4 Secrets You Should Know to Get Your Loans Approved

Before you head out straight into applying bank loans, there are few checks you must make to ensure high chances of approval. I previously had the chance to have a conversation with a banker who now becomes a businessman and he shared something incredible.

You might be wondering “how do I know what to check?” or “how would I know my chances of getting approved?” – well good thing is it is not rocket science. Here are the 4 major checklist you have to follow through.

1. Application Score

In the old days you will normally have to meetup face to face with bankers at the banks. Banks no longer have to see you or you seeing them which may cause biased loan approvals.

But things changed, banks have a system these days to screen your loan application. The system is like a score engine that sees through your profile demography such as, your:

  • place of work
  • home address
  • salary
  • work experience

However, a brilliant tip to get your loan approved is to change your home address.

Change my address?! When I say change your address does not mean you have to move to a new home or change your address in your personal ID – it simply means using your parents’, siblings, or spouses home address when you apply your loans in the bank form. Why is this important? Believe it or not banks will also assess your financial strength by the place you stay.

In Malaysia, places like Bangsar or Central Kuala Lumpur are expensive places. Banks may fare better for people who stayed in Bangsar compared to those who stayed in a lesser developed area.

Bank’s logic is that when you stayed in developed areas means you can afford the lifestyle there which also reflect your financial strength.

However, this all depends on where you buy your house, you may get a better approval chance if you buy a house in less developed areas if you stay in there – just try your luck, we’ll never know.

2. Banks Will Assess Your Income Level

This is important because the bank would like to see how much you are earning which also determine your loan payment capabilities. If you don’t meet the banks’ income criteria then you will be rejected – as upset as it sounds.

Another good advice is to choose the right bank! What do you mean choosing the right bank? It simply means you will have to ask the magic question to banks, “how much percentage of my income do you recognize to process my loan? “.

That’s right! Some banks only recognize 70% of your income instead of 100% for your application. Let’s say your salary per month is RM 3000, if the bank only recognize 70%, that means you are applying your loan for RM 2,100.

If a RM 3000 can get you a RM 160,000 worth of property, you might need to rethink your decisions if the bank allows only 70% of the total RM 3,000. The key take away is to ensure that you ask the banks how much percentage of interest do they recognize on customers’ loan applications.

3. Credit Score Report – CCRIS

When it comes to your credit report which have all information regarding your credit score, banks will know everything which in this case recorded in the, “Central Credit Reference Information System (CCRIS)”. CCRIS knows all about your credit facilities such as PTPTN, car loan, home loans and whether or not you are a good customer – a good customer would mean a good payer from bank’s perspective.

If you are a credit card user, you may wonder, “how am I to know if my credit score is good?”. just make sure not to use more than 50% of your credit limit – as simple as that – well, theoretically.

But you may also wonder, “what if my credit score is clean? like a piece of white sheet with stains on it” – that won’t be good as well because banks cannot judge your financial behavior such as your spending patterns or how well are you committed to paying any financial commitments. A good tip is to take up an ASNB loan which has a compounding effect in it since it does not disrupt any of your CCRIS.

Not only will it help you saves money, it will also grow while you sleep! you have nothing to lose. However, try minimize using unsecured loans such as credit cards – why do I say this?

Banks will think that you are a “credit hungry” person or you don’t have much cash with you when you use or apply many credit cards and this gets worst if you don’t pay on time.

and last but not least….

4. Monitor your Debt to Asset Ratio (DSR)

Let’s say you run short on cash that month but you still swipe your credit card for few non-needful items just because it has huge discounts – Oh man, I haven’t paid my credit cards yet this month!

Worst, the bank called you and ask for your payments and it has going like this for few months. Chances are, your DSR is already quite critical because you find it hard to pay your own commitments or are poorly managing your finances which may need your financials restructure.

The standard DSR formula is “all your commitments + any new loan application (in RM) divide by your net income (after tax and EPF deductions)”.

Different banks have different DSR acceptance rates. Some banks will approve people with DSR maximum of 60% while some banks prefer 45% (which is quite a good percentage). This apply same to applying housing loans, have read on 4 Great Tips For Getting your Loan Approved !

All and all, my advice is to bite what you can chew – don’t take loans with commitments higher than what you think you can pay. Settle for things you can afford so long as you can have a peace of mind.

You are not enjoying life if you get financial headaches to maintain your big houses or great cars – the important thing in life is to be happy and to always know that you have extra money to live off comfortably at the end of the month or as I call it “financial abundance”.

5 things you should consider before buying your first house

Nothing beats one of the best feelings rather than having a roof over your head but the greatest thing to know is – you own it! After working for about a year right after college, I managed to buy my first house. I went through all the process – finding the right house at the right place, did my credit checks with the banks, and arranged a house visit with a property agent which I get to trust. Overall, it was not a straight forward process as there were many questions I asked – whether the land title has been issued, the current unit’s market price , or even the issue of why the current owner is selling the unit. Here are the 5 things you should know before buying your first house.

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1. Do you want it or do you need it?

Whenever you decide to buy a house is always to determine whether you need the house? or do you want the house? .Need and want are two different things and are quite simple to distinguish, that is in theory. A need is something that you really require to carry on your daily life; a want is something that springs out of your desires and may not be very crucial to your current life.

If you think you can finally buy a property without stressing out your life too much – then you are all set! However, in some cases buying properties may get you in heaps of trouble – having to settle the loan installments late or always on a tight budget, then maybe you need to reconsider your purchase decisions.

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2. Is the house for investment or for your own stay?

This question changes a lot of things if you ask yourself. If you consider to buy it for own stay, you might want to buy the house in a descend environment, be it in a suburban area or the city. You might also prefer a better house condition if that’s the case, Then again this is all up to personal preferences. However, it will be quite different if you buy a house for investment purposes because you would need the house at places with high population, malls, offices, public transport, and etc. to get good rental income.

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3. Do you have an exit plan?

An exit plan should always be the planning stage in case if your property purchase could go haywire – fake property agent or owner, or maybe unsettled installments down the road. These possibilities must be simulated so that you will be able to anticipate preparations if these scenarios happen – yikes! But at least you will be able to know just what to do and panic less if it does happen, right?

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4. Do you have enough money?

As cliché as it may sound, yes, it is important to assess your ability to purchase the said unit. This is because there are times where property agents only wants to secure their share of bargain, their booking fees of 3% out of the total 10% deposit. Sometimes, these agents do not assess our financial credibility. It is up to us to assess our own so that we won’t lose out.

Let’s give an example,

You want to purchase an apartment costing RM 170,000 and you have a salary of RM 3,000 – which is still alright. You also have in your savings RM 17,000 which is just enough to pay for your 10% deposit of RM 17,000 from the apartment’s total cost. There is still to pay for the legal fees which is by the lawyer, oh no! this will normally cost around RM 7,000 that needs fork up. Hence, always take into consideration all costs associated with purchasing a house including the hidden costs and you will do fine.

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5. It is alright to wait.

Sometimes it is just better to hold your purchase. I am not saying that you should not buy a property at the soonest, sometimes if you hold for a moment and reassess your decisions then you might think – nahh maybe this property is not too good a deal or you might just realise that you may be in a worsen condition if you proceed with the purchase. Being in a situation where you don’t have to worry about your daily finance is better than having to maintain a house and constantly struggle to meet ends meet – but that is just my personal opinion. Not all property investments makes great money – some of the investments might get you into serious financial trouble, learn and plan right. To sum up, buying a property is always a great idea especially if you have the stable financials and the right knowledge.

Are You Making These 4 Common Mistakes As A Property Buyer?

If you think that buying any property and simply make money out of renting it or selling it out, then you might want to reconsider your options.

Applying the right way to buy a house will help you not to lose any money in the future – knowing it might save you enough cash to reinvest in another house.

Here’s 4 common mistakes you should avoid:

1. Buying above market value

Maybe you have set your eyes on this one house and you think – wow! It’s near to public transport and the university, pretty sure there won’t be any tenant demand problem.

Well maybe you are right.. But then again consider checking the market value of the property as well.

There are lot of times property buyers neglect market value factor and buy above the market value in the end.

Sometimes due to emotional auction biddings or high-end property facilities (pools, security, exclusive gardens) offered that makes the buyer completely illusioned.

This will mostly lead to mistake #2

2. Negative Cash Flows

Let’s compare property A and B

Property A

Let’s say the average market price for property A

Compare this to property B

Property B (under auction)

Let’s say you are buying property B and then you got swayed away by yout emotions. Rather than stopping the bid at the most optimum ROI (Return on Investment), you now increase your bid further for the sake of winning the auction.

Instead of buying the property below market value, you have now gotten overboard.

This leads to higher bank instalments you have to pay. This also means that if the average rental in that area is $750 per month, you have a negative outflow of $150 because you are paying the banks at $850.

3. Buying a property far from your usual place of presence

Well, sometimes you might think that can still manage your property from another state whilst you are in another state – you can. However, it might pose certain challenges such as time and convenience of visits you can make.

Few things to note is that you may need to add more controls to these types of challenge. These includes:

  1. Setup an automated payment system
  2. Build close relationship with the property management team (if any)
  3. Get to know the local repairmen in the area
  4. Find trustworthy tenants.

