Things People Believe About Property Investment Which Are Completely Bullshit

Nice looking girl at GoodPlace HQ

Last Sunday afternoon I had the opportunity to sit in at my Mentor‘s mastermind circle at one of his friend’s lofty bungalow at Damansara Heights. My Mentor was the elder statesman of sorts of the group, and he had let me join the meeting after a couple of requests and favours (which involved me moving his lawn in his Nilai estate and babysitting his ten year old grandson).

Khai Yin, you’ll get to ask a question and we will answer it,” he told me as we stepped down his aging Jaguar. “Only one question, so make sure it counts.” I nodded.

In the group, there were six men and two women, of ages between the mid 30’s and 60’s. Like any Internet geek would do, I Googled them beforehand, and to my surprise, none of them were particularly famous. Information about them online was relatively scarce; some sparsely populated LinkedIn profile pages and alumni listings at some well known colleges were the only things I could find. It would seem to me that these people would avoid the limelight as much as they could, but at the same time hustled really hard in their smaller, elite circles to get to where they are.

In short, these are the exactly the people I aspire to be.

The Rich And Not So Famous

“Khai Yin, this is my group,” the Mentor introduced me to the mastermind circle. “Now give us your question.”

I cleared my throat. “My Mentor had told me that in order to be successful, I would need to move against the herd and start questioning conventional wisdom. And I understand that in order to be where you are now, you must have done this and gone against the grain many, many times.”

“So what I want to know is this – in your career, what were the conventional things that you challenged to your benefit? In short, what are the commonly held beliefs about property investing that you know are not true?

The group gave a collective chuckle. “You mean, the bullshit that people believe it’s true, but is bullshit? My, that’s plenty,” Roger said. “There’s so much misinformation out there today that it’s not even funny. But I’ll start with the biggest, baddest myth of ’em all. And here it is.”

Goals Are Bullshit

“Gurus and self-help books will tell you that goal setting is paramount to success. We can tell you here that it’s hogwash,” said Roger. The group nodded in unison.

I tried to respond with a counter argument, “Having a realistic goal is like having a target to aim at, no? Also, with a goal, I’ll know when I have arrived so that I can pat myself on the back.”

Roger replied, “Do you think for a second that Bill Gates set out to be the richest man in the world? Don’t bank on it. Being a cut-throat businessman as he was, he just wanted to win at all costs, out-competing everyone else. Or Steve Jobs? He didn’t set out to build the company with the biggest market cap, ever. He only wanted to build cool stuff that people loved to use. Think about it. Goals meant nothing to these men. Goals suck. Goals are for losers. Especially in property investment!

Douglas Adams wrote an insightful blog post on Systems vs Goals which I recommend everybody to read. Click here.

May was a little more diplomatic in her words. “What we are trying to say is that while you can have something to aspire to, you should instead concentrate more on your work habits and systems. Creating good rituals and developing a strong work ethic is what you need, not dreamy visualizations about something that you might attain in the future.”

“Set up a good work process, put in the effort, and the results will come. In short, having a good system is better than having a goal.”

TaskThe "Goal Setting" Approach
Buying first propertyI want my first bungalow in Bukit Tunku before I'm 21
Becoming financially independentI want to give my boss the middle finger right after this year end's bonus round
Building up a portfolioI want to own twenty properties in KL, Singapore, New York and Timbuktu worth $129.12 million by the time I'm 35 1/2

TaskThe "Systems" Approach
Buying first propertyLearn the basics by reading GoodPlace.my every day. Start saving 10% of my gross income every month. Research about landed properties for 30 minutes every day. Look out for transaction info on Bukit Tunku in the newspapers or at JPPH.
Becoming financially independentLearn how to identify properties with good rental yield. Research and look at listings every day. View properties every weekend. Buy property, pimp it up, rent out. Repeat.
Building up a portfolioBuild up a team and run the business like a business. Devote two days in the week to look out for opportunities. Spend a day a week building relationships with agents, bankers, lawyers.

Goal setting is guru fodder,” said the Mentor. “And you know where I stand when it comes to property gurus and their snake oil peddling schemes.”

