“Don’t Call Me A Real Estate Investor. I Am Not One.”

Cassie Black Illuminati

You can call me anything, Khai Yin, anything at all,” Melanie said with a laugh as she took a seat in front of me at my office. “But I am not a real estate investor, and so don’t call me one, especially if you happen to write about me in your blog.”

I was slightly taken aback by her assertiveness in a way, but I was curious at the same time. “So let me get this straight. You buy properties to sell later at a profit. That puts you squarely within the definition of an investor, at least in the conventional sense.”

She laughed again. “Well, conventionally, yes. But what I do is hardly conventional.”

“But you don’t like being labeled as a real estate investor.”

“That is correct,” she answered. “I don’t invest in real estate deals, which are just quick money generators for me. I get funds which I then funnel into the only asset class which I truly invest in.”

“Which is?”

Businesses.”

“Wait. How can real estate be quick money generators when it’s known to be illiquid?”

She smiled. “I’ll tell you.”

The Tale Of A True Blue American Hustler

An American, Melanie (not her real name) set up shop here in KL just two months ago to replicate the success that she had back home in Buffalo, New York. “There are so many opportunities here that most people miss that it makes me excited just to be here. I completely agree with your blog post on the importance of pulling oneself out from the herd mindset. And when I read about your series of posts on your Mentor’s mastermind on how the successful thinks and acts differently from the rest of the world, I told myself that I must come and see you.”

I smiled. “You know, Melanie, just to preempt you. I can’t get you into the mastermind.”

She laughed. “I was hoping that you would. But I understand that I’ve got to earn my way in.”

I nodded.

“I do bring a lot to the table. I’m doing stuff that nobody else I know is doing here in this country right now. Nobody at all,” she boldly declared.

Curious, I sat up and leaned forward. “So what do you do exactly?”

“I broker real estate deals for a living.”

I felt underwhelmed with that answer. “Like everyone else then.”

She smiled. “Except that I do it at hyper speed. I buy, sell and make money in three days, typically, from start to end. The fastest deal I have ever done was TEN MINUTES FLAT.”

High Frequency Property Trading…?

I could not help but felt a little skeptical at Melanie’s claims at this point. After all, property was as illiquid as it would get, and here was a lady who claimed that she could complete the buy and sell cycle… in ten minutes no less.

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“Khai Yin, I know you’re thinking if I’m nucking futs, but hear me out first before you kick me out. The difference between me and a real estate investor is that I look at as a business, not as an investment. I trade properties. I don’t invest in them.”

I listened attentively. “Trading, investing, flipping… just semantics, my friend. What do you exactly do?

“Here’s the deal. Most people’s approach is different. They think about finding buyers for their houses. I do it the other way round. I think about finding houses for my buyers.”

“Interesting.”

“So you see, my method is fundamentally different. While people get agents or look at classifieds sites to find real estate to buy, I go and look for buyers first. And as you see, I am not an investor. Investors are my customers. They pay me to find them houses.”

“But you’re not an agent.”

“No, I am not an agent. I might get an agent to find me houses but only WHEN I have got my buyers all lined up in a row.”

It’s Easier To Find A House For A Buyer Than A Buyer For A House

“That’s very intriguing, Melanie,” I said. “And if I could borrow a cliched term, very out-of-the-box.”

Melanie smiled. “Thank you. But I didn’t stumble upon this by chance. Like you, I had the privilege of getting mentored by an old hand in the industry back in Buffalo, and he helped me a lot. I was a struggling “investor” a couple of years back, and I was having a super hard time unloading these few foreclosed townhouses in north Buffalo that I had bought. And then one day my mentor told me something that completely rocked my world.”

“Which is?”

“He had told me: Melanie, it’s easier to find a house for a buyer than a buyer for a house.

I chucked. “So true.”

“Yes, that was one of those brick-shitting moments! From that moment on, I knew that my days as an investor were over.”

You Don’t Have To “Invest” In Real Estate To Make Money

“So who are your buyers then?”