However, if you think all these demands too much from you then you might want to consider hiring a property manager at a cost which is not too bad either.

4. Not buying an investment grade asset

A property pamphlete may seem too convincing sometimes. The timber wood floor, glowing kitchen cabinet, big windows – you name it!

But the biggest things being promoted on the pamphlete are the things you need to stop and think back again.

Do you need the luxury items offered?

What’s your initial purpose to buy?

And always go back to basics.

You must try as best as possible that the property you buy especially for investment purposes must be below market value, have positive cashflows, near your usual place and most importantly it has capital appreciation.

But if it is your dream house and not for your investment purposes – theres no issue to buy it even if its priced higher and that you can afford it.

After all, buying a good house for investments may prove to be one of our best ways to conserve as well as amplify our wealth – it is one of the best tools to achive financial independence.

5 Core Things Needed To Retire Early

It was a casual saturday and I’d normally stop by my favourite bookstore to top up my family’s weekly groceries.

It was then that I come across this amazing book called “Your Way to Financial Independence”, authored by Yap Ming Hui. He’s been helping a lot of people planning out their life and achieve financial independence – his company (Whitman Independent Advisors Sdn Bhd) helps people to achieve this. Check their page out if you are keen to restructure your life plans at https://whitman.com.my/.

I only imagine the idea of financial independence and retire early in life so that I can do things that I deem much more important than working around the clock and have no time to do the things I’m really passionate or care about in life such as spending time with my loved ones.

Hence, I believe it is vital for me to get my notes into other people’s notes. Knowing key knowledge in life earlier in life will help reduce your stress in future to come. Just like Jim Rohn said, ignorance is not bliss – ignorance is pain and tragedy.

In this article, we’ll be going through 5 very simple cores to take note if you plan to become the master of your money. I believe this will pose as an important turn around in reader’s life if people know these infos early in life.

1. Spending

Knowing where you stand in life is important. This is the same in spending, knowing how much you spend every day or every month determines your financial standings for that period.

An important note from the book, very simple –

The more you spend, the less savings you have.

The more you spend, the more money will be needed to maintain your lifestyle.

Spending relates very closely to our wants and needs, being aware of your wants and needs will help you steer your way to a more controlled spending life.

2. Return on investments (ROI)

The main idea here is that wealth will work for you better when your ROI is higher.

How do you get high ROI?

Well…

There’s ROI from properties, stocks, bonds, businesses, dividends, compounded bank interest and so on – we only need to get a good research before getting our hands on those investments.

But be alert to get ROI that is above the inflation rate. Otherwise, your money will lose its value across time. It’s as if we didn’t invest at all.

Read more at the links below to know a little more about investments you can start!

3 Surprisingly Creative Ways To Make Money From Properties

Stock Trading For Beginners

Making money while you sleep – the compounding bank account (ASB)

Now let’s continue..

3. Savings

Savings and spending are like yin and yang – they are closely associated with one another.

Just like mentioned previously, the more you spend means the lesser you save.

When we retire, the money we saved will be utilise for our daily wants and needs. But the best way to use that big chunk of money upon retirement is that we invest it and earn dividends in return.

This is where big savings are important so that we only need lower “Return on Investments (ROI)” to sustain our daily life after retirement.

Take an example,

Josh who saves $16,000 a year would need to achieve ROI of 18.3% to accumulate $1million in 15 years time compared to the same Josh who saves $36,000 a year that needs only 8.3% ROI to accumulate $1million in 15 years.

Which Josh do we choose to be?

The point is that saving money consistently bears high result financially and save you more time to buy your financial freedom in the future.

Have a read at…

How You Can Save $1300 A Month With $3000 Salary

and find ways how you can save your money better!

4. Time

When it comes to time, it means to forecast the period where certain of our wants and needs will appear in the foreseeable future.

For example, the time when:

1. We send our child into their tertiary education

2. We drawdown our retirement funds

3. We will marry or our children get married

And so on.

It could be a cash inflow or cash outflow depending on our needs and wants but normally big events in life. This is so that you can roughly estimate how many savings you must have or maybe a certain ROI you need to have to ensure your financial independence goals are still in check when the time comes.

5. Inflation

When it comes to investing, always take into account inflation rate.

Why?

Because your ROI might be lower than the inflation rate. This will result in your investments losing out money whether short term or long term – and we don’t want that.

We expected a return on the money we put to work – what if after 5 years you discovered that your financial status is still the same?!

That’s a nightmare.

Hence, make an effort to check the current inflation rate and which investments whether individually or aggregately are able to beat the inflation rate.

How To Achieve Financial Independence

Now that you have clicked on this title, you must have been wondering what is financial freedom? Or…

You have already set yourself up for financial freedom in future to come but you haven’t figured out how.

That’s great! It means you have successfully gotten out of the rat race way of thinking – at least from a state of mind.

Now it’s time for action. Now it’s time to see how you will set your new life direction so that you can arrive at a new destination.

Before we start, know that different people have different meanings for financial freedom.

Does it mean being debt-free? Does it interpret as being able to travel other countries twice a year? Does it mean living your daily life without worrying that your money might run out one day or another? That depends.

What is your meaning of financial freedom?

To cut things short, this is the general outline that I learned from attending financial seminars and meet people who already obtained financial freedom and those who are already charted to that destination.

Assume we are doing this in order of sequence:

1. Work

Yup! That’s the reality of it – you have to work and by saying work it means the job you earn your main income. It’s the job you work to pay your monthly living expenses like utility bills (electricity, water or phone), housing and car installments, as well as other monthly legal obligations.

This is where it all starts – it is the first stage.

The key to this stage is when your salary comes in, who do you pay first?

Yourself!

That’s right, yourself.

You will have to allocate a certain portion of your salary aside for yourself. This leads to the next stage…

2. Savings

This is where the warm up begins – you will have to be disciplined and set your goals.

You will have to save every month until that money accumulate into a huge pile of resource. You need to calculate how much you need to save before you believe that huge resource can help you achieve that freedom.

Have a read at 5 Simple Ways To Save Money and How You Can Save $1300 A Month With $3000 Salary to get wider ideas of how you can save better!

When we already have that huge chunk of money, you might asked what happens next?

This is the point where you make money work for you.

When the time comes, when you believe you are ready to get to the next stage – whamm!!

You invest that money!

And that leads to the next big part which is investing.

But before we go any further, we’ll have to consider another important part to achieve financial freedom and this is applicable to the massive people out there.

This is simply because having a single income from a single work may not be enough to accumulate that huge chunk of money. You will need a second source of income or maybe a third or fourth.

And that leads to our 3rd step….

3. Side hustle income

Many times we’ve heard people working 2 jobs at a time to sustain their life – well you are probably right.

But the idea is that the money used from your main work to pay your loving expenses. Your daily work is used to settle your daily expenses such as basic bills (electricity, water and phone) and other recurring expenses like rents and daily foods.

On the other hand, your second job is what you use to build your fortune.

It can be any jobs, you can start by selling stuffs online, become an insurance agent, open a business, become a beekeeper or even a painter – anything that you love.

Then you save your money and build that huge chunk of money that you can invest and in return, get you that recurring income.

Or…

Without investing, you can simply get recurring income from the people’s demand provided that your service to the society gives value.

Value. This is one of the secrets that Jim Rohn, a great motivational speaker once shared – to attract the world’s wealth, we must become the people that can create and give value to the society.

And I think that’s wonderful information.

Now that you know how to accumulate the huge chunk of money, step 4 plays an even vital role.

Step 4. Invest

Invest – It’s a big meaning for a short word.

Money will lose it’s value in time to come. Things like inflation will inevitably be one of the major cause. Money will not grow unless we put it to work, now that we have worked hard enough to get money.

This is why we need to invest.

We invest to sustain our wealth. To make sure that the money grows more while we are occupied with other matters.

We have traded our time much enough that it is now time that the money will work for us and saves us more time to do the things we really want to do in life.

I always like to invest in things I already know well, and not invest into blurry confusing things. I still prefer the traditional way of investing.

This brings us to step 5.

Step 5. Passive Income

While there are many other forms of investments in this world, I will highlight the most common yet effective investing instruments that are still relevant till today.

It’s none other than by investing in properties. With this, you’ll get recurring income from renting. Imagine if you have 10 houses that each gives you $800 a month – that’s $8,000!

Can you live off with that? I know I can.

You might wonder how to start investing in properties – have an overall understanding by reading 5 traits of a good property to invest and get good rental and 7 steps guide to buy a house – the complete guide. This should help you get that booster understanding about real estates in general.

If you are still young and having fun in your 20s but are getting prepared to settle down – you’ll be ahead of your time by knowing the top 5 tips to buy a house in your 20s.

Better yet, boost your investment income by knowing the 4 unbelievable ways you can maximize your rental income!

Imagine you get yearly dividends from 20 types of stocks that each gives you $200 a month – that’s $4,000 a month!

You might be wondering how you would begin this great journey through freedom by learning stock trading. Have a brief understanding here!

