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Studio apartment investor goes all-inNo diversification needed when one is young, property investor tells CAI HAOXIANG

18 Feb 2013 09:04

MOST investors live by

the virtues of

diversification - that is, not

putting all your eggs in

one basket.

Not Ryan Khoo Chung

Ming. The 30-year-old

bought his first apartment

in his native Malaysia in

2007 when looking for a

place to stay. Then, the

market was not as

buoyant. He spotted an

opportunity for studio

apartments and bought more and more, maxing out his borrowing limits.

He even moved to Singapore in 2009 to get a higher-paying job so he could borrow even

more.

Today, he owns 13 apartments in Kuala Lumpur, a studio apartment in the United States, a

studio apartment in Singapore, and has also invested in an office unit in Johor Baru and a

hotel floor in KL. The total value of his portfolio has gone up and is now worth RM10 million

(S$4 million). Half of the portfolio is yield-generating, with the remainder under construction.

Like many who buy property, he is highly leveraged, borrowing more than RM8 million. But

with rental income more than covering his mortgage payments, Mr Khoo quit his bank job to

focus full-time on his property investment club, Alpha Marketing.

Says Mr Khoo: "After my first rental unit, I saw I could get attractive returns. I thought, why

buy one, I should buy more, it was such a waste. I knew I can still borrow, so I borrowed

more. I bought units in the same block together with friends," he says, adding that stocks

were too volatile for him.

"When you're young, you can take the risk, don't diversify. If you're trying to make it, you

should be a bit more focused," he adds.

Mr Khoo grew up in Petaling Jaya, a city near KL, in a middle-class family. His father worked

in the navy, and his mother was a housewife.

"Growing up, I had an idea to do business. But the expectation was to go to university, get a

good degree, get a job, buy a house, get married, settle down and have children," he says.

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Property diehard: Mr Khoo, 30, today owns 13 apartments in Kuala Lumpur, a

studio apartment in the United States, a studio apartment in Singapore, and has

also invested in an office unit in Johor Baru and a hotel floor in KL, totalling $4

million. - PHOTO: ARTHUR LEE

MARKET TODAY:

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He graduated in end-2004 with a degree in electronics engineering. "Things were tough for

engineers, the pay was lower. I didn't feel I had the aptitude to get ahead in the industry. So I

joined something with bigger prospects," he says.

He joined Standard Chartered Bank in 2005 as a loan product manager, with a starting pay of

around RM3,000 a month.

Valuable experience was gained in the process, which he later used to his advantage. "I

learnt that loan approval depends on your income and employment, your age, I learnt about

debt service ratios that banks use to determine how much to lend to you," he says.

In 2007, he was looking for a place to stay and found a three-bedroom, 1,100 sq ft apartment

in the KL suburbs for RM300,000. By that time, he was earning around RM5,000 to RM6,000

a month.

The downpayment was just 10 per cent, or RM30,000 - easily paid for with saved-up cash.

Then his colleague, who is also his age, told him about one-bedroom apartments. He thus

bought his first investment property - a 380 sq ft one-bedder.

The studio apartment, near KL's city centre, was going for RM170,000 and could be rented

out for RM1,800 a month. This translates to a gross yield of more than 12 per cent.

"Those were the days when property investing wasn't so sexy," he recalls.

"We found there was a shortage of supply of one-bedders in the city centre. But expats need

a place to stay. So we bought more studios, together with friends. We bought whatever we

could find. We bought till we ran out of money."

In 2008, he bought four more units, each costing around RM200,000. The downpayment for

each was either 10 per cent, or lower than that for properties where owners were financially

distressed.

"I ran out of money, my income hit the borrowing limit," he says.

Mr Khoo thus transferred to his bank's Singapore office in 2009. His father helped him

manage his properties in KL. In 2009, he bought one more studio unit, in 2010, five more, and

in early 2011, two more.

Last year, he bought a 590 sq ft studio apartment in Singapore that cost $650,000. In early

2011, he started Alpha Marketing with his girlfriend Melissa Low, a finance executive.

"I realised Singaporeans lacked knowledge about buying properties in Malaysia. They know

more about property investing in Australia and the UK than in their neighbouring country.

There is a lot of suspicion. But I want to show that it's not difficult," he says.

"Agents bring leftover stuff to sell here. I want to stay here and serve a certain market

segment: Malaysians here go back often but are out of touch, and Singaporeans who want to

invest in property but find Singapore hard to invest in, and the UK, Australia and the US too

expensive."

Last year, he thought about quitting his job and living in Malaysia off his rental income.

"But my mum told me, you are only 30 years old, why do you want to quit and live like that for

the rest of your life? She told me to continue working.

"But after working for so long in a bank, I didn't like the thought of politics and ladder-climbing

in larger companies."

Hence the decision to quit his job last December and focus on his club. "It's a passion," he

says simply. Mr Khoo is now a licensed sales person under ERA Realty Network.

Alpha Marketing began through sharing sessions over dinner. It grew by word of mouth and

social media, and eventually started organising seminars on property investing. Now, there

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are 1,000 on the mailing list, out of which 100 are active investors. "Membership is free but

we make money off deals," he says.

"I can't do this alone. Having partners mean having a network, sharing information, and we

can work together to buy. We try to be selective, we want to avoid selling leftover, overpriced

property."

Buying property in a club allows investors to buy bigger properties like office space and hotel

buildings. High net worth individuals who want to stay low-key also go through him to get

more financial firepower for the deals they are doing.

Says Mr Khoo of his plans: "I don't have a target as to how much I want to acquire. I want to

get some prime property in Iskandar, and build a name for myself as an expert on Malaysian

property."

He is bullish on the Iskandar region, which both countries see as an alternative for

Singaporean businesses, and a location that is just an hour away.

"In five years' time more Singaporeans will want to stay there, instead of Johor Baru where

there are still worries about crime," he says, noting that the infrastructure there is being

developed well.

Now, Mr Khoo's rental income adds up to around $3,000 a month after deducting loan

repayments and maintenance fees. He also earns commissions from property deals.

"I would call myself thrifty. But if I want to upgrade my lifestyle, this is not enough," he says.

He says property prices have gone up in Malaysia and Singapore and it is harder for

investors to find attractive buys now. Even though his investments are highly leveraged, he is

undeterred. "If the market falls, I can cut rentals and still break even," he says.

"But it is not so easy now. Developers are building a lot, and supply is coming up in

Singapore and KL. So I might try to cash out in 2016 or 2017."

Is the non-farm payroll as

unpredictable as the weather?

just created account on

Disqus..So. how is yours??

Diversity in boardrooms affects

companys performance

Bank

Instruments for Securing Investment

Funds . We provide bank instrument

Higher supplies equal rising prices?

I'll be speaking at REDAS'

Property Prospects Update 2013 on

30Jul2013 at Grand

Grilled over a budget

Value added

employment for McDonalds? I am

interested on more about this

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