“Glad you asked,” said Melanie. “These are investors who are making money the traditional sense… to buy cheap and to sell high. What they typically do is to buy real estate at market value, and then do the necessarily improvements and repairs before selling them at a premium.”

“I noticed that you said that your buyers buy AT market value, not BELOW.”

Melanie replied, “Yes, as both of us know, the savviest investors don’t go around bargain hunting because there’s really no point. They eventually have a mark up at around the 15-20% mark anyway, so it’s pointless for them to stretch themselves to look for stock which is selling -5% below market price.”

RELATED: To find out how savvy investors buy AT market value and sell +15-20% above market price, read this guide.

“So here’s all it boils down to. I have returning buyers who have some very specific requirements and they specialize in certain niches.”

“Luxury properties, distressed properties, student rentals, fringe areas…”

“Exactly. They diversify rarely, if ever.”

I smiled. “This is true, and I have written about it.”

“These are motivated buyers, always hungry for the next deal. Once they have found their niche, they will want to build up a pipeline in that niche. They want more and more houses they can fix and flip. The profit potential is limited only by how fast they can get the houses and turn them around. And as a supplier, my job is to feed into that pipeline.”

“This is so different from selling properties to the consumer,” I offered my view. “There’s usually so much more emotions involved when you’re dealing with individual home buyers. To your investors, houses are just products, just like manufacturing. It’s completely impersonal, which is good for you. Takes the guesswork out of the equation.”

“Exactly!” Melanie enthused. “I had made my millions in Buffalo, and I am going to do the same thing here. No offense, but I think Malaysians are fixated with the new launches and new areas like Iskandar… I only know this “new shiny object” syndrome too well. My business model deals with overlooked areas of real estate, like modest, bread-and-butter homes inside and outside the city. Competition is much less too because everybody’s eyes are on the latest launches.”

“My little blog gets read by a little more than 40,000 people a month, you know. Aren’t you afraid of copycats?”

She laughed heartily. “I’d welcome that actually. There’s no real competition in this business, and if there are any of your readers who want to collaborate, ask them to contact you and we can work out something together.”

Do You Think Melanie Is Legit, Or Full Of Shit?

A disclaimer: I have not done any checks and verified if Melanie’s claims are true. Anyhow, I have decided to publish Melanie’s story because of these three reasons:-

  1. It shows that there are alternatives to the classic “buy property with high yield now and sell it later at high price” method of making money.
  2. It presents a novel mindset about property which is different from both “flipping” and “long-term investment”.
  3. I like her insights about how it’s easier to find a house for a buyer than a buyer for a house (this should entirely transform your approach to property investment!).

All that said, if you’re going to replicate Melanie’s method, then do it at your own risk. GoodPlace can’t be responsible for the actions you choose to take from reading our materials. 🙂 Alternatively, as Melanie has offered, leave me your details if you want to find out more.

Is Melanie legitimate, or just making things up? What you think? Tell me in the comments section below.

About Khai Yin

When I am not writing for GoodPlace.my and helping my readers find properties though the DealMatcher service, I spend time doting on my three kids: Wenyi, Qinyi and Eian. My personal stuff, some published essays and contact details can be found at khaiyin.com

Comments

  1. Hi Khai Yin,

    Great post and after reading this, I am still skeptical at Melanie’s claims. It might work in other countries like the UK where contracts are assignable, but I don’t see how this is worthwhile when there’s RGPT here in Malaysia? Unless her client’s don’t know about RGPT..

    Nevertheless, could you send me more details about what Melanie is doing.

    Regards,

    Rui

    • Rui – good point on RPGT. Obviously I can’t speak for Melanie, but RPGT is levied on gain which means that as long as the profit margin is good enough then it still makes sense especially if volume is the name of the game. In her own words, she claimed to “trade at high frequency”.

      She’s kicking things off apparently with her existing customer base which she had built over the years out of her operations in New York state. It will be interesting to see how far she goes.

      • So basically, she is the buyer’s agent, hoping to earn a commission on recommending houses for her bulk purchase buyers?

        The RPGT is 30% for the 1st 3 years. And her clients want to have “a mark up at around the 15-20% mark”. When you do the maths, you will know that it’s a slow-return game that needs Ponzi investors to make it work.