Wow…

How about making that monthly commitment to save a portion of your income into the compounding bank account. Let’s say you save $600 a month for 35 years – that may grow to around $1 million after 35 years.

This is where you will be able to see how to make money works for you! Even when you are sleeping.

It’s just amazing. You can either use that money yearly – though you might lose the benefits of compounding or you can just wait for it to grow big. If you can’t benefit from it then maybe your family can!

We’ve already worked hard to get that big chunk if money and we should not risk it by investing in things we do not know – in things that may not exist 10 years to come.

And that brings us to the final step.

Step 6. Dream

Now that you have worked your ass off, you can now live your life without worrying about money!

Your debt is settled and no one have any claims on you every single day because now you are free.

Free to do what you want and free to live how you want it to be.

This is where you can do the really significant things in life because you have solved the money problem.

This is where you can buy your dream.

It can be anything.

Spending time with your wife and kids. Innovate something creative and beneficial to the society or even as simple as helping/coach other people become financially free – just like you did.

You can also opt to help poor people when you are free. Help them escape poverty and coach them the ways of attracting wealth. In return, you will feel what it means to truly live. You will only gain more when you give more because giving to charity makes you richer.

a quote by Tony Robbins from one of his greatest books, “Money: Master The Game” –

The secret to living is giving.

It’s a noble cause.

This is why financial freedom is important. You’ll be able to chase matters beyond any money concerns because you are now free. Upon achieving financial freedom, you can now chase a life purpose that is bigger than just making money and meeting ends meet – with financial freedom, you will be able to create a more meaningful life.

Stock Trading For Beginners

So you have been thinking a lot about earning money from the stock markets. Going through all the dilemmas and risks associated with investing in the stock market – fret not! It is true that investing in the stock market has its risks but it also has its own perks.

This article will mainly talk about how you can start your investing experience in the stock market but most importantly – how you can get a great start!

To start off, we will go through the basics.

Here is the first one!

1. Choosing your trusted remisier/dealer

Who’s a remisier?

He’s like a middleman between the investor and the company you want to invest in. A remisier earns commision from every transactions of stock trading that takes place.

These are the things you need to ask before choosing your remisier:

a) Are they licensed?

b) Do they have wide knowledge of stocks investments?

c) Can they advise you well in stock investments?

d) How experienced are they in the stock trading field? 10 years? 30 years?

If you think all the 4 questions above gives you a confident nod then you are good to go!

Do check on the link below to ensure that your business representative/ remisier are registered with the Securities Commision Malaysia > https://www.sc.com.my/

This is to help avoid unnecessary losses or scams at the start of your investing journeys 🙂

2. Registering your Central Depository System (CDS) Account

A CDS account is just like your bank account but a CDS account keeps the shareholdings of companies you invested in the form of stocks.

How do you create a CDS account?

Here are the general things (or at least applicable in Malaysia) :

a) A copy of your identification card (IC)

b) RM 10.60 to open a cds account with the Malaysian Central Depository Sdn Bhd

c) Finally, that is, opening a trading account with your trusted remisier

Normally you can just inquire your remisier and they’ll guide you through the whole registration process – it’s really simple and straight forward.

3. Don’t trade stocks yet – join a class!

That’s right, you don’t want to put in $10,000 and end up with a loss – you will need reliable coaches to teach you how and which stocks to invest. You can start by looking into the social media (facebook, twitter, or instagram) for reputable classes organized or ask your friends who have traded stocks before and how they go about it.

However, most classes may require you to pay – just make sure its not a scam!

Here’s some tips before you decide to attend any paid classes:

  • Attend the free classes initiated by Securities Commision known as the “InvestSmart” series, check this out > https://www.investsmartsc.my/index.php/
  • Better yet, you can also get free basic stock trading knowledge from Bursa Market Place, have a visit at > http://www.bursamarketplace.com/mkt/learn
  • Or, you can try and find great mentors/coaches that have been in the stock trading industry in a long time – people like Faizal Yusup or Dato’ Dr Nazri Khan are corporate people who are still working in investment companies and at the same time still organize classes.

Also, a great advice I received from a good friend of mine,

“Avoid trading stocks using your bread money”,

meaning – invest using the surplus money that you have and not the money you use to run your daily routine. What I would advise is to invest using money that you are willing to lose. Also note one of the benefits of stock investing is that you can accumulate cash faster than investing in properties due to its liquidity characteristic.

With that said, you will be able to accumulate your capital faster with stock investing to proceed with purchase of a much stable investment which is property investments. Have a look on 7 steps guide to buy a house – the complete guide, 5 things you should consider before buying your first house or 5 Traits of a good property to invest and get good rental for starters.

Now that you have read until the end, I believe the above should suffice for you to have a general idea on how and where to start. Have a great investing exploration ahead!

Top 7 Biggest Mistakes Property Investors Make

The beginning of any investors isn’t an easy one. You have to know what that business is about, how it generates money, and can the business expand in the foreseeable future.

This is applicable to being a property investor.

Being a property investor requires you to attend classes, get to know your mentors, and people who are successful in your respective investing fields. You would have to continually learn and apply the knowledge you obtained – constantly experiment and adapt your techniques around the market.

Why is this vital?

Certain people would think they are ready when they have attended one class but once is never enough. You must constantly learn (attend many classes) , talk to field experts, and mingle within your investing team members.

Hence, here are the top 8 biggest mistakes property investors make:

1. YOU BUY PROPERTIES ACCORDING TO QUALIFICATIONS AND NOT AFFORDABILITY

Well, many of us are happy when the bank loan officer approves our bank loan. Your salary plus side income seemed decent, your liabilities are pretty low – so he thinks, ehh why not…. But the monthly installment would take away more than half your salary?!

Is that a red flag? Should you worry? … The answer is – yes!

A safe principal to follow is 30% – 35% (where 1/3 of your total salary) of your total salary would go to payment of home installments. This is because 1/3 of our salary should go for savings, 1/3 to daily needs like foods and transportation, and another 1/3 for commitments and/or investments.

It is safer that way rather than having 2/3 of your salary dumped to pay your home. Well, some people can live under strict financial diets but what if emergencies happen? How would you survive? Worst off if you have kids! So buy properties that you can afford and not what you are qualified to buy.

2. YOU THINK YOU CAN FLIP (SELL) A PROPERTY RIGHT AFTER YOU BUY ONE

This is one of the dangerous tactics in the books of property investments. You think you can sell the house you just bought right off the bat. When you buy a property for the sake of flipping – that is not investing, it is called gambling.

Why?

Simply because you sell “in the hopes” somebody will buy that property. In investing, we rely on facts and numbers – not mere speculations without concrete reasons.

I understand that we always hear stories of people having able to sell their houses right after their purchase but sticking to the fundamentals would be a safer way to invest and make money. The risks associated with flipping a fresh property is too high to take. It would take years to recover from buying a wrong property.

Worst off – you may have a financial monster in your hands and would need to auction the property, which would not represent a good outlook on your financial backgrounds the next time you apply for loans.

This same advise is applicable to properties that YOU THINK can get high rentals and make good money!

Always go back to fundamentals and research well your markets and competitors. One key strategy to know if that area has good rental occupation rate is to make time and visit that area at night.  Observe how many lights are on in every units. If there are many units with lights on, that shows high occupancy – a plus point to buy a unit in that area! If it’s vice versa, you should consider other places.

3. YOU THINK GOING TO ONE CLASS IS ENOUGH

It is plausible that you make effort to attend property classes – that’s great. Then you will feel pumped up and highly motivated – and you feel highly driven to buy a property. You will think that you can make money with the current knowledge you have.

But little did you know that there are more aspects you need to know to buy the first house – which is the riskiest investment. That’s right, your first house is the most vital investment to make.

Read more:

5 things you should consider before buying your first house

Should I Buy Property For Investment First Or Should I First Buy To Stay? 

4. YOU DIDN’T MAKE SURE THAT ALL THE FACTS AND NUMBERS ARE PRECISED!

It will determine whether you can be on the fast lane or slow lane in property investments. Because you might get stuck with that property for at least 6 years or more as a result of bad judgement. But that’s alright, you will learn by experience.

Always ensure your knowledge checks are complete. Things to know or cover are mainly as below:

a) 3 Major Risks Of Renting Properties And How To Mitigate The Risks

b) 5 Traits of a good property to invest and get good rental

5. YOU DID NOT PERFORMED THE REAL ESTATE INVESTMENT CALCULATION

To be an investor, you must rely on facts and numbers – not hopes and rumours.

This applies the same with property investments. You have to know the basic calculations to know if your property can make money.

How do you make the calculation?

Ensure that the property you want to invest is below market value approximately 10% – 20%

You can do this by checking the price offered by sellers against the average price people offer around the area.

Better yet, in Malaysia, we have a website that discloses the transparency of actual price transacted on the sales and purchase agreement (S&P). It was a partnership between a company and the local government to improve the property market business.

So if the seller’s offered price < average market price?

That clearly shows the property price is below market value.

However, to easily know that you can get a property below market value, have a go at auctioned properties. These are properties that have problems mainly due to previous owners having trouble repaying their monthly installments.

