- 1 Step #1: Get Educated
- 2 Step #2: Develop Your Investment Criteria
- 3 Step #3: Go For The Hunt
I remembered that it was back in April 2013 that I first told the Mentor that I was starting GoodPlace.my. By that time, I was already six months into his mentorship, and I had accumulated copious amount of notes. I had wanted to record his (unconventional) wisdom for posterity and I thought that a website would fit the bill nicely. Plus, there was something else in my mind, too.
When I told him my initial plans for GoodPlace.my, he gave me his trademark all-knowing smile. “Khai Yin, is that all? Recording what I say for posterity? Really?”
I sighed. “Not really.” He read my mind. “Condensing your knowledge and making it available to everyone is merely starting point. Eventually I want GoodPlace.my to be the catalyst for information in Malaysia property to flow freely.”
He raised his eyebrows. “But why?”
“If there’s one thing I hate about the industry is how people tend to hide things from each other. I want to built something that will make things more transparent and efficient for everyone – the buyers and sellers as well as their agents. After all, information wants to be free.”
The Mentor nodded. “Unfortunately, it’s an industry that thrives on opaqueness. As far as the theory goes, there’s no profit when the market is fully efficient. Money is made by exploiting the inefficiencies of the market.”
I added, “Money is made exploiting the ignorance of the home buyer, more like.”
He laughed. “That’s easy fix, you know. Ignorance is overcome by education. And as I have always told you, getting a good property education is the very first step that aspiring investors must take if they want to succeed.”
Step #1: Get Educated
“I think most people will agree to that. But the problem is that they look for education at all the wrong places.”
The Mentor knew what I was going to say next, but he obliged me with a question, “Wrong places? Hmm. Where, dare I ask?”
I remembered that two weeks earlier that Joo (the founder of ChatAProp) had called, and he had said to me, “Khai Yin, you’re fast becoming the Paul Tan of property!” As much as I respected Paul and his work in the car niche, I realized that I could be seen as one of those lame property investment gurus, and I threw up in my mouth a little.
“Wrong places? Let me see. Well, let’s start with guru seminars. You know, the I-make-my-money-by-teaching-you-how-to-make-money kind. Pisses me off just thinking about them. How about those stupid get-rich-quick ebooks and programs? Yes, those shitty DVDs they sell at the back of the room which you can buy with six easy installments of RM997, billed monthly. And don’t get me started on the ponzi schemes thinly disguised as property clubs! Bomohs, shamans, snake handlers… all feeding from the same trough.”
The Mentor smiled at my little rant. “You’re going to piss off a lot of people.”
“I am not going to use GoodPlace.my to attack anyone. And truthfully, I respect everyone’s hustle. It’s just that you won’t see me hitting the guru circuit anytime soon, if ever. I don’t want to be a seen as a “guru”, because I am not one and I do not want to be one. And I do think that the industry is better off without charlatans posing as altruistic teachers. Spreading misinformation is wrong, plain and simple.“
“I agree.” The Mentor then tore out a piece of paper from his notebook. “Let’s list down all the legitimate sources of information for the aspiring property investor.”
- I tend to steer away from generic stuff like “the importance of having the right mindset for property investment” which is rife with gurus peddling their crap, and go for “specialist” topics like property law and investment math –
- Elizabeth Siew’s book (Smart Property Investors Know The Law)
- Khairul Anuar’s book (40 Things To Ask Your Lawyer…)
- Frank Gannillelli’s “What Every Property Investor Needs To Know About Cash Flow & 36 Other Key Financial Measures”
- Gary Keller’s books are good but he can be guru-ish at times
- Jack Cummings’ “Real Estate Finance & Investment Manual”. A classic.
Not directly related to property investment but are very relevant –
- Oren Klaff’s Pitch Anything. All property deals need persuasion skills. This book is awesome as a Satanic sex ritual threesome. I can’t rave about it enough! It’s that good!
