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Buying properties? Think big, start small, my view

A senior manager colleague shared with me that over 10 years ago, he bought a shoplot. In his mind, he was thinking BIG. Despite just starting, he aimed at commercial property due to the potential huge profit. Alas, nothing happened after it was completed. He thought it was the worst investment he has ever made and vowed not to buy another one. He had to continue paying for the loan and only recently, with the boom in 2012, the shop lot increased in price sufficiently that he sold it. He said, based on his total investment, it gave him a return of around 80%, divided into 10 years is 8% per year. Actually, this is really nothing to shout about but this is still 2.5 times more than FD. Sometimes, it is just the timing. Many times, we should think big but start small.

When you think about property investment, do you think of it as a potential or just another form of investment? I think of it as an investment that one must have. The potential depends on how you do it and perhaps a bit of luck. If you happen to buy and your condo was completed during a financial crisis, it definitely does not help. Nevertheless, as long as you have no roof over your head, buy one. If you already have a roof over your head and you like to buy a Segment C car then buy another property first. Chances are you may be able to afford the downpayment for a Segment D car instead, within five years time.

Do not however start property investment thinking that you will have repaid for at least one property in 20 years and have 2 properties fully paid for when you retire. Start property investment with a goal of retiring earlier and be financially free. However, start on a strong footing. Have sufficient downpayment before starting and not borrow from your relatives or friends to start the investment. Start right, start small. Buy a property which you can afford easily with your current pay. If you can afford to pay for a mortgage of RM2,000, then buy a property which only needs for a mortgage of RM1,600.  There’s nothing wrong with stretching yourself but it is very risky for you to stretch yourself to the limit just at the very beginning. If you are lucky, you may hit your first jackpot faster than majority but if you are unlucky, you are also the minority who somehow got bankrupt from property investment.

Thus, personally I have always believed that if we intend to get very rich, retire earlier than majority, real estate investment is a key investment we must have. Only one thing that I always remind myself is, there’s no need to rush. My first property was only RM123K, second property was slightly higher, followed by the third one at RM247K and this increased slowly over the years until my latest property few months ago at RM540K. I know, nowhere near a lot of really gung-ho property investors but it is ok. My property investment motto remains to be, Think Big, Start Small. Happy buying.

written on 9th May 2014

Next suggested article:  40 years later – Malaysia property market in my personal view

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9 Comments

  • duaimei on May 10, 2014

    Thank you for sharing. Although I am not ready to start property investing, I think that it is intriguing.

  • asali on May 10, 2014

    Good Article. Think big, buy many small. Many Small became bigger and bigger..:)

    • chialih on May 11, 2014

      yeah, even if one only have Rm250,000 apartment but he has 10….. wow….

  • racistmalaysian on May 16, 2014

    But nowaday in Penang, less than RM200k apartment become RM400k. The rental yield is so low that it is not funny. So how do you see property investment as of now? I think basically we just can think of capital gain instead of rental yield. It probably bad time to buy property for investment?

    • chialih on May 16, 2014

      I think apartment of 700st is still rm200 to 300k. Relau, air itam, paya returning etc As for rental yea, pretty bad. For rental not Penang.

  • Ang on May 16, 2014

    Hi

    ROI for rentail yield in Penang is so low as it lacks of business momentum to drive the activity, unfortunately, there is lack of energy in this area and need improvement to attract more talent/business activity coming to Penang, it is only way to revive economic not only for rental yield but also other economic activity, therefore, foreign investment and business play the important part, for instance, outside/local talent is also one of the factors in requirement for bringing our economic alive and active to attract incoming talent from outside to stay in Penang for business, employerment, second home program and so on, these are the criteria to support it as a whole.

    Lastly, if you intended to invest a new property for rental, you may need to think twice unless the property is fully paid without bank loan OR this investment is a piece of cake to you : )

  • […] Next suggested article: Buying properties? Think big, start small, my view […]

  • syahmie on January 29, 2017

    true..its safe to have some margin before begin to pay for those commitment

    • charles on January 29, 2017

      Yes Syahmie. In fact problems only crop up because many did not save enough and still bought something they could not actually afford. Happy Holidays!

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