Mr. Yeong bought his first investment property back in 2009 in a quite remote place which near to the Penang International Airport. Yeong booked the property when he spend his weekend in Gurney Plaza. Fortunately there is a Property Showcase going on there and he managed to understand one of the best project he invested in Reflection by SP Setia. He booked a unit the next a day at $460,000 the next day.
Mr. Yeong shared with me that when he received the key in 2013, the property already can sell for $600,000. It is a cool profit of $140,000. I straight away congratulate him.
Mr. Yeong is a closed of mine and we always share the financial needs often. Based on what Mr.Yeong needs to retire, I told him that he requires to buy 4 more properties to meet his retirement needs. To my surprise, he said that he is done with property. Mr. Yeong said that in fact he is worried about buying his next properties.
How could it be? If a person just pocketed in clean profit of $140,000 and will just stop repeating the formula the next day? It is strange isn’t it? If this happen to me, I will just repeat this simple formula over and over again. I believe you have the same feeling with me. What if the property you bought do not need any capital money? I just could not wait to buy more properties.
I continue to probe further, and understand that he do not know he make $140,000! So purely by blind LUCK.
Of course I spend some time to explain why he was able to make that kind of money based on what he buy. The reason was an emotional one and of course is a good emotional. There is no show house at that time, the price is the highest at that location. But the facilities is the BEST around that location and lastly the developer is a branded whom the first high rise project in Penang. So he made the decision is based on the above criteria with no numbers involved at all.
Would you tell me a person who do not have knowledge in property investment will able to tell you some “numbers” like price per square feet, rental yields, vacancy rate, future upside etc? Of course he would not know and all the decision is based on the emotional one.
Mr Yeong bought Reflection 3 bedder property in Sungai Ara for less than $460,000 five years back as he wanted to stay nearby his working place. There is not too many supply of new high rise in Sungai Ara area with new property. So his options were limited. He was looking for a min 3 bed room as he was already married with 2 children. So at that point of time, Reflection was the best choice for him.
What he did not know and probably did not care at that time was there was a shortage of supply of new, good high rise in Sungai Ara area. In fact there are development in term of facilities such as International school and Second Penang Bridge will be ready in 2014. The whole road infrastructure will be significantly improve at that area connecting to the mainland.
Looking back, Reflection that he bought was priced under $400 psf. The price point was also friendly enough to nicely complements existing, older property within the Sungai Ara area. Mr. Yeong also benefited from buying at the beginning of a property bull run which happen in early 2009. There were many buyers who are of similar profile like Mr. Yeong and upon completion many used this place for their own use, so there is not too many sellers after receiving their keys, so it helps push price upwards to over rm480 psf when he exits this investment. He never knew and understood why he made this $140,000 profit. After listening to my explaination and Mr. Yeong became clearer to him.
At the end of the session, Mr. yeong bought me the dinner in a 5 star hotel in Penang for my kind sharing with him.