- Neil Strauss’ The Game. Now, what does a book on DATING WOMEN have to do with property investment? Answer: everything.
- Robert Greene’s 50th Law. It’s all in the hustle, baby.
- Robert Greene’s Mastery. See the above.
- Michael Gerber’s E-Myth Revisited. Important if you want to scale up your portfolio and treat your business like a, well, business. Avoid all other Gerber books (they are crap). This one’s rather excellent.
Word of caution: there’s possibly more crap than good stuff out there when it comes to property investment education, and the easiest way to sift through it all is to have a “Guru Filter”. How to spot guru shit? Well, it’s easy. Just look out for these dead giveaways in their marketing brochures or in the back flap of the book –
- “How I Made RM1,583,291.92 Under 4 Minutes And 35 Seconds In My Pajamas Before I Even Took My Morning Dump”. Scam alert: headline in red (check), impossibly specific numbers (check), quotation marks (check), capitalized words (check).
- Financial freedom
- Work in your pajamas / underwear / naked in the kitchen
- Painless drop in the bucket
- Passive income
- Menjana pendapatan melebihi $10,000 sebulan!
- Syoknya bekerja dari rumah
- Sack your boss
- LAST DAY TODAY!
- Mystery bonuses worth $1,000 if you buy today!
- Turnkey anything
- Private label anything
- Push button anything
- SYSTEM (Gurus like selling “Systems” for some reason)
- Iron clad money back guarantee, no questions asked!
- AUTOMATED / HANDS-FREE / SET AND FORGET / AUTOPILOT WEALTH
- I want you to succeed! (Sure, Bucko.)
- I have made my millions, and I want to give back.
- Financial literacy
- Super Exclusive VIP Coaching Program (
19 12 82 spots remaining)
- Prices ending with “7” in the end ($47, $67, $97, $777, WTF?)
- PROVEN FORMULA / MODEL / JEALOUSLY GUARDED SECRET SAUCE
- Abundant Mindset / The Secret / Law of Attraction / Attract Riches / Visualization – In Short, Do Nothing, Just Think Positive, And Cold Hard Cash Appears In Your Pockets! Woohoo!
Spotting gurus is easy; just follow the old adage: if it looks like a duck, quacks like a duck, then it’s not a bloody chicken.
FOOTNOTE 1: Don’t even try to ask me what I think of “Rich Dad, Poor Dad”.
FOOTNOTE 2: Donald Trump’s a bona fide hustler, but he has got nothing substantial to say in his books. I doubt that he even wrote them himself to be honest. Avoid.
- Where else to start now but at GoodPlace.my? Here’s our best guides listed below for your convenience:-
A. Finding Agents & Making Deals
B. Opportunity Spotting
- The Biggest Mistake In Property Investment
- How To Find Undervalued Properties
- Investing For Capital Appreciation? Obey This Rule
- Property Prospecting 101 (Part 1)
- Property Prospecting 102 (Part 2)
C. Property Valuation
D. Specific Guides
E. Property Finances & Number Crunching
- Do what I did – find somebody who has been-there-and-done-that to mentor you. Seek out people with considerable EXPERIENCE investing in properties (careful not to confuse these people with those who make money primarily by teaching people how to make money in property). These can be people who have or have not done it correctly (it doesn’t matter).
Things To Find Out
- Reasons for their success (or lack thereof)?
- What have they done correctly?
- What have they NOT done correctly?
- What would have they done differently?
- What skills did they need? What did they lack?
- What was their financial situation, then and now?
- What was the external factors affecting their decisions (market conditions, etc)?
Your goal is to find (and learn from) the correlation between their action and results. PROTIP: do NOT ignore negative correlation! For example, if you find that most unsuccessful people are also property seminar junkies, then you’d better stay away from, well, property seminars. 😉
Step #2: Develop Your Investment Criteria
Getting educated is an ongoing thing,” the Mentor said, “And of course, you can never stop learning. However, there’s a REAL DANGER in turning into an information junkie. Remember, despite how the common saying goes, KNOWLEDGE IS NOT WEALTH. Taking action is.”