Read more:

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

6. APPLYING MULTIPLE LOANS FOR MANY PROPERTIES AT ONE TIME (MULTIPLE SUBMISSION)

If I would tell you one thing that is truly risky – the black magic in property investing; that is none other than multiple submissions.

Normally when you associate black magic with the practitioner, it would definitely harm the practitioner in return. The multiple submission technique applies the same consequences – it would do more harm than good if not applied carefully.

You might wonder why this is black magic?

Imagine you applied a loan for two properties because you think that you can flip (sell) the property right after purchase or rent it high – considering the fact that your income can’t sustain the installments for both units.

Remarkably, your loan gets approved probably because you combined loan applications with your wife/trusted partner. That’s great!

But……..

Things get scary when both the units can’t be sold immediately, or nobody would want to rent the units/ rented it at lower price!

What will you do when this happen?

Worse comes to worse you might have to auction the properties or you’ll go bankrupt. Would really hope this is the last resort.

There are times where you think that specific property promised a good deal, even if you know you can’t maintain it – it is recommendable to bolster your income or buy a property you can afford.

7. NOT BUYING PROPERTIES NEAR YOUR “COMMON AREAS”

Common areas are areas where you normally go everyday. It can be the area where you work, your neighbourhood areas, or the place you passed by everyday. The idea is to buy a property that you find easy to visit in case you need to be physically there!

What happens if you don’t buy a property near your common area?

One thing for sure…. you will find it hard to visit your property if you need to be there physically. Things like signing contracts with tenants or handing over of keys (if you are into Airbnb business) would be a challenge if you are not physically there.

However, the aforementioned challenges can be overcome by building contacts with the local janitors or neighbours  who can help you out – of course, with an additional pay. The key to implement this is to find people who you can trust to run your chores when you can’t be there physically.

With all that said, hope you will make wiser investment decisions! It makes a lot of financial differences between making the right decisions and a wrong one. 

How You Can Save $1300 A Month With $3000 Salary

I am no expert in this but I am very much aware of the importance when it comes to savings. Why is this crucial?

Opportunities or emergencies may arise surprisingly at any time. There will be a time when out of a sudden someone would want to sell their business, a company is looking funds to grow business, or there is that hot property going on auction way below market value!

Hence, It is up to us to ensure that we can grasp the opportunities when the time comes or at least prepare ourselves financially in event any emergencies arise. Here are the ways you can save $1,300 a month with $3,000 of salary.

Travel Cost

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We all have places to go each and every week. Like many, we would have to incur costs to travel to work. I’m staying on a suburb far from the city center, Kuala Lumpur.

It would normally take me more than 1 hour on busy days to work – that is about 28 kilometres (km) per trip, a total of 56 km one day. Below are the costs I incurred per month:

Fuel = $400 ($20 per day)

Toll = $200 ($50 per week)

That would be a high $600 a month! And I ain’t liking it.

Solutions?

I opted to use public transport instead. Since then, travelling cost was cut approximately half! Which is roughly $400 a month now for both car fuel and toll fees.

Not only this help save a lot money but also help to save my travel time and reduce stress of going through traffic jams.

Food intakes

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Another way to save is that I chose to cook my own meal – most of the days normally costs me around $100 – $150 for a month worth of food stocks or ingredients.

Aside that, I would simply buy my daily lunch supplies at cheaper price at a petrol station selling cheap cooked foods where I normally pass through everyday when I go to work – that is if I have too packed of a schedule. Costs me $3.50 per lunch box containing fried rice, an egg and a bit of gravy – pretty cheap and neat right?

But then again, there are days that we have that friends night out or Friday night outings so I wouldn’t mind spending a bit for that particular session since I have already saved a lot of margins on other areas. In total, food supplies would cost me around $150 – $250 a month.

Education loans

Yes, you read that right – education loan payments. I’m still actively repaying my education loans every month. That would cost me $100 a month which is not too high of a burden but still a great obligation to meet.

Phone bills

This would normally costs me $120 for my phone bills and I think that is still quite high for me.

I believe you can try and minimize your phone bills by finding better phone plans. If you can reduce your phone bills by $20 a week, that is $200 extra savings a month! and I’m quite sure there are way more awesome phone plan deals out there.

Home installments

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This would costs me $800 per month inclusive of maintenance. However, now that I rented it out – the rental income I generated with the right strategies gave me an extra boost of $200 – definitely great! Check out 4 Unbelievable Ways You Can Maximize Your Rental Income and 5 Traits of a good property to invest and get good rental for greater knowledge of how you can boost your property investing game.

Life insurance

I focused on life insurance because if ever I am faced with a critical sickness and I am unable to work any longer, my insurance would be able to settle all my bank loans pertaining my debt on properties owned. Not only that, the insurance package would also allow the accumulation of cash value where it would have a certain amount I can withdraw as extra money after certain period has passed – you can say that it is like investing while insuring yourself.

By doing so, I would not have to burden my family members to pay the housing loans if I am cripple and not having enough capabilities to work any longer. It costs me as low as $100 a month and it helped cover so much trouble for me in future to come. So if you find yourself still young and just started your career life, take up an insurance but be careful of scams and take up insurance coverage on areas you deem only important for the coverage you want.

Let’s say if your company already have unlimited coverage for your medical expenses, then maybe you can opt not to take medical insurance – for example. I would suggest you to take up insurance from reputable companies.

Have a read on “MRTT vs MLTT? Get yourself insured before buying a property” to get a good glimpse of general insurance knowledge that can settle all your housing debts in event you can’t work anymore. However, this condition will only work if your insurance coverage is more than your full housing debt.

Be mindful that insurance companies find it hard to consider your insurance applications after you are critically ill because it would be a loss to the company – sad truth unfortunately. So take advantage of your good health and ability to generate income now and apply one before the aforementioned happens alright! :))

Costs breakdown:

Car fuel and toll = $400

Food intakes = $150

Phone bills = $120

Education loans = $100

Home installments = $ 800

Life insurance = $100

Total expenses = $1,670

Amount saved = $3,000 – $1670

= $1,330! 

“A penny saved is a penny earned” 

~ Benjamin Franklin

So what can you do with these much savings?

1. Apply an auto-debit (Standing Instruction) from your salary account into your compounding bank account. Doing this will help you Making money while you sleep – the compounding bank account (ASB) just like Tony Robbins advised in his greatest book, “Money: Master The Game”.

2. Invest the money in stock market.

3. Save all of them as your next home deposit.

4. Give to charity (help people in need). Always bear in mind that Giving to Charity Makes You Richer!

5. Provide some money to your parents or family members as presents.

6. Gather enough money and be ready to launch or buy a potential business.

7. Put it in your flexi-bank account to reduce your monthly home loan interest (yep, that’s what it’s called in banks, flexi-bank loans).

And the list goes on….

But whatever it is, always bear in mind that for every dollar you saved would give you better chances of grasping the opportunities when it comes. Have a read at 5 Simple Ways To Save Money to get bold ideas to save money better.

You can’t simply start saving when the opportunity or emergency happened right there and at that time right? That is insane! If you start saving at that very time, the opportunity would have gone into other people’s hands.

You need time to save money enough to be able to take advantage of the opportunities that falls before you. Never the less, knowing that you are reading this article till the end would mean that you care for your financial securities and your future – that YOU want to make that change! Good luck hustlers!

3 Major Risks Of Renting Properties And How To Mitigate The Risks

So you have decided to invest in properties and are planning to rent it out. You have the capital, the knowledge, and a good sense of where you want to invest now. However, you must also prepare yourself mentally for the major risks that awaits you when the rental starts. Here are 3 major risks of renting properties I consider quite substantial during your journey ahead.

1. Tenant do not pay their rent

This is basically the major concerns of most landlords. Landlords screen out the right tenants – or so they thought, and maybe they get good rental payments on time for few months but things changed after a while. You don’t get back your rental income because the tenants keep on delaying their payments. Worse comes to worse, you don’t hear much from your tenants and their bills dued more than 2 months – you checked your house and found out your tenant is already gone. They stayed at your house for free which is being very irresponsible especially at your expense.

2. The house is damaged/ things stolen

Alright so maybe the tenant has left the house for good without making payments and you think – “well, that’s alright! I can always get me new tenants”. But things just got worse when you discovered that your TV is stolen! Or nothing else was left there unlike when you started the rental except for the built-in items which is really not moveable. These kinds of problems are landlords’ worst nightmares.

It happened to me once. We had a condo near KL and welcomed a new tenant. The tenants claimed that she’s married and will be living there with her husband and children. We screened through their background details and found no problems at all. The payments were going smooth sailing the first few months until we did not received it for a month and contacting her seems unreachable. We decided to go visit the condo and shockingly found that our tv and some of our furnitures went poof!! And the house was like a wrecked ship – not to mention the weird smell being left there. Since then we always opted for good property management companies and have seen better results in terms of home maintenance qualities due to good tenant filters. However, some property management companies are only in for the money ignoring their service quality, hence we always opt for well known companies. It is a bit pricey in their services but help reduce lots of unecessary stresses.

