29/05/2018
Knowledge first
SAD - WHY EVEN OWNING 6 PROPERTIES WONT HELP MR.A
Meet Mr.A recently over 1on1 and the first thing he asked us was:
“How do I get to RM20,000 passive income per month so that I no longer need to rely on my job?”
We looked at his portfolio and I told him that despite owning 6 properties, he will never be able to make RM20k passive income before he retires if he continues at this way. RM10k is highly possible, but RM20k will be out of reach. We explained that :
1. Most of his properties rentals today has an average rentals of RM700 per month, as its mostly low cost apartments. So RM700 x 6 units, means he collects RM4,200 per month only today. Assuming rental doubles every 15 years, means in 15 years he will be getting RM4,200 x 2 or RM8,400 per month.
2. In order to get to his RM20,000 income per month target, he needs to buy about 8 more similar properties.
3. He is out of his 90% loan now, which means he needs to put potentially 30% downpayment for the next 8 properties. That translates to RM240,000 capital for downpayment which he doesn't have. He has less than RM30k capital today, which means he has enough to buy just one more only.
When he heard this, he was devastated as clearly, he is frustrated with his current job. He thought by investing in properties, he has found a way out and no longer need to be dependant on his jobs anymore. But he now learns that based on what he has bought, it just wont get him there. I felt bad for him.
But hey, thats why we do what we do right? Our jobs is to solve problems that other people cant. So we told Mr.A a detailed 3 level plan (O-R-A) that can be summarised as :
Optimize
Recalibrate
Attack
As a result, he is now able to unlock his 90% loan again, and then able to buy 3 better properties that will bring him much closer to his goals. Best of all, those 3 new properties, can be bought using less than RM15,000 capital. If he sticks to the plan and portfolio we design for him from this 1on1, he has a very good chance of making achieving his goal of having a RM20,000 passive income, using :
a. Just 3 more properties instead of buying 8 more
b. Accomplishing this with RM15,000 capital instead of RM240,000 capital because he can now get 90% loan again.
c. Gain better capital appreciation/gains from mass market properties VS owning low cost properties renting to migrant workers.
d.Manage lesser properties to accomplish the same goals since he only has to buy 3 more properties instead of 8 properties.
Does anyone wants to know how does Mr.A will be able to accomplish this? If I can get 5,000 SHARES on this post, I’ll share the full investment plan for Mr.A since really there are many who wants to know. ( should be easy since we have over 100k followers ) .
Otherwise, we just reserve this knowledge to people who are serious about building portfolio and attends Value Investing Property or 1on1 then. (Y)
%LoanAgain
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