation and personal development to empower and inspire others to achieve their personal dreams.
Property Insight (PI): What first inspired you to venture into the property business?
Tony Yap (Tony): I stopped right in my tracks upon spotting and reading a peculiar book by Robert Kiyosaki which advises people to start investing their cash rather than spending it. At 24, upon graduating with a Robotics Engineering Degree from the Multimedia University in Malacca, I first started out my property journey by buying a low-cost apartment.
The seller asked for RM90,000 but since I had no prior savings, I decided to save four to five months of his salary first and visited the bank to do a valuation for the property. By now, it was valued at RM120,000! Taking on a 90% loan, I made a differential sum of RM12,000 to pay for the legal stamp duty, and the money saved wasn’t used again. The monthly maintenance fee was RM650 but I rented out the fully furnished unit to students for RM1,100 monthly.
I realised at that time that in order to do investment or business, I needed more knowledge. Within a span of two months, I bought another apartment with a 40-year tenure, but which was now both fully settled and transferred to my wife’s name. To understand the property market further, I began to read more. Eventually, I bought and flipped a few units. My friends started approaching me for consultation and I followed them to showrooms, did analysis and also attended courses.
Caleb Chin (Caleb): I started my career about nine years ago as a Mortgage Banker in a foreign bank. During that time, I came across many Business Owners and Investors. It struck me how they can make so much of money and how they were able to sell and buy properties as well as stocks. I needed to break the rat race so I asked some of my clients as well as my Senior Manager at the bank for advice. They guided me on investment strategies but my aspirations grew stronger after seeing my Senior Manager calculating her net profit for the month which amounted to about two years of my salary. After seven years, in 2012, I quit the bank and entered the real estate journey.
PI: Tell us more about your journey.
Tony: I realised that I am able to earn higher commission when I am into real estate. I was attracted by that thought. So, I quit my day job. I also realised that I am able to acquire first -hand information on better capital investment, receive flexibility in funding and be able to do research on pre-investments of properties to avoid losing money.
Caleb: I leveraged on the banks. It was delayed gratification on my part as I sacrificed daily to save up enough in order to accumulate the seed or capital money. I admit that the initial early years were tough. My first property was purchased in 2009 comprising a luxury serviced apartment called the Zest in Bandar Kinrara, Puchong. I struggled to get the down payment. There were no rebates but only a free Sales and Purchase Agreement (SPA). I only had RM12,000 in savings while the deposit was RM25,000. So, I signed a loan agreement with my father for RM10,000 and took out a personal loan from the bank. I was 24 and purchased the unit for RM240,000. During that time, upon vacant possession, I worked as an in-house agent with the same developer.
PI: How many properties do you own?
Caleb: I have successfully purchased 29 properties, flipped most of them and am holding on to seven units. My dream is to achieve a semi-retired state.
Tony: I purchased eight units and am holding on to five now. In these few years, I have written four books and co-authored one book with Caleb.
PI: Your experience in auction properties?
Caleb: Yes, my first experience was when I bought an auctioned flat located in Equine Park, Sri Kembangan. The asking price was RM55,000 for the unit but I ended up forking out RM68,000 in cash. The mistake I made was I failed to check on the title of the unit and the status of the developer of that project. It was only later that I found out that the developer was a bankrupt.
The flat should possess a strata title that is valid within 10 years but because the developer was defunct, the bank refused to finance the project. That got me thinking I could have bought more properties with that amount I paid in cash. Therefore, I always advise others that auction properties are not for rookie investors as they require high capital or funding.
Tony: I am far away from investing in auction properties as they have complex mechanisms attached to the process.
PI: What were some of the Challenges Faced During your investment journey?
Tony: I have studied that pitfalls stem from wrong expectations and no solid planning for the investment. Some are unable to secure loans from the banks and the tenure to settle the loans are shorter but the instalments payable are higher. I have a friend who owns a property near KLCC who complained that he was unable to make money from that high-end investment. The property resulted in capital gains of less than RM15,000 in a span of three years even when the rental income was good with a net profit of RM1,000. Meanwhile in Semenyih, another person complained that the rental yield was unsatisfactory although his capital gain rose to 50% in the past eight years. He wanted a higher rental return. From the start, always must ask yourself what the plan is and manage your expectations before diving into property investments.
Caleb: Knowledge is very important. I bought a two-and-a-half storey super-link house in Bandar Kinrara a few years back for RM960,000. The developer is good but the quality was bad. A crack built-up from the top storey to the ground floor, and it took six months for the defect to be repaired by the developer. I later sold that property for a good RM1.15 million.
Another feat that I faced was with the low cost flat at the Equine Park which was tenanted but no rental income came in for six months. The family had financial issues and struggled to pay up. Eventually, the tenant moved back to his hometown and the lot was left empty until now. But, I am happy as the mass rapid transit (MRT) is being built adjacent to my unit. I intend to sell it off after its completion for double the amount.
PI: Your advice to new property investors?
Tony: I recall Robert Kiyosaki’s book which states that only when one’s passive income is more than one’s income, bringing it to a surplus, only then can one see profits. So, in order to achieve the passive income goal, I tend to keep more commercial properties. I find that the trend for residential properties is always fluctuating as the rental value goes up or down with every transitional 10 years.
As for commercial properties, as long as there is steady human traffic and the need for economic activities in an area, the demand is always positive and the income stable too. So, buy as many shoplot units as possible!
Caleb: I believe in not falling into the trap of trading time for money. Time-money-value is my benchmark in property investment. So, it is worth treating each single property as a financial product and money-making strategy. Understanding and finding the right products via resources gathered and turning them into a self-sustaining financial methodology is the best way forward for savvy investors.
PI: How do you manage your property portfolio while coaching and consulting?
Tony: I prefer making property purchases within my usual travelling time which is about 30 minutes’ distance away so I am able to manage it well. I allow my trusted agents to handle my property management.
Caleb: I do the same with the local specialist in that location. However, rental collection is done by my wife.
PI: How do you identify the correct property to buy?
Tony: I have many friends, gurus and developers who always highlight to me regarding sub-sale products or new launches. We go hunting via investor groups and visit many show galleries.
Caleb: I gather information via seminars, web searches on launch previews, via agents and groups of investors. We have no property overseas as of yet.
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