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Why you must make properties your stream of residual income 30 th January 2010 Andrew Chia Organised by Galaxy Connections.

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Presentation on theme: "Why you must make properties your stream of residual income 30 th January 2010 Andrew Chia Organised by Galaxy Connections."— Presentation transcript:

1 Why you must make properties your stream of residual income 30 th January 2010 Andrew Chia Organised by Galaxy Connections

2 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.

3 Welcome! Let's get to know one another... On the road to financial independence we need all the support, guidance and assistance we can find.

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5 1.Reasons for buying properties for investment 2.Choosing a property 3.Getting financing for your property 4.Renting out your property 5.Q & A

6 1.Reasons for buying properties for investment >Hedge against inflation >Value will not go down to zero >Most rich people do it >Population in cities grow quickly >Excellent leverage

7 1.Reasons for buying properties for investment (cont'd) >Acceptable collateral >Peace of mind >Future stability >Pride >You are in control; not your boss. >You can get started immediately >And... Andrew Chia's reason

8 >What are the two types of income? >What happens if you do not have residual income? >What are the common types of residual income? >Property investment is one of the easiest Property investment can give you residual income

9 1.Reasons for buying properties for investment 2.Choosing a property 3.Getting financing for your property 4.Renting out your property 5.Q & A

10 >Avoid properties with negative cashflow >Don't buy uncompleted properties, especially from unknown developers. >Don't target more than 3 areas >Don't assume - check the lease period; banks may not finance if less than 60 years. >Avoid T-junctions and dead ends Let's start with the don'ts...

11 >For residential, avoid row directly next to shophouses; shoppers may park at your house. >Avoid scorching sun in your living room >Avoid potentially hazardous zones such as high-tension cables, electrical rooms, etc. >Avoid unpleasant views such as graveyards, funeral parlours, rubbish disposal areas, etc. Let's start with the don'ts... (cont')

12 >Avoid proximity to crowds such as pasar malam or places of worship >Avoid units next to empty plots; you may have an oxidation pond, rubbish dump or places of worship. >Avoid unpleasant neighbours >Avoid properties with low occupancy rates, especially for no obvious reasons. Let's start with the don'ts... (cont')

13 >For walk-up apartments, avoid ground floor and units near staircase or rubbish chutes. >For condos, avoid units near to multi-purpose halls. >Avoid falling in love with your properties >Avoid buying in rural areas >Avoid buying raw land >Avoid buying through ballots or property fairs Let's start with the don'ts... (cont')

14 >First remember the formula - 10 months' rental must cover 12 months' instalments. >ROI must be double that of F/D >Buy from motivated sellers >Initially go for maximum term of financing, then gradually reduce. >Buy ready-made >Buy properties that come with tenants Now, the shopping tips...

15 >Buy freehold >Buy leasehold more than 70 years >Buy in areas with more than one entrance and exit >Buy in auctions >Buy in big cities like KL, Selangor, Penang and JB. >Choose locations near schools, banks, public transport, highways and freeways. Now, the shopping tips... (cont'd)

16 >Bear in mind travelling time, especially for kids to go to school. >You may consider renting before you buy, if you are not sure. >Find out what your tenants want, eg. location, broadband, LRT, employment, shopping, office, eatery, etc. >Medium bracket tenant need car park, cleanliness, pleasant environment, amenities, etc. Now, the shopping tips... (cont'd)

17 >High income bracket tenants need security, beauty and good neighbourhood. >Shoplots needs to be accessible to walk-in customers and highly visible from the road. >Penthouses need to be luxurious and not located in low or medium cost projects. Tenants need good security and management. Now, the shopping tips... (cont'd)

18 >Choose properties that are regular in shape, eg. square or rectangle. >Choose properties that are bright and airy, especially in the main entrance or sitting areas. >Properties should have a clear and unobstructed view from its main entrance >The road and your driveway should be level; avoid slopes. >Semi-D's should be more than 3,000 sq ft Now, the shopping tips... (cont'd)

19 >Condos more than 1,000 sq ft is preferred >Choose properties with a wide staircase of 3' or more; proportionate to the width of the property. >Dwelling areas should be quiet >Buy units facing a body of water >Buy units facing greenery >Buy units where bath and toilets are separate, ie. at least 2 toilets. Now, the shopping tips... (cont'd)

20 >Buy units with ceiling height of at least 9 feet >Buy units with at least 2 car parking spaces >For walk-up apartments, buy 1st or 2nd floor. >Buy condos with 2 car parks >For condos, low density projects are preferred. >Buy terrace houses that are at least 22' wide >Final tip: Find out why people are moving in. Now, the shopping tips... (cont'd)

21 1.Reasons for buying properties for investment 2.Choosing a property 3.Getting financing for your property 4.Renting out your property 5.Q & A

22 Financing 1.Bank loan 2.EPF 3.Refinance your old property 4.Creative financing

23 1.Reasons for buying properties for investment 2.Choosing a property 3.Getting financing for your property 4.Renting out your property 5.Q & A

24 Tenants are the golden gooses that give us the golden eggs. Maximise property's usage, rent out roof-tops, car parks, etc. Where possible, rent out unfurnished, or furnish to bare minimum. Spread out furnishing to be recovered in 24 months

25 Better to rent residential property to couples or small families Putting in thousands of dollars in renovation usually don't make much difference in the rental Two important qualities of tenants - cleanliness and ability to pay. Get full payment of deposits before handing over the keys

26 Educate your tenants to bank in rental into your account Help tenants to make it a habit to pay rental on time Communicate clearly and directly your expectations Avoid getting too friendly with tenants; respect them.

27 Make it a point to drive by your property every month or two Think of ways to make your tenant when it comes to renewal time Help to realise and expect that rental will be increased by small amounts each year

28 1.Reasons for buying properties for investment 2.Choosing a property 3.Getting financing for your property 4.Renting out your property 5.Q & A

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30 Thank You More financial intelligence at, AndrewChia.com Acknowledgements Galaxy Connections, Kanyin Publications, readers of Money Secrets, Crystal, friends who assisted in this seminar.


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