Buy what others did not think, see, view, yet

During my recent visit to Sandakan, I spent some quality time dropping by the Sandakan library and read a few magazines and listening to some old songs. I also happen to read an interview in Smart Investor magazine that the famous Robert Kiyosaki gave when he was in Malaysia not too long ago. The question was about the strategy that Robert Kiyosaki would adopt in the current real estate market slowdown in Malaysia. I would not want to summarise his reply. It’s as below, word by word.

Robert Kiyosaki: Don’t look for something that everyone else wants to buy. When I buy real estate, I’m looking for something that nobody wants to buy, something that’s in bad shape. And then I have to do something to fix it and make it better. Most people who flip properties are speculating. And some of them will make money. When I want to buy a house, I’m not looking at the price whether it’s going up or down. When I buy a house, I want to know whether I can make money from it. If I can’t, I don’t touch it. I don’t speculate. I’m an investor. Most people who are speculating are gambling.

To read the full article, it’s here: http://www.smartinvestor.com.my/the-rich-dad-mindset/

Many times it’s funny because majority would know all these “secrets” but somehow chose to ignore and follow the majority instead. In other words, buying what majority are buying. Reason? It’s simpler and less efforts needed. It’s called “lazy” investment. The best part about this strategy is that since most are investing in what we are investing, chances are the property we buy should also be a favourite of many. The worst part is that probably we would have to buy high and try to sell even higher. In a situation where the property prices are already considered unaffordable, this strategy may give us low returns and at very high risks too.

Let’s talk about buying properties in areas that people are not buying yet because majority of buyers are lazy. Not many bother to check areas which is further and deeper, despite an upcoming new MRT station. The reason? Even with MRT it takes an hour to reach KL city centre! Well, that popular area everyone loves, during peak hours in the morning would take as long or longer. Stressful too. Funnily though, when it’s already a popular area, we are willing to pay double or triple the price per sq ft! We are not talking about RM50k. The actual difference might be RM400,000 for a 1,000 sq ft condo! Are Malaysians really that much richer?

In terms of fixing things up; buying an older place and “modernise” it, this will take even more efforts but sometimes it’s worth the time if we really understand what we intend to do. Question is, do we already have a team doing it or are we still working full time and property investment is just a “second job”? I think for a start, perhaps buying up a place which has been renovated and everything’s in good condition would make sense. That’s what I would normally do. Both my properties in KL were bought fully renovated and I did very little before moving in. Of course, it’s not meeting what I wanted 100 percent but hey, I have saved RM100,000 of renovation or more, why not?

Property investment really do take time, effort and managing risks. If we follow the majority, perhaps we can also have safety in numbers but when it comes to actual returns, sometimes viewing more and offering one that meets all our expectations would be a better choice. No matter how much people love that certain area or that certain type of property, there’s a limit to how much h they could or willing to pay. Reaching that meant the last buyer would lose money instead of gaining unless he holds it until the affordability comes back again. Happy think, see and view.

written on 21 Feb 2016

Next suggested article: It’s the duration, not the distance ok?

6 thoughts on “Buy what others did not think, see, view, yet

  1. My advice to you is to stop reading Kiyosaki, unless you want to continue making bad investment decisions.

    Still plugging your Dsara Damai condo? It’s a lousy location because it’s full of cheap housing apartment and over run by foreigners, and low income people. Location is not just about journey or duration, it’s about who your neighbours are! You buy cheap condo, you get similarly cheap neighbours. Give you an example: Bukit Bandaraya, good location. Pantai hill bad location. Geographically they are next to each other. But one is bad, the other good. Get it? The bad will never become good (unless they relocate all the cheap apartments pantai hill people). The good remains good.

    http://www.thestar.com.my/opinion/letters/2014/07/07/sad-state-of-damansara-damai/

    Amazingly, not only do you continue to keep writing about your bad decision to invest in Damansara Damai, you also wear it like a badge of honor. Unbelievable. Please stop propagating something that is so dunderheadedly wrong, unless you enjoy people cursing you for the next decade (when they follow your advice and then realize you are wrong).

    Good day.

    • Thanks for commenting Naysayer. I don’t like any of Kiyosaki’s books right from the beginning. However,it does not mean 100% of whatever he said is useless. I prefer Aziz Ali by far. As for whatever opinions as well as Bukit Bandaraya or Pantai hill etc, will treat that as your personal comments. Do not wish to add into the debate. Please continue to invest in areas that you personally love. I love my current condo and its facilities and all my good neighbours too. The price appreciation will continue even if it will be nowhere near those hotspots of today. However, the entry cost is also lower and presents good value. As for following my advice, haha… all these are my personal opinions. just like the tons of Facebook comments we read on a daily basis about how the world is wrong and they are right? If you have any friends staying in Armanee, pay him / her a visit. Have a cup of coffee by the pool. Walk around the park. Play badminton in the badminton courts. You may realise what I enjoy today. Have a productive day ahead and remember, keep investing in places you love. As long as you love it, it meant many others love it too.

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