Gurus Are Scumbags

“If you’re a guru follower then you’ll need to get your head examined, plain and simple,” said Munirah. “To some people this is as obvious as the nose on Jackie Chan’s face, but I found myself having to reason with guru fanboys far, far too many times.”

“What I found to be useful when dealing with gurus is to quote MJ DeMarco’s “paradox of practice”:-

A Paradox Of Practice exists when someone promotes a moneymaking strategy but that strategy is not what made him or her rich. In other words, they’re not practitioners of their own advice.
MJ DeMarco

“Alright, just to play the devil’s advocate here. There are some gurus who claimed that they actually made their money using the strategies that they taught. So what gives?”

wonka

The Mentor laughed. “And so why are they not making money using their strategies anymore? Worse, they are now making money by teaching people how to make money using the strategies that they used to use to make money? Do you see the problem here?”

I chuckled.

“These are the people go give out property investment advice, but are dirt poor. Hypocrites! Just as you won’t take fitness advice from that overweight trainer, you shouldn’t listen to property gurus who make money from seminars and not from their own properties. And if they are actually making money from their own properties, they won’t be conducting seminars.”

You Can’t Get Rich Flipping Properties

“You just can’t,” said Ari, the quiet one who finally joined into the discussion. I later found out from the Mentor that he was probably the most well off in the group, now presiding over assets worth some $300 million in five countries. “You can make some pretty good coin flipping properties, but to get RICH? No way.”

“I guess everybody’s definition of “rich” is different. From where I come from – rural Taiping – folks seemed to think that the best way to be rich is to be a doctor or a lawyer. Charge hefty fees dispensing medical or legal advice, work for 35 years and retire in a bungalow facing the Lake Gardens.”

Ari smiled. “I guess so. I’d stick to Felix Dennis’ definition from his book “How To Get Rich” which I highly recommend by the way. And no, that’s not a guru book.”

£1m – £2mThe comfortable poor
£3m – £4mThe comfortably off
£5m – £15mThe comfortably wealthy
£16m – £39mThe lesser rich
£40m – £74mThe comfortably rich
£75m – £99mThe rich
£100m – £199mThe seriously rich
£200m – £399mThe truly rich
£400m – £999mThe filthy rich
Over £1bnThe super rich

Ari explained more, “You see, flipping properties is opportunistic in nature. To win in this game, you have got to be strategic. And if you have been following what your Mentor says, then you’ll understand that you’ll build wealth in property investment from acquiring income-generating assets, and not by buying properties to sell off later.” The Mentor nodded.

May chimed in, “Of course, there’s nothing going to stop you from flipping properties in order to come up with the cash you’ll need to reinvest into your bigger projects. In fact, that was what I did when I started many, many years ago.” Ari nodded in agreement.

“People seem to think that in order to take money out, they will need to sell. That’s not true. You can pull out equity by refinancing, and as property usually appreciates, you can do this again and again. This is not a beginner strategy, but if you’re motivated enough, you should learn how to do this.”

NEXT: Big Deals vs Small Deals – Does Size Really Matter?

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. “You see, flipping properties is opportunistic in nature. To win in this game, you have got to be strategic.

    This I concur.. of course all the other points too, but this one sits at the top of my list.
    In my book “The rich collect, others trade”

    • Spot on, Cayote. You don’t see ballers like Gates and Buffett sell off anything if ever. If you’ve got a Lebron James on your team, would you sell?

  2. Great interview Khai Yin. Make a lot of sense now.If only more people are willing to share the truth, i guess the world become a better place.Good work

  3. Thanks for the article, Khai Yin. This really changed my prespective 360°, especially about my goal setting habit and the property gurus.

  4. Khai Yin, thanks a lot for your helpful article. It helps me to be back on the track, with the right way in the property investment.

  5. Amir Hazwan says:

    Thanks for this article. It is really going to be helpful for me. I have got to plan my system now rather than setting my goals.

  6. …”You can pull out equity by refinancing, and as property usually appreciates, you can do this again and again. This is not a beginner strategy, but if you’re motivated enough, you should learn how to do this.”…

    Can anyone here advice how do to the above?

    Thank you

Speak Your Mind

*