why you must make properties your stream of residual income 30 th january 2010 andrew chia organised...

Why you must make propertiesWhy you must make properties

your stream of residual incomeyour stream of residual income

3030thth January 2010 January 2010

Andrew Chia

Organised byGalaxy

Connections

This slideshow contains opinions and ideas of its author and is designed to provide useful advice to the reader on the subject matter covered. The strategies outlined here may not be suitable for every individual, and are not guaranteed to produce any particular result. Any reference to any product or service does not constitute or imply an endorsement or recommendation. The author of this site has endeavoured to be as accurate and complete as possible in the creation of the posts herein but does not guarantee that the information herein will remain complete and accurate at the time of reading. The author specifically disclaims any responsibility for any liability, losses or damages of any kind as a consequence, directly or indirectly, arising from the use and application of the contents of this slideshow.

Welcome!Welcome!

Let's get to know one Let's get to know one another...another...

On the road to financial independence we need all the

support, guidance and assistance we can find.

1.1. Reasons for buying Reasons for buying properties for properties for investmentinvestment

2.2. Choosing a propertyChoosing a property

3.3. Getting financing for your Getting financing for your propertyproperty

4.4. Renting out your propertyRenting out your property

5.5. Q & AQ & A

1.1. Reasons for buying properties for Reasons for buying properties for investmentinvestment

>> Hedge against inflationHedge against inflation>> Value will not go down to zeroValue will not go down to zero>> Most rich people do itMost rich people do it>> Population in cities grow Population in cities grow quicklyquickly>> Excellent leverageExcellent leverage

1.1. Reasons for buying properties for Reasons for buying properties for investment (cont'd)investment (cont'd)

>> Acceptable collateralAcceptable collateral>> Peace of mindPeace of mind>> Future stabilityFuture stability>> PridePride>> You are in control; not your You are in control; not your boss.boss.>> You can get started You can get started immediatelyimmediately>> And... Andrew Chia's reasonAnd... Andrew Chia's reason

>> What are the two types of What are the two types of income?income?

>> What happens if you do not have What happens if you do not have residual income?residual income?

>> What are the common types of What are the common types of residual income?residual income?

>> Property investment is one of Property investment is one of the easiestthe easiest

Property investment can give you Property investment can give you residual incomeresidual income

1.1. Reasons for buying Reasons for buying properties for investmentproperties for investment




5.5. Q & AQ & A

>> Avoid properties with negative Avoid properties with negative cashflowcashflow

>> Don't buy uncompleted Don't buy uncompleted properties, especially from properties, especially from unknown developers.unknown developers.

>> Don't target more than 3 areasDon't target more than 3 areas>> Don't assume - check the lease Don't assume - check the lease

period; banks may not finance if period; banks may not finance if less than 60 years.less than 60 years.

>> Avoid T-junctions and dead endsAvoid T-junctions and dead ends

Let's start with the don'ts...Let's start with the don'ts...

>> For residential, avoid row For residential, avoid row directly next to shophouses; directly next to shophouses; shoppers may park at your shoppers may park at your house.house.

>> Avoid scorching sun in your Avoid scorching sun in your living roomliving room

>> Avoid potentially hazardous Avoid potentially hazardous zones such as high-tension zones such as high-tension cables, electrical rooms, etc.cables, electrical rooms, etc.

>> Avoid unpleasant views such as Avoid unpleasant views such as graveyards, funeral parlours, graveyards, funeral parlours, rubbish disposal areas, etc.rubbish disposal areas, etc.

Let's start with the don'ts... (cont')Let's start with the don'ts... (cont')

>> Avoid proximity to crowds such Avoid proximity to crowds such as pasar malam or places of as pasar malam or places of worshipworship

>> Avoid units next to empty plots; Avoid units next to empty plots; you may have an oxidation pond, you may have an oxidation pond, rubbish dump or places of rubbish dump or places of worship.worship.

>> Avoid unpleasant neighboursAvoid unpleasant neighbours>> Avoid properties with low Avoid properties with low

occupancy rates, especially for occupancy rates, especially for no obvious reasons.no obvious reasons.


>> For walk-up apartments, avoid For walk-up apartments, avoid ground floor and units near ground floor and units near staircase or rubbish chutes.staircase or rubbish chutes.

>> For condos, avoid units near to For condos, avoid units near to multi-purpose halls.multi-purpose halls.

>> Avoid falling in love with your Avoid falling in love with your propertiesproperties

>> Avoid buying in rural areasAvoid buying in rural areas>> Avoid buying raw landAvoid buying raw land>> Avoid buying through ballots or Avoid buying through ballots or

property fairsproperty fairs


>> First remember the formula - 10 First remember the formula - 10 months' rental must cover 12 months' rental must cover 12 months' instalments. months' instalments.

>> ROI must be double that of F/DROI must be double that of F/D>> Buy from motivated sellersBuy from motivated sellers>> Initially go for maximum term Initially go for maximum term

of financing, then gradually of financing, then gradually reduce. reduce.

>> Buy ready-madeBuy ready-made>> Buy properties that come with Buy properties that come with

tenantstenants

Now, the shopping tips...Now, the shopping tips...

>> Buy freeholdBuy freehold>> Buy leasehold more than 70 Buy leasehold more than 70

yearsyears>> Buy in areas with more than one Buy in areas with more than one

entrance and exitentrance and exit>> Buy in auctionsBuy in auctions>> Buy in big cities like KL, Buy in big cities like KL,

Selangor, Penang and JB.Selangor, Penang and JB.>> Choose locations near schools, Choose locations near schools,

banks, public transport, banks, public transport, highways and freeways.highways and freeways.