3. Rental income does not cover your monthly housing installments

Whenever you are renting out on properties, the best strategy would be to get rental incomes higher than the installments. This is how you make money out of your investments. This is also a reason why you need to consider your housing investments carefully, that is to buy a property that is not too expensive so that people on majority will be able to pay you rentals that they find affordable and in a way helps you generate extra income out of the rentals. One of my property coach who is also my father once advised me, “when you are investing in rental property – go for the people in majority”.

This simply means that you buy property which can cater to the affordability of most people around that area or country. If you think that area is of high income earners then you may consider buying a quality apartment/condominium because people around there have the financial means.

However, if you find that the people living in that area consists of middle to low income earners then you might as well consider the lower range properties which caters to the affordability of the surrounding society. This way, if you are not earning positive cash flows from the property – at least you can get half of the installments covered, even though that would be our last resort. That’s a way you can minimize your risks to this matter.

So how are you going to minimize your risks during rental period?

1. Hire a property management company to manage your property

2. Research your property in depth before you make the investment in order to get the most out of your returns

3. Get your property insured for rental business purposes (there is an insurance specially designed to protect your property provided by the banks)

All and all, provided with great insurance coverage and the right knowledge – any property investments will be a good investment and a worthy one for sure.

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

Have you been walking passed that same house – that gloomy, window broken, cracked door house for countless times and has never been occupied? You might think there is no hope at all to restore that property into good function – you might have to think twice!

Why are abandoned properties considered an amazing investment opportunities?

Simple, normally an abandoned property is sold below the market value! This gets even better if it is auctioned by the bank because it will be auctioned by higher margins below market value. Even though you might need to incur some costs to repair – hey, you got the house way the market value, meaning you are buying it cheaper than most people bought the same unit in the same neighbourhood. On a side note, “Lelong” is a term called by Malaysians as auctioned house.

According to Leslie Low, an auctioned specialist from Malaysia stated that an auctioned property would offer 30% to 40% below the market price based on The Star newspaper. Who would give you a property offer of 40% below market value? A decent newly launched terrace home these days costs RM 500,000. That means you’ll get an offer of RM 300,000 for the same property type – or even better.

How would you know if that property can make money?

Then you might ask, how do you buy a property that will make good investments? It’s simple! So long as it’s below market value, returns positive cashflows during rent, potential capital appreciation, within your usual place of hanging out or work, good neighbourhood and…. that area have a 5 year upgrading/expansion plan (check with your local developer) – then you are all set!

All the good signs are there already giving you the positive signals. Sometimes only that particular house looked all scary and dark but the other houses looked neat and tidy, that’s a sign of a good neighbourhood. Especially if it’s nearby public transport, malls, offices or any kind of public attraction. All these characteristics will definitely drive high population into that area making it having high demands for basic needs and wants – in our case it’s a roof over our heads. People would definitely need a place to stay.

How much money can an abandoned property make?

That actually depends on many factors. One of it is the marginal percentage below market price you are purchasing it. Let’s say you are buying a RM 500,000 worth of property at RM 300,000 during auction, you already have a capital appreciation gap of RM 200,000 there! Even though that capital appreciation will slowly catch up to the market value once the function of the house is fully recovered – hey, that means you are investing at a lower capital.

Wouldn’t it be great to invest a lower capital and have a high return? Everybody else is investing at higher price but still have a return approximately close to yours. Whose the winner? You are! But you still have to do your homework. You must know how much Return on Investments (ROI) that property makes, the future developments that area will undertake, who will be your target customers, and your overall costs short term as well as long term.

Not all properties can make great returns, what is a good property for you may not be the best property for another friend – always keep the foundations in mind. Have a read on 5 Traits of a good property to invest and get good rental to get general ideas on what is a good property to invest.

What is the best way to take advantage of the capital appreciation and low purchase price?

The magic word is “refinance” your house. The gap between market value (bank’s value of the said property) vs property purchase price = extra cash! There are two ways that I know of which is available in Malaysian and international banks – you can use term loans or an overdraft. Take an example of the same RM 500,000 property bought for RM 300,000 and after some time your property value had a capital appreciation to RM 700,000 because there is a new train station built in front of your neighborhood.  Then you decided to settle your loans fast and you apply “refinancing”.

The banks will reimburse you loans at the current market value of RM 700,000 – this will give you extra money to settle your old loan of RM 300,000 and on top of that, getting extra RM 400,000 (RM 700,000 – RM 300,000) that you can use to settle other outstanding loans (education or car) and you even use the extra money to invest in another property or open a new business!

But always bear in mind that the banks will always win. The amount of loans you get will need to be repaid on top of bank interest. Have a backup plan on how you will repay the bank loans before and after you utilized your loans. A good way to utilize your loans is to use it for matters that will improve your life financially such as settling outstanding loans (to avoid long term interest incur), start a profitable business, or to buy assets that can give positive cash flows in the future which outruns the bank loan installments itself. Good luck fellas!!

5 Simple Ways To Save Money

Financial opportunities are everywhere and it may come at anytime of your daily life – be it when you are ready or not ready. How do you take advantage of this? Sometimes you may be faced with great inconvenience – you needed medications, car broke down, or annual education fees. How do you prepare for this? It’s not rocket science, you have to prepare your savings – cash is king. Here are the 5 simple ways to save money.

1. Apply auto debit/ standing instructions

Every month I have set an automatic debit or as known as standing instructions (SI) which takes away a certain portion of money from my bank account. You would have to arrange the SI service with your associated banks. The best thing is the service have no fees at all! Simple right?

You can have the banks to take away your money at a specific date. So if your salary will come in every 29th of every month, you can have the bank to debit your bank account on the 1st of every month – just make sure you have enough money in your bank account. I would normally have the bank debit my bank account and transfer those amount directly into my compounding bank account. Why is this great? Not only does it feel less painful to save (because the bank’s do the savings for you) but you will be able to save and invest at the same time. Your money is growing every month in your bank account through compounded interest, you get yearly dividends, and to top it off – you make money while you sleep!

2. Withdraw only what you need at start of every month

This is a type of control I set for myself everytime I received my salary every month. I will withdraw fixed amount of cash that I deem necessary for that month – based on my monthly budget. For example,

Car fuel – $ 300

Families – $ 300

Foods – $ 300

Total = $ 900

Hence, based on the example, every month I withdraw $ 900 beforehand and stick very hard to the cash I have withdrew. The balanced money in my bank account will be splitted into savings and the other portion will be maintained in my salary bank account in case if I needed extra cash.

3. Have a piggy bank

Everyday I have allocated the maximum amount of money I can spend. Let’s say one day the maximum I plan to spend is $ 15 only and at the end of the day I still have $ 2 – I will put that $ 2 in my savings box.

This strategy actually helps as another filter on top of other saving strategies I have applied. At the end of the day I will deposit all the money in the savings box into my bank account. Well, it’s actually up to you – you can also try and buy good foods for your family or even give to charities. As the saying goes, giving to charity makes you richer. Do not wait till you become rich to start giving, give until you become rich.

4. Be your own chef, cook your own meal

I have been applying this for one year now and guess what? It is unbelievable how much money you can save! I try hard to cook my meals at home and bring it to office the next day.

I noticed that cooking meals that consists common ingredients saves lots of money and time – it’s a good time management technique. For example, cooking meals that have chicken and broccoli or fish for straight 3 or 5 days and switching ingredients every 1 or 2 days. Imagine if you can save $ 200 every month, that’s $ 2,400 a year!

5. Buy what’s necessary, spend little on wants

Sometimes you need that caramel frappe from Starbucks or that banana buzz from Boosts – go for it, buy it! It’s always alright to spend an extra something each month to make you happy, something that helps motivate you to work harder. Consider it a reward for yourself. However, try as much as possible to limit yourself and avoid overspending on things that can cumulatively cause financial leaks to yourself. You may not need to eat at that luxury restaurant every week, try around once a month. Another way to look at this is to buy on things that won’t burden you such as buying a house that is within your comfort financial zone – not a property that caused too much strain on your financials. All and all, save as many as you can while you can and leverage the savings into assets that can grow you money.

Should I Buy Property For Investment First Or Should I First Buy To Stay?

Before I started to get serious with property investments, I always have my mind set to buy a house but am always confused – should I stay right away? Or should I rent it out first? Then I think, “maybe..just maybe I can find a house that can do both! One that can be easily rent out and I can always choose to stay there when I’m ready – or so I thought”.

Turned out it wasn’t so easy to decide because if I choose to rent first, I might have to buy a smaller property first which is not in my interest. I don’t have much time to accumulate enough money to buy a landed house at that time – a landed house in a good location that can  be rent out while I hold no serious commitments and when I’m ready then I can just decide to move in.

On another hand, if I decide to buy my first house to stay then I might have to wait longer time to gain enough money to buy one decent house. Might take me another year.. Might take another 2 years – anything can happen within those years. I have this landed house that I marked my eyes on for quite a long time. It was in a neighbourhood I once grew up – it’s a peaceful place and located strategically in the centre of the small town I live in. But I know that by the time I accumulated enough money, the value of the houses there would jump higher than now.

