Land Story 3

This artical was contributed by very close friend MR K..

One of the hard facts of life is that the rich will get richer and the poor will get poorer. Whether we are individuals trying hard to make a better economic future for ourselves and children or nations building their economies, it is the same. The rich will always have an advantage and they are likely to get richer.

The rich man has what the poor do not have. He has sufficient income from his bank savings, investments, stocks and properties to generate passive income and more than pay for his expenses every month. In fact, he may not even care whether the market conditions are good or bad because he does not need the market. He has the luxury of choices and there is no pressure for him to chase the stock market, or squeeze out profits from fluctuations in exchange rates, or lock up his liquidity in fixed deposits. The rich man is the market and he makes the market. The poor man unfortunately has to take the market and live with it.

The rich man can invest when, where and how he wants to. His winning card is that he can afford to wait. At a time when people are running after the market, he will sit back and watch.  When the market comes down, he will pick up bargain stocks and properties  at rock-bottom prices. While the majority struggle to pay off debts and suffer losses, the man with deep pockets drive a hard bargain and knows exactly when to strike valuable assets at a mega-discount.

There is little competition when the investment amount is big and unattainable by most people. I once went to one property auction where the successful bidder drove the price from the reserve price of RM1.8m to a closing price of more than RM4m . He knows exactly what to do. His work is cut out because he knows his bottomline. The other bidders lose to him because he is richer than the rest of them. The rich can afford to sit back and wait for the perfect timing to make his “kill”.

On the other hand, the poor is always in a hurry to make more money.  His little cash is spread thin because it has to cover for daily expenses and the basic necessities of life. Sometimes, certain daily needs may even be sacrificed to squeeze out a few ringgits to buy lottery tickets hoping to strike the elusive million bucks. He gets cheated in get-rich-quick schemes and gamble on football games . He is ignorantly running after the market all the time and does not believe that the odds are stacked high against him. As he struggles financially and get into borrowings, what he has end up belonging to the banks or worse still, “alongs”. The borrower always  end up being a servant to the lender because what he has does not belong to him.

The process of building wealth is definitely more complex than the above. But when we do not have much spare cash to play it like the rich man’s game, we can at least combine the best of the two. Keeping land in your asset portfolio will be a good investment. What I mean is to buy land within your present means and wait for it to appreciate. In order to break out of the poverty cycle, somehow somewhere one generation has to sacrifice to come up with some cash to buy the land. Raw land can still be acquired for less than RM50,000 per acre in the smaller but fast developing towns such as Keningau, Tenom, Kota Belud, Ranau, Telupid, Beaufort and Kudat. This is the “buy-and-wait” strategy. When you waited long enough and development comes along, you can sell your land by the square feet instead of by acres.

The key then is to look for raw land in strategic locations, preferably with road access, and/or available basic utilities infrastructure where there is good potential for future appreciation. Picking the right location will ensure that you have a sure winner. You may not even have to wait that long because there are always more buyers than sellers for land. Remember, land is a scarce resource and everybody wants a piece of it. If you do not buy, someone else will because he can afford to wait for it to appreciate. The basic economic law of supply and demand will naturally drive up land prices. You do not have to look at Hongkong or Singapore to know this is a fact because it is happening in big townships like Kota Kinabalu. Locally, premium land and properties are likewise transacted among the rich because nobody can come close to challenging them. It may be a rich man’s game but if we do not do something now, we will never be in the game at all.

Land is limited in supply and demand is increasing due to population growth and development. There is nothing that smells like the good earth, more solid than any other investment and timeless. You sure cannot grow land, but you can grow your money – in land!  When the harvest time comes, whether in your lifetime or your children’s, you can be sure that the seed money you had sown many years back will reap you a few-hundred fold of your initial capital. Even planting durians will take five years to bear fruit. How about planting some money in raw land and wait?

My own view…Investing in land is just like waiting a big giant to wake up. Only time will proof how fruitful is your harveting is. Yesterday my close associate told me land next to him are under site clearing and expecting some development. He bought the land early this year for not more than RM100K per acre. After asking around, the person who own the development was CKS owner who intend to built supermarket just next to his land. I think his land has double or even triples in terms of value..it was a suprise present for him as he only got it for less than 9 months..This is what we expect in accumulating vacant land. You never know when the suprise going to come but it will…you just need to be ready. So keep practising “buy & wait” strategy.

Happy investing.

Y0u cannot Grow Land..CK Wong & MY DAD

Related posts:

1. Land Story
2. Land Story 4
3. Land Story Part 2
4. Exciting Durian Story

Tagged as: Buy & Wait Strategy, CKS, Kota Belud, Kudat, Tuaran