By Aisyah Suwardi email@example.com
OFTEN we heard about the story of a successful property investor earning a passive income and wouldn’t need to hold a day job.
However, for those that need a 9 to 5 job to support their daily expenses, there are always ways to boost one’s income and strive towards financial empowerments.
At the upcoming StarProperty.my Fair at Kuala Lumpur Convention Centre at Nov 11 and 12 (Saturday and Sunday), Mark Chua, an experienced corporate worker and the author of “WHO SAYS You Can’t be Rich Working a 9 to 5 Job?” will be giving a talk titled “7 simple ways to boost your income and property portfolio”.
What are the ways to boost your income?
Chua: There are two types of income, namely earned and passive income. Earned income comes from the monthly salary of your 9 to 5 jobs while passive income is from your investment such as in property or stocks.
Many people have the preconception that passive income is sexy, and would try their best to have it while neglecting their earned income.
I find this to be a problem as I think that the more you earned, the more you can invest and leverage more efficiently. Never underestimate your earned income.
In an ideal world, people would want to quit their job in six days and buy six properties in six minutes. But we all know in reality, it doesn’t work that way.
What I did was, I built a progressive career and channelled my increasing income towards my investment portfolio. That way, I utilised my earned income and gained a passive income. It's a win-win situation.
What are the features of well-diversified property portfolio?
Chua: The word diversification itself is a misnomer. I like a saying from the American business magnate Warren Buffet that says, “Diversification is only suited to those that do not know what they're doing.”
Jokes aside, I do not like having ten baskets of wealth which are diluted. I prefer having two or three baskets, being an expert in them and watching them like a hawk.
Do you believe that the current Malaysian economy is conducive for property investment?
Chua: Property investment is a long-term game. For the last 17 years, property prices went up by about 5.4%. Even recently in 2016, when things were deemed "slow", prices went up by 7%.
I don’t have advice on how to time the market but I would advise on being data-driven.
For example, currently, the average price of a property in KL is about RM570,000. According to Khazanah Research, for property prices to be deemed "affordable", it should be three times your median income, which is RM279,000.
Unless the country is going through some recessions, I do not see prices falling by 51%. And if that happens, we would have more problems as well, such as slow consumer spending and massive unemployment.
In short, know your target areas and do your research. Afterwards, make your decision based on the data that you have collected. Then buy the property and wait.
Never wait to buy a property. There is no such thing as the perfect timing.
What are the conventional trappings when it comes to property investments?
Chua: People are usually conflicted between deciding whether cash flow or capital appreciation plays are more important.
For me, both are equally valuable. It’s like being asked whether food or water are more important to your survival when we know both are vital.
In today’s market, getting a positive cash flow property of RM500 per month is quite challenging. Even if you have ten units, you will only get RM,5000.
Instead, the appreciation in your properties from RM2mil to RM6mil over ten years will set you free.
Take note, however, that the RM5000 cash flow will require you to have HOLDING POWER over ten years.
Imagine if you were having a negative cash flow of RM20,000. Chances are, you won't even be able to hold your properties over ten years.
In conclusion, both cash flow and capital appreciation are essential ingredients to the success of your property portfolio.
Time would be your best friend because building wealth takes time and should be boring. Like watching a fungus grow.
What can your audience gain from your sharing?
Chua: I am proud to say that I have a weird and different way of thinking. So during the KLCC Fair, I’ll be sharing on how a progressive income and career can help people to become a better investor. I will also enlighten people on how to get a consistent raise and promotions in their job.
On the property side, I would like to challenge the audiences thought process. I’ll be discussing on whether a location is the most critical concept in real estate, how “boring” properties that appreciate by 2% per year can still earn you money, and how to make your units stand out and be rented out efficiently.
For more information, visit fair.starproperty.my.