The probability of not being to buy that house would be quite high and I might missed out better opportunities not buying cheaper properties for rent now. Why? Because the other property I had my eyes at that same time was another awesome apartment, quite small about 650 square feet, but in a prime area of Kota Damansara – a great place with many property boosters like hospitals, universities, malls and strong rental power.

It was quite a dilemma to decide which was the better options. So I studied how many property gurus who started from nothing and now end up making millions. I discovered that most of them started out by renting their homes – it was their first step to a financially free life. One of them was my coach who started from a small business helping his mother selling foods in a school canteen. He bought his first house before turning 25 and rented the house for 3 years before buying another one. All the hard work paid off as he became a property millionaire when he was already 30 years old by diversifying his rental incomes into various businesses and keep buying more properties along the way – pretty smart eyy!

All in all, it is actually up to you to decide whether you want rent first or stay first, why? Because everybody is different – if you have extra money, why not buy two houses (one for rent and one for staying), if you have limited funds then maybe you can consider renting it out first, or.. if you think you want to start a family then it may be better to buy for stay. There’s no right or wrong to this question because it is all up to your own preferences. The type of property that is the best for me may not be the best property for you.

The key takeaway I learnt is to use whatever you have..whatever was given to you – be it skills, money, assets, or anything you have and try to use them to provide value in the market. I listened to a talk by Jim Rohn – an exceptional motivational speaker, he advised that the fastest way to make huge money is to provide value to the market. I think that’s a good way to tune our minds to do good in life. When we provide value to the markets, we are practically solving societal problems. I hope this article helps you to have an idea of what you should do if you are ever in this situation because I did! Despite all the decisions you have to make, I know you’ll make the right choices – best of luck!

‘Should I Buy Property For Investment First Or Should I First Buy To Stay?

Before I started to get serious with property investments, I always have my mind set to buy a house but am always confused – should I stay right away? Or should I rent it out first? Then I think, “maybe..just maybe I can find a house that can do both! One that can be easily rent out and I can always choose to stay there when I’m ready – or so I thought”.

Turned out it wasn’t so easy to decide because if I choose to rent first, I might have to buy a smaller property first which is not in my interest. I don’t have much time to accumulate enough money to buy a landed house at that time – a landed house in a good location that can  be rent out while I hold no serious commitments and when I’m ready then I can just decide to move in.

On another hand, if I decide to buy my first house to stay then I might have to wait longer time to gain enough money to buy one decent house. Might take me another year.. Might take another 2 years – anything can happen within those years. I have this landed house that I marked my eyes on for quite a long time. It was in a neighbourhood I once grew up – it’s a peaceful place and located strategically in the centre of the small town I live in. But I know that by the time I accumulated enough money, the value of the houses there would jump higher than now.

The probability of not being to buy that house would be quite high and I might missed out better opportunities not buying cheaper properties for rent now. Why? Because the other property I had my eyes at that same time was another awesome apartment, quite small about 650 square feet, but in a prime area of Kota Damansara – a great place with many property boosters like hospitals, universities, malls and strong rental power.

It was quite a dilemma to decide which was the better options. So I studied how many property gurus who started from nothing and now end up making millions. I discovered that most of them started out by renting their homes – it was their first step to a financially free life. One of them was my coach who started from a small business helping his mother selling foods in a school canteen. He bought his first house before turning 25 and rented the house for 3 years before buying another one. All the hard work paid off as he became a property millionaire when he was already 30 years old by diversifying his rental incomes into various businesses and keep buying more properties along the way – pretty smart eyy!

All in all, it is actually up to you to decide whether you want rent first or stay first, why? Because everybody is different – if you have extra money, why not buy two houses (one for rent and one for staying), if you have limited funds then maybe you can consider renting it out first, or.. if you think you want to start a family then it may be better to buy for stay. There’s no right or wrong to this question because it is all up to your own preferences. The type of property that is the best for me may not be the best property for you.

The key takeaway I learnt is to use whatever you have..whatever was given to you – be it skills, money, assets, or anything you have and try to use them to provide value in the market. I listened to a talk by Jim Rohn – an exceptional motivational speaker, he advised that the fastest way to make huge money is to provide value to the market. I think that’s a good way to tune our minds to do good in life. When we provide value to the markets, we are practically solving societal problems. I hope this article helps you to have an idea of what you should do if you are ever in this situation because I did! Despite all the decisions you have to make, I know you’ll make the right choices – best of luck!

3 Surprisingly Creative Ways To Make Money From Properties

Generating money from property rental is always what most people will think of when they see a house. These days property investors must stretch their imagination and challenge themselves beyond the common investing paths. Just few months ago I came across an amazing book titled “Propreneur” which was published by MasteryAsia Property Series – I find the book brilliant! The book shared many ways of utilizing your properties to make profitable businesses and it’s a collaboration of many property experts from their respective area of expertise. Here I will share 3 creative ways to make best use of your property and make good money out of it.

Group of people working in a home space

1.Virtual Office and Serviced Office Business     

When it comes to virtual office, this would mean that the business entity or individual subscribing are only interested to obtain the corporate address and call handling services. Normally, those who subscribe to this services is due to its very low cost. How much? It can cost to only RM 35! But having a virtual office would also mean not having a physical office space such as meeting rooms, office spaces or the pantry. The type of people subscribing to this service are freelancers (ie. photographers, graphic designers, etc.), branch representatives (people who open branches in other areas but have too little staffs in the new branch), and startups (ie. friends who just started their first business after graduating). These people generally would not need physical space but they need the office address which is from their subscription of services with virtual office providers. Why is this important? When they present their business cards to their clients, they need a corporate address to attract clients’ confidence which is an important aspect to grow their business.                                                                                                                                                                                                                                                                                               Service Office     

 With a service office, customers would be able to enjoy their personal physical space. This is surely better than virtual space and the advantage spans from readily available phone system, IT infrastructure, network coverage, and basic amenities such as water and electricity.  Renting a space will definitely have way better perks than just subscribing for a virtual office space. Normally such spaces are rented by multinational companies, branch or sales offices. However, buying such space to carry on this type of business would require an ideal location and have the right size of office depending which type of target customers you are aiming. Maybe you can start to have a look around for properties that can maximize your rental as a start – this is because running a service office would require similar booster indicators when you rent it out.

Dinosaur skeleton in a museum 

2. Tourist Attraction                                 

You may came across vacant properties when you were walking down the usual street to buy your daily groceries and you might think “who would stay or make even make use of this place?”. The windows are broken, holes in the ceiling, and high grasses all over the unit but truth is – you can turn it to better use! You just have to think outside the box.  We have a look at Steven Tan, a CEO of Inpromastery Sdn Bhd which he started at age 24 and has a vast portfolio of 158 properties within 7 years through group investment model – how did he do it? One of his project is turning a property into the first 3D art museum in Penang, Malaysia – a place that is famous with tourism. According to Steven, they receive approximately 1000 visitors on a normal day but the number boosts to 3000 visitors a day on festive seasons in addition to be able to achieve their ROI within a year.                                                                                                                                                                                                                                                                                                                                                  Now that we know about the idea, what about the costs? From my personal view, I believe the costs of setting up these kinds of business depends on how big you want to launch your business. However, Steven’s business costs RM 1 Million which took about 5 shop lots to be able to cater up to high traffic in Penang. You might wonder, “how about recurring costs?” – well, it will take up RM 35,000 to RM 40,000 which covers areas such as staff salaries, property
rental, maintenance, and others. Making this business a success would require a great deal of research, know your target market, have a unique business idea, and a great mindset. You may even have to liaise with local taxi or bus drivers as part of your marketing to get the word spread about your business. None the less, the fun is seeing you and your business grow and feeling satisfied through the process.

Vacation home on a forest hill

3. Airbnb

Started since 2007, Airbnb has topped their revenue up to 2.6 Billion USD! I remembered what my property coach taught me, “when you venture into Airbnb, you have to think tourism!” – and in tourism, the best location to have your property is at places with entertainment, business, tourism and/or hospitals. In terms of which type of property to invest in for airbnb services would be apartments or small houses – why? On general, people who opts for airbnb services would normally prefer cheap places to stay but also offer an experience of living in another person’s home. However, there is no right or wrong to this – I have even met successful airbnb hosts that makes great ROI from his property and its a landed unit. However, I noticed that successful landed unit airbnb hosts are able to obtain such great ROI because their homes offer unique perks such as near to the beach or university where parents or families from other countries or states can have an overnight stay before their children’s graduation at the university. But then again, demands for vacation has always been there – the question is whether you want to make a serious business out of airbnb or doing it for fun, it can be either way or both! 

 

4 Secrets You Should Know to Get Your Loans Approved

Before you head out straight into applying bank loans, there are few checks you must make to ensure high chances of approval. I previously had the chance to have a conversation with a banker who now becomes a businessman and he shared something incredible. You might be wondering “how do I know what to check?” or “how would I know my chances of getting approved?” – well good thing is it is not rocket science. Here are the 4 major checklist you have to follow through.