I nodded. “It’s easy to get stuck in the ‘learning zone’ and telling yourself that you’re making progress when you’re just wasting time reading up stuff with no practical use. And that’s exactly what the property gurus want – information addicts who pay money to attend seminars, one after another.”
“Now let’s not start another guru bashing tirade now,” the Mentor smiled. “Taking the first step is easy. The first thing that I recommend every prospective investor to do is to come up with their own foundational set of criteria which they then use to guide their investment decisions.“
He then took out a piece of paper from his leather folder. “Remember this?”
7-Step Investment Criteria Framework
|1||Type||Residential or commercial||Commercial properties may be overlooked by many novice investors.
Also, consider specific niches like student rentals, short-term lets a la AirBnB, etc
|2||Tenure||Short- or long-term||Typically, long-term would be >7 years
Short-term sales (or flips) are by nature speculative
|3||Goals||Cashflow and/or capital growth||Most of the time, it's difficult to have both 🙂|
|4||Target market||Buyer and/or tenant profile||Knowing how you can rent out / sell to will guide your investment decisions accordingly|
|5||Budget||Price||Total price; factor in the miscellaneous costs + fees. Monthly installments, upfront payments|
|6||Location||Where?||Choose with a familiar place rather than a "hot area".|
|7||Angle||Marketing plans, especially for niche properties||Example: Upmarket Property Guide|
“Yes, of course,” I answered. “Filling up this spreadsheet was the first thing you asked me to do when I first asked you to mentor me.”
“It’s amazing to me that many buyers start looking out for properties even before they know exactly what they want. This spreadsheet will help narrow down your choices so that you can make smart decisions that jive into your investment philosophy. And you won’t waste time and energy chasing rabbits if you keep yourself grounded.”
“I remember spending more than week on this,” I remarked.
“Yes, and in fact I encourage you to spend more time thinking about your investment strategy, revisiting it from time to time if necessary, and how it fits into your overall financial situation at the time of review.”
I remembered the other exercise that the Mentor asked me to do when I was figuring out my budget (item #5 in the Investment Criteria spreadsheet above). Specifically, the steps were:-
- Do a personal budget audit:-
- Bulk cash for down- or upfront payments if needed
- Cash flow – how much you can spare for monthly repayments
- Allocation for fixer uppers if needed
- Review your insurance policies:- both life and property.
- Review your will.
From here, you will be able to set the two most important ground rules when it comes to your financing strategy:-
- How much you can borrow (without getting into negative cashflow position)
- How much you can afford (which then limits you the types of properties you can get to choose from)
Now once you’ve completed the checklist above you’ll remain focused on the very specific properties in the areas that qualify based on your criteria. This will save you from the “shiny object” syndrome, or whatever the hot new thing is getting peddled by property gurus in the speaker circuit. 🙂
“When you’ve got the investment criteria set, then you’ll be able to make a plan of attack,” explained the Mentor. “What you want to achieve then will be as clear as day to you.”
“I do find myself straying from the plan once in a while,” I offered. “I get derailed sometimes by the things I read sometimes, or from the conversations I have with developers and agents. There’s always new emerging opportunities, or incidents or policy changes which affect my initial plans.”
“That’s nothing extraordinary,” said the Mentor. “If you deviate from the plan, then ask yourself why. Don’t be afraid of new opportunities, but don’t forget to TEST THEM AGAINST YOUR CRITERIA. And whenever possible, get an independent person to review your plans.”
“An independent person?” I queried. The Mentor smiled. “Yes. Ideally someone who does not have an ulterior motive in helping you.“
I nodded. “Right. Thanks for the reminder.”
“Now you’re ready for some action. The next step is to find the property that fits into your investment framework.”
Step #3: Go For The Hunt
To be continued next week 🙂