Now, the shopping tips... (cont'd)Now, the shopping tips... (cont'd)

>> Bear in mind travelling time, Bear in mind travelling time, especially for kids to go to especially for kids to go to school.school.

>> You may consider renting before You may consider renting before you buy, if you are not sure.you buy, if you are not sure.

>> Find out what your tenants Find out what your tenants want, eg. location, broadband, want, eg. location, broadband, LRT, employment, shopping, LRT, employment, shopping, office, eatery, etc.office, eatery, etc.

>> Medium bracket tenant need Medium bracket tenant need car park, cleanliness, pleasant car park, cleanliness, pleasant environment, amenities, etc.environment, amenities, etc.


>> High income bracket tenants High income bracket tenants need security, beauty and good need security, beauty and good neighbourhood.neighbourhood.

>> Shoplots needs to be accessible Shoplots needs to be accessible to walk-in customers and highly to walk-in customers and highly visible from the road. visible from the road.

>> Penthouses need to be luxurious Penthouses need to be luxurious and not located in low or and not located in low or medium cost projects. Tenants medium cost projects. Tenants need good security and need good security and management.management.


>> Choose properties that are Choose properties that are regular in shape, eg. square or regular in shape, eg. square or rectangle.rectangle.

>> Choose properties that are Choose properties that are bright and airy, especially in the bright and airy, especially in the main entrance or sitting areas.main entrance or sitting areas.

>> Properties should have a clear Properties should have a clear and unobstructed view from its and unobstructed view from its main entrancemain entrance

>> The road and your driveway The road and your driveway should be level; avoid slopes.should be level; avoid slopes.

>> Semi-D's should be more than Semi-D's should be more than 3,000 sq ft3,000 sq ft


>> Condos more than 1,000 sq ft is Condos more than 1,000 sq ft is preferredpreferred

>> Choose properties with a wide Choose properties with a wide staircase of 3' or more; staircase of 3' or more; proportionate to the width of proportionate to the width of the property.the property.

>> Dwelling areas should be quietDwelling areas should be quiet>> Buy units facing a body of waterBuy units facing a body of water>> Buy units facing greeneryBuy units facing greenery>> Buy units where bath and toilets Buy units where bath and toilets

are separate, ie. at least 2 are separate, ie. at least 2 toilets.toilets.


>> Buy units with ceiling height of Buy units with ceiling height of at least 9 feetat least 9 feet

>> Buy units with at least 2 car Buy units with at least 2 car parking spacesparking spaces

>> For walk-up apartments, buy 1st For walk-up apartments, buy 1st or 2nd floor.or 2nd floor.

>> Buy condos with 2 car parksBuy condos with 2 car parks>> For condos, low density projects For condos, low density projects

are preferred.are preferred.>> Buy terrace houses that are at Buy terrace houses that are at

least 22' wideleast 22' wide>> Final tip: Find out why people Final tip: Find out why people

are moving in.are moving in.




3.3. Getting financing for Getting financing for your propertyyour property


5.5. Q & AQ & A

FinancingFinancing

1.1. Bank loanBank loan

2.2. EPFEPF

3.3. Refinance your old propertyRefinance your old property

4.4. Creative financingCreative financing




4.4. Renting out your Renting out your propertyproperty

5.5. Q & AQ & A

Tenants are the golden gooses that Tenants are the golden gooses that give us the golden eggs.give us the golden eggs.

Maximise property's usage, rent out Maximise property's usage, rent out roof-tops, car parks, etc.roof-tops, car parks, etc.

Where possible, rent out Where possible, rent out unfurnished, or furnish to bare unfurnished, or furnish to bare minimum.minimum.

Spread out furnishing to be Spread out furnishing to be recovered in 24 monthsrecovered in 24 months

Better to rent residential property to Better to rent residential property to couples or small familiescouples or small families

Putting in thousands of dollars in Putting in thousands of dollars in renovation usually don't make much renovation usually don't make much difference in the rentaldifference in the rental

Two important qualities of tenants - Two important qualities of tenants - cleanliness and ability to pay.cleanliness and ability to pay.

Get full payment of deposits before Get full payment of deposits before handing over the keyshanding over the keys

Educate your tenants to bank in Educate your tenants to bank in rental into your accountrental into your account

Help tenants to make it a habit to Help tenants to make it a habit to pay rental on timepay rental on time

Communicate clearly and directly Communicate clearly and directly your expectationsyour expectations

Avoid getting too friendly with Avoid getting too friendly with tenants; respect them.tenants; respect them.

Make it a point to drive by your Make it a point to drive by your property every month or twoproperty every month or two

Think of ways to make your tenant Think of ways to make your tenant when it comes to renewal timewhen it comes to renewal time

Help to realise and expect that Help to realise and expect that rental will be increased by small rental will be increased by small amounts each yearamounts each year





5.5. Q & AQ & A

Thank YouThank You

More financial intelligence at,AndrewChia.com

AcknowledgementsGalaxy Connections, Kanyin Publications, readers of Money Secrets, Crystal, friends

who assisted in this seminar.

why you must make properties your stream of residual income 30 th january 2010 andrew chia organised...

Documents

cont slide

residual income slide

uncompleted properties

easiest property investment

galaxy connections slide

excellent leverage slide

andrew chias reason

investment hedge