1. Application Score

In the old days you will normally have to meetup face to face with bankers at the banks. Banks no longer have to see you or you seeing them which may cause biased loan approvals. But things changed, banks have a system these days to screen your loan application. The system is like a score engine that sees through your profile demography such as, your:

  • place of work
  •  home address
  • salary
  • work experience

However, a brilliant tip to get your loan approved is to change your home address. Change my address?! When I say change your address does not mean you have to move to a new home or change your address in your personal ID – it simply means using your parents’, siblings, or spouses home address when you apply your loans in the bank form. Why is this important? Believe it or not banks will also assess your financial strength by the place you stay. In Malaysia, places like Bangsar or Central Kuala Lumpur are expensive places. Banks may fare better for people who stayed in Bangsar compared to those who stayed in a lesser developed area. Bank’s logic is that when you stayed in developed areas means you can afford the lifestyle there which also reflect your financial strength. However, this all depends on where you buy your house, you may get a better approval chance if you buy a house in less developed areas if you stay in there – just try your luck, we’ll never know.

2. Banks Will Assess Your Income Level

This is important because the bank would like to see how much you are earning which also determine your loan payment capabilities. If you don’t meet the banks’ income criteria then you will be rejected – as upset as it sounds. Another good advice is to choose the right bank! What do you mean choosing the right bank? It simply means you will have to ask the magic question to banks, “how much percentage of my income do you recognize to process my loan? “. That’s right! Some banks only recognize 70% of your income instead of 100% for your application. Let’s say your salary per month is RM 3000, if the bank only recognize 70%, that means you are applying your loan for RM 2,100. If a RM 3000 can get you a RM 160,000 worth of property, you might need to rethink your decisions if the bank allows only 70% of the total RM 3,000. The key take away is to ensure that you ask the banks how much percentage of interest do they recognize on customers’ loan applications.

3. Credit Score Report – CCRIS

When it comes to your credit report which have all information regarding your credit score, banks will know everything which in this case recorded in the, “Central Credit Reference Information System (CCRIS)”. CCRIS knows all about your credit facilities such as PTPTN, car loan, home loans and whether or not you are a good customer – a good customer would mean a good payer from bank’s perspective.

If you are a credit card user, you may wonder, “how am I to know if my credit score is good?”.  just make sure not to use more than 50% of your credit limit –  as simple as that – well, theoretically. But you may also wonder, “what if my credit score is clean? like a piece of white sheet with stains on it” – that won’t be good as well because banks cannot judge your financial behavior such as your spending patterns or how well are you committed to paying any financial commitments.  A good tip is to take up an ASNB loan which has a compounding effect in it since it does not disrupt any of your CCRIS. Not only will it help you saves money, it will also grow while you sleep! you have nothing to lose. However, try minimize using unsecured loans such as credit cards – why do I say this? Banks will think that you are a “credit hungry” person or you don’t have much cash with you when you use or apply many credit cards and this gets worst if you don’t pay on time.

and last but not least….

4. Monitor your Debt to Asset Ratio (DSR)

Let’s say you run short on cash that month but you still swipe your credit card for few non-needful items just because it has huge discounts – Oh man, I haven’t paid my credit cards yet this month! Worst, the bank called you and ask for your payments and it has going like this for few months. Chances are, your DSR is already quite critical because you find it hard to pay your own commitments or are poorly managing your finances which may need your financials restructure.

The standard DSR formula is “all your commitments + any new loan application (in RM) divide by your net income (after tax and EPF deductions)”. Different banks have different DSR acceptance rates. Some banks will approve people with DSR maximum of 60% while some banks prefer 45% (which is quite a good percentage). This apply same to applying housing loans, have read on 4 Great Tips For Getting your Loan Approved !

All and all, my advice is to bite what you can chew – don’t take loans with commitments higher than what you think you can pay. Settle for things you can afford so long as you can have a peace of mind. You are not enjoying life if you get financial headaches to maintain your big houses or great cars – the important thing in life is to be happy and to always know that you have extra money to live off comfortably at the end of the month or as I call it “financial abundance”.

Giving to Charity Makes You Richer

Money has been mostly what people chase in their life to ensure they can meet whichever needs or desires may come. While many think that money makes them happy – money is actually a tool to make us happy. Some people are happy because they get that new Mercedes, or they get that new pair of shoes, or even that latest iPhone – but what is actually used to have all these? That’s right, it’s money.

But believe it or not, people tend to become happier when they commit a portion of their money not on themselves – but towards other people. People will become happier when they contribute to others, they feel life has a meaning because they feel like they are making a change – and indeed they are!

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By now you will be asking – man, how will by giving to charity make me richer?

Based on an article from the Entrepreneur, a research from The Social Capital Community Benchmark Survey by Harvard University stated that giving more of your money for charity leads to higher income. This fact takes into account of the differences in race, religion, age and other personal characteristics in America. How is this possible?

According to another research from the United States and the Center of Philanthropy at Indiana University provided an essential example – $100 increase in income per person leads to an increase in $1.47 of additional money given to charity. Simultaneously, an increase in the same $100 given to charity boosts GDP by a marginal $1,800. It is amazing to observe that small amount of money channelled into the society would impact such large multiplier effect and stimulates economic growth.

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There is also another research called “Feeling Good About Giving” conducted by Harvard Business School discovered that people who experienced positive events such as receiving cookies or finding dimes in a payphone place are more likely to help other people afterwards which is believed to be due to the happiness they felt. This is further backed up by another experiment conducted where a group of people were to report their general level of happiness after disclosing how their monthly expenses are utilized; either towards personal use and/or public social purposes.

Surprisingly, people who give more money for charities experienced greater happiness. I would say that is also a type of richness in life, I mean, there are people out there who have billions of dollars in their banks but are still unhappy, worried or sad most of the time – hey, look on the bright side! You are already rich when you are happy and content with what you have and found meaning in life – that’s a great deal!

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Analytically, when people feel happy – they will give more money towards other individuals or institutions for charity purposes. Simultaneously, when we look on a countrywide perspective, the charities (be it in money or other forms of charities) distributed will then encourage people to spend in the market. As a result, the country’s productivity is boosted – hence resulting in economic growth.

What happens if there’s economic growth? More of the consumers will have better incomes or stronger purchasing power – it will become a continuous cycle of pure goodness. Not only you are making yourself feel happy but you are also helping people become happy too! More people will have high likelihood to make charity and help more people who are in need. If ever, you feel like things always go wrong in your life, try and give charity a shot – who knows what you might discover along the way. Giving is living and you will always get more than you give. 

What’s the difference between master title, strata title, and individual title?

Whenever you are purchasing a property or you went for a property purchase inspection, people always say things like, “don’t worry this unit has strata title issued already” or “this unit is great but it is still under master title” – why is this so important? It’s important to know as it affects your property purchase process especially in terms of time. In this article we will discuss on master title, strata title, and individual title.

Master Title

Having a master title means one thing, the property is under a major/parent grant which is usually the property developer themselves. The master title will eventually be released as an individual title (normally for landed properties) or strata title (normally for high rise buildings). However, the title release will depend on the property developers in terms of how fast they settle their land purchased from the government through self finance or banks using bridging finance. In Malaysia, it may take 3 – 10 years on normal circumstances.

Strata Title

Unlike master title, strata title is issued for high rise properties. Having a strata title means you are now the rightful owner of that small unit up the apartment – finally! This implies that the land lot has been split evenly to all respective owners. This also means that it will be easier for you to purchase or sell the property without consent from the property developers.

Individual Title

Similar to strata title, individual title is normally issued for landed properties. Having an individual title means that the property is under the ownership of the individual who purchase the property. The issuance of individual title is normally much faster compared to strata title. Sometimes, even though it is a landed property but in a gated housing areas with guards and facilities – the property can be considered as strata title (as it is in a shared areas, similar to the concept of a serviced apartment) and not an individual title. Hence, do ask your developers whether your property is under which title as each title has its impact on your whole purchase process.

The links below might interest you~

https://hustlerinvestor.wordpress.com/2018/11/18/3-surprisingly-creative-ways-to-make-money-from-properties/

MRTT vs MLTT? Get yourself insured before buying a property

Any other people should be aware and act to include themselves with an insurance coverage once they are able to afford one. You can consider yourself lucky if you start paying at a young age because the younger you are – the smaller the insurance premium you have to settle. I have heard many stories where people buy a house then suddenly – wham!! They got into a major accident and unable to work again. What happens next? He couldn’t pay the loan installments, banks put his house on auction (lelong), and the poor fellow lost his home – all because he didn’t get himself insured. Maybe you are thinking it’s too early to get insured or maybe you are concerned that it would take huge financial impact on you. My advice is get yourself insured while you are still healthy because insurance company would have high chances of turning you down if you apply when you are critically ill. Believe it or not, you can get yourself covered for RM300,000 by only paying RM 100 a month, small sum for a big life changer. Here are two types of insurance for starters:

Mortgage Reducing Term Takaful (MRTT)

MRTT basically will only get you covered on a single property and it acts as a safety mechanism for the banks in the event that the borrower (us) gets a total permanent disability (TPD) and could not work anymore to make the bank loan settlements. However, with MRTT – the banks will still be paid in full by the insurance company on the whole property price if the borrower faced TPD.

