Planning for Your First Property Purchase

Good things don’t come easy and no one agrees to this statement more than KT Microhandling Sdn Bhd General Manager Chong Kok Siong who worked extra hours, followed a shoe-string budget and strict financial plan just to buy his first property. Looking back, this savvy investor who has accumulated three properties under his name which generate lucrative returns for him has no regrets in having sacrificed his time and effort in coming up with the necessary seed money which he needed to buy his first property.

Property Insight (PI): How does it feel to be a young investor?

Kok Siong (KS): I am fortunate enough to know a mentor who enlightened me about the importance of investing while one is young. This has driven me towards setting up a long term investment strategy, allowing me to plan ahead for my retirement. I am constantly on the lookout for new knowledge and believe in scouting around for opportunities that will improve the quality of life.

PI: What got you interested in property investment?

KS: It is an assured investment whereby you will unlikely lose money over the long term period. Given the scarcity of land, property prices have consistently increased over the years. Hence, those who seize the opportunity to invest in properties are bound to harvest lucrative capital gains at the end of the day.

PI: What started you on your property journey?

KS: It was a small dream of being a landlord that fuelled my desire to own my first property. I prefer renting out my property whereby I can use the rental fee to repay my monthly loan instalment. Hence, right after I graduated from university, I planned to buy a property for rental purposes. I remember buying my first apartment in 2004. At that time, it was priced at only approximately RM250, 000 and fetched a rental yield of 9%. So, it was a property generating positive cash flow and the developer also provided a Guarantee Rental Return (GRR) scheme which meant that it was a low risk investment that suited my risk profile back then.

PI: Where did you get the seed money for your first property and your advice to first time property buyers?

KS: Like most young investors, getting capital to purchase one’s first property is always the hardest part. I had to work as a part-time tuition teacher while studying and kept my spending as low as possible. Do not waste money on unnecessary things and you will be able to save enough for the initial down payment of your first property investment and can start building your investment portfolio from there on.

PI: What was your first experience like investing in properties?

KS: It was a mixture of worries and excitement. I was worried at first because I was a newbie in the property scene and might be prone to making the wrong analysis. Hence, I appointed a lawyer to review the Sales and Purchase Agreement (SPA) before signing it. I viewed the purchase as an achievement as it brought about the expected rental yield as planned and I managed to sell off the property three years later with 90% capital gain. Currently, I am planning to invest in two condominium units targeted at the student rental market.

PI: What was the biggest challenge you faced in property investing?

KS: Securing sufficient capital for down payment is always the challenge that might slow you down from building a broader portfolio. Tenant management is another challenge. As you own more properties and particularly, if you are renting your property out by room basis, your time will be consumed in managing tenants. In a nutshell, you will be busier and it will affect your valuable family time. Fortunately, there are many outsourced tenant management companies available now in the market which you can hire to oversee your tenants moving in or out, collect their rental as well to maintain the property by paying a fix premium. There are plenty of companies offering such kinds of services out there in the market who can make your life much easier.

PI: What is the message for those out there who have yet to start investing in property?

KS: Invest as soon as you can afford it to pay off your monthly instalment. Start small and dream big especially when you are young as age is your advantage to leverage on in terms of paying off debts in the long run. Finding the initial capital should not be the reason in stopping you from investing because you can borrow money from your parents or relatives to complement that taken from your own savings.

PI: What are your top tips to those who want to start investing?

KS: Look for a property at a strategic location that suits your long term investment plan. Start to plan for your long term property investment strategy and be committed to always educating yourself in understanding the property market the best that you can so as to avoid investing in the wrong location that will slow down your wealth creation plan. 

PI: What are your investment plans for the remaining part of this year?

KS: I plan to acquire two sub-sale condominium units around the Sunway area as I am targeting the student rental market to elevate my cash flow within my property portfolio.