        There’s simply not enough volume and quick returns, for that kind of margin that her investors are seeking in the current lacklustre market.

        • YC: 30% is levied on gains. I believe that she marks up +15%~ on top of market value.

          We’ll hear it soon enough if her plans work out or otherwise. Won’t really judge until the results are in. Maybe she’s seeing something that all of us are missing?

          • Hi Khai Yin: Let’s assume her buyers are foreigners as Jason pointed out, with a min threshold of RM 1m. To make 14% returns to beat 30% RPGT on a RM 1m property, her buyer needs to sell the property for RM 1.2m in the next 3 years.

            (RM200k profits @ 70%) / RM1 m = 14% returns.

            I have excluded 4.45% interest cost from the calculation, which will further lower the returns. And, interest cost is nearly RM 3k a mth based on 80% loan.

            In short, even if her buyers pay in cold hard cash, they will need a “market value property” to rise 20% in the next 3 years to make 14% returns. Now that surely ain’t easy at all in the current market.

    • in malaysia there are some technique for processing this SNP.
      but in what she has told, if fews days she can get the buyer to buy what she just brought, she can directly use her buyer name as her puchaser.
      not a big deal in malaysia :D, but it is illegal.

  2. Well, what she said is correct. “Easier to find a house for a buyer rather than a buyer for a house”. The assumption is that you can readily find buyers who want houses. That is any businessman’s, lawyer’s, retailer’s, service provider’s dream isn’t it? To have a ready clientele.

    I guess after you make a name for yourself people will come to you. But Melanie is new to Malaysia, dealing properties as a foreigner in a foreign land. I will be very interested to know how she first found her clients when even local agents have to pull every trick in the trade in a dog-eats-dog business.

    • Unless one is saying that she is using her existing customer base which she built in Buffalo – and they will be… foreigners? Hmmm…. That begs the next questions… For one, I thought that since late 2013 foreigners are not able to buy second-hand properties (correct me if I am wrong). And even if they are, they need to adhere to strict minimum prices – RM1 mill for Johor and RM2 mill for Selangor…. With rules like that, how does one effectively find overlooked areas? By picking out overlooked new launches?

      With these inherent disadvantages I would be very interested in seeing her strategy for trumping local agents…

      • Importance of local “expertise” cannot be overstated especially for property, and that was why she approached me. She had hoped that I could refer to her some local people who will team up with her. She had an interesting model, but I’d rather wait and see how it played out for her initial batch of buyers (i.e. her existing customers).

  3. @YC: She could be trying to ride on the tails of the bull here in Malaysia as her home market had dried up. Again, she didn’t deny that margins were wafer thin (as it is common for anything which is arbitrage in nature – stocks etc). So, it’s a volume game right from the start, and when margin hits zero then it’s time to look for new markets (i.e. Buffalo to Malaysia).

  4. Melanie is forming a property club here. She gathers investors promising them bulk purchase discount. One can do it by advertising for investors to pool their monies etc and then write in to developers promising a bulk purchase and bring them back to her club to inform her members of it. Nothing new really…

  5. Hi Khai Yin,

    Despite of RPGT, with min 1m of foreigner pricing for local property, how she get the next batch of purchaser for her to helps her buyer to flip/earn the expecting profit? For spotting places might helps but not all the time works. It’s still interesting to know how are she going to do it. Hope for your updates about her model.

  6. Dave Chan says:

    Thanks for sharing khai yin, actually I’m so interested to meet melanie cause I think she had a very positive mindset, she can actually see things from different angles although I know little about real estate but I personally think that she have her own way.

  7. Hi Khai Yin,

    This thing is interested and it helps me to think the other way of getting profit on property. i guess She has a very very very strong Networking skill as not much below market value property in the market, or not much buyer wanna take the property that higher than market value.

  8. Sabrina Lim says:

    Hi Khai yin, mostly likely her clients will park purchased properties under a private limited companies to be flipped immidiately for a profit. Only change of directorship is required as to avoid RPGT.

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