These days MRTT are made mandatory by banks in Malaysia because there have been many cases years back where borrowers make MRTT as an optional matter and in the end faced TPD. Resulting their properties to be auctioned and banks consequentially have to sell the property at lower price. MRTT will normally be included as part of your bank loans during your loan application process. Have a read on “4 Great Tips For Getting your Loan Approved” for better insights to have a successful loan application. For MRTT, you may get covered for only one property and that the monthly payments reduce over time (which is good, maybe?) – but so does your coverage (covered only in specific period) gets reduced and the coverage will no longer be available to you after the contract period ends. MRTT is especially beneficial for people with less dependents/ family members.

Mortgage Long Term Takaful (MLTT)

Unlike MRTT, MLTT covers you forever but you will have to pay forever until you pass away. Well it does cover you forever but it also requires you to pay forever? how do you take advantage of this? The answer is to start as early as possible! The earlier you start paying your insurance, the cheaper the premium you will pay. Also, the amount you pay monthly will be fixed forever – unless you are willing to increase the amount of  insurance coverage when your salary increased. You can decide whether or not to top up your coverage anytime in futures to come.

Finally, the best thing about MLTT is that if you are faced with TPD – your house will be fully settled completely. Let’s say your property loan is RM 200,000, your insurance stands at RM 300,000 – your house will be fully paid and the balance of RM 100,000 will be distributed to your family members 🙂 This way your family won’t suffer too much of a harsh time in your death and you  can rest easy knowing your family members are in good hands.

Key Notes:

  • You may fall critically ill anytime and when you do, you may not able to work, when this happens – you can’t pay your bank loans
  • In the end, you will lose your property to lelong (auction) – you may have no place to stay anymore, family members will be in hard times.
  • The younger you start paying the premiums the better, because the premium paid is determine by your age, the younger you are, the lower your premiums will be.
  • In event you can’t pay your loan due to critical sickness, the insurance will help settle all your loans, provided you take an insurance that covers the property price your purchased. Start young and get protected fellow hustlers!”

Making money while you sleep – the compounding bank account (ASB)

When it comes to investing, you don’t have to become a genius or squeeze your brain to the extreme by figuring out stock investments, index funds, gold investments and many more complicated investments out there. In this article, we will talk about an investment that can make money while you sleep – It is a financial instrument that helps multiply your wealth by many folds. Even Tony Robbins, one of “Top 50 business intellectuals” by Accenture, really stressed on the potential power of compounding in his book, “Money: Master the Game”. But knowing how much the compounding power holds such super potential, how come we don’t see many people taking advantage of it?

“If you don’t want to work, you have to work to earn enough money so that you don’t have to work”

– OGDEN NASH

Based on the book “Money: Master The Game”, the key to having your financial freedom is to work hard enough and accumulate massive abundance of money – which then makes the money work hard for you. This compounding technique is your main road to financial freedom and acts as your freedom fund. Cutting to the chase, the main criteria to make money while you are sleeping is as simple as – discipline, have a portion of money to put aside in your bank account, and  having determination not to disturb the portion allocated. But I would like to think of the money you put aside not as your savings – but investments; investments that will grant you your dreams!

This would require you to make a significant financial decision in your life. What decision? It is the fixed amount of money that you are willing to set aside every single month out of your income stream. How much amount of your money you are willing to park inside your bank account and leave it untouched no matter what happens in your life, no matter how desperate you are – that is the sacrifice. But heed my words that your sacrifices won’t be in vain for the money you put aside will keep on accumulating and grow, and keep on growing on dividends until you see that the income it produces on compounding effects will be big enough to help with your lifetime needs and wants and for the people you care.

“Riches are not an end of life, but an instrument of life”

– Henry Ward Beecher

Some examples that have compounding effects are like the retirement scheme in The United States, 401k – or in a more relatable context in Malaysia, the Amanah Saham Berhad (ASB). Let’s take an easy example:

 If you take a 100,000 loan for 30 years. Every month you put in RM 650 – this would give a return of approximately RM 8,000 a year for the first year, and you will have about RM 17,000 the second year. How does this happen?

1st year

If 1 month = RM 650,

12 months = RM 7,800 (this is the amount you will save in your bank for one year)

With an average of 7% return annually for ASB,

You will get RM 7,800*1.07 = RM 8,346, you just invested and obtained a great amount of approximately RM 8,000 a year!

2nd year

Assuming the monthly payment is the same as 1st year, you will still pay full RM 7,800 a year for the second year.

But,

The calculation would be calculated as dividends on top of dividends, what do you mean?

It means,

[RM 7,800 (full year payment) + RM 8,346 (first year payment + 7% dividend)]*7% = what do you get?

RM 17,276!!

Who would give you RM 17,276 in two years?! Plus, you can now put a 10% deposit for a RM 170,000 house now – simply awesome. So how much can the amount grow to in 5 years? – it is RM 47,995 but this excludes yearly or quarterly bonuses that the banks may announce which means the amount should be higher than RM 47,995, crazy right? The amount will keep on accumulating like a snowball because it grows dividends on top of dividends from previous years. Having all the necessary capital, you can now take steps to proceed to know the 5 things you should consider before buying your first house or you can start by knowing the basics of buying a house through the 7 steps guide to buy a house – the complete guide – it is all up to your own pace.

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.”

– Warren Buffett

Now imagine a bigger vision – after 30 years that 100,000 loan you took may have stretch to RM 600,000! just by applying consistency and discipline – who will give you RM 600,000! let alone RM 1000! Using the power of compounding you will be able to achieve financial freedom!

But always and always make sure to have that minimum amount saved in your mind and take action to do the needful, put the money in your compounding bank account. Tony Robbins advised, “turn your should into your must!” and in this case having that clear mind to achieve financial freedom and make that fixed amount saved in your bank account must be your must! This is only the surface about investing and we are not even talking about active aggressive ways of investing. all you need is discipline and patience after making that calculation and follow through to your plans, goals and visions so that you can cater a happy life for you and your loved ones.

 

 

4 Unbelievable Ways You Can Maximize Your Rental Income

The best thing about property investments is the capital appreciation of your units and rental incomes. However, waiting for the capital appreciation to get high enough to turn it into cash when you sell it may take a long time. This is when rental income play a vital role to ensure you are winning the rental game. Since properties normally have rental limits based on your rental agreement or size of the properties, the question is – how do you maximise your rentals?

1. Crunching the numbers, focus on Return on investment (ROI)

When you want to invest, always know what you are investing in. Otherwise, it would be called gambling rather than investing. Like any other investments you should make the calculations and see whether or not the property of your choice are worth the money you invested. This is why I recommend you to use Return on Investment (ROI) as your main formula.

You must be interested in ROI rather than the total rental income you received. Why do I recommend the above?

“You must be interested in ROI rather than the total rental income you received.”

Lets take an example, you bought two apartments at:

General formula,

Return on investment (ROI) = rental income per year/total purchase price of property

1) RM 100,000

Rental income per month = RM 300

Rental income per year = RM 3,600

ROI = 3600/100,000 = 3.6%

2) RM 200,000

Rental income per month = RM 300

Rental income per year = RM 3,600

ROI = 3600/200,000 = 1.8%

Looking at apartments 1 and 2, which one would be a better investment?

It would surely be property number one! There are two reasons for this:

1) Apartment 1 has a better return on investment than apartment 2

2) This means that with lower amount of capital (apartment 1), you can obtain a better returns than using higher capital (apartment 2) – thats amazing.

This part of the article is considered as a gem in the property investing game and many property investors overlook this part which made their money grow slow or in other cases – results in a bad investment. You are in great advantage to read this.

2. Focus on multi-family complex properties

While you may think a bigger and more expensive property will give you better rental returns – it may but not as frequent as a multi-family complex properties. So what is a multi-family complex?

It is basically properties that have multiple units in one building or complex such as flats, apartments and even condominiums. Most successful property investors gained their cash cows from investing in a multi-family complex. The main reason why these types of properties are the best investment is because the rent is still affordable on most occasions and these units are suitable for temporary stay. Normally, people on general would opt for a landed house if they wanted to settle down. Those who decided to rent are:

  1. Families (be it short or long term)
  2. Students
  3. Office workers
  4. Tourists

Eventhough these types of properties are slightly difficult to sell, it would not be a major concern if it is situated in a prime – hot area.

3. Keep track of rental market

With a property in your hand, you must treat it like a business when you are making investments. Simply renting it out may give you a decent return – but also keep in mind that rentals will increase with the value appreciation of the property. Hence, always keep track of the market rental rate around your neighbourhood area and also the value of your property to get the most out of your rentals.

4. Find and keep good tenants

This is one of the factors that most investors take lightly. With good tenants, they will help you look after your property properly and most importantly – pay your rentals on time. By doing so, your unit would have lesser damage, have longer rental returns because you want to keep good tenants, and lesser headaches! One of my properties is currently being rented out to a kind married couple and even after a year of them staying there, the house still looks like it was renovated few weeks ago – I am quite relieved to have such good tenants. Eventhough they are renting it slightly below the market rate – I don’t mind because they gave me lesser things to worry and they are looking after my house very well. Therefore, finding good tenants will surely result in an unbelievable way to maximise your rental incomes.

Property investments and general finance tips

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