Keep Leveraging in Wealth Building

Many times I come across people tell me they don’t have money to start off their first property investment regardless of their age, young and old. Having listens to all the same story for the past many years, I get bored and fed up. Here I want to share with all of you how you can accumulate more property with calculated risks.

Age is the most critical factor in property investment. Bank at all time prefer young professional to borrow longer term so that they can earn more interest out of it. That why you can see some local banks is providing financing up to age 70 or 40 years whichever is early. That means you can borrow maximum of 40 years for your property loans. This will definitely help in reducing your monthly commitment thus boost your future repayment capability. Take a simple example, I started property investment at the age of 24 and my first rental property is Api-Api apartment worth RM165K @ 1320 sf. My loan was 20 years with monthly repayment of RM 955. Last few months I take initiative to refinance my facility to other bank to enjoy lower rate while capitalizing my “equity”. After revalued the property, I manage to take our additional loan of RM130K. I stretch my repayment to 30 years and maintain lower monthly repayment of RM1250 per month. Even with additional RM300 per month to services my loans; I’m still at positive cash flow as I’m getting RM1500 per month rental per month. But bear in mind, I have cash out my RM130K for other investments. I don’t need to sale my property to cash out my capital appreciation. I still can keep the property under my portfolio for rental collection while my debt will be reducing day by day even with little bit of capital appreciation. But can you do this when you are 50 years old? Sorry to tell you that your choice is very limited. Advices for the young people: Don’t waste your valuable time as compound effect does work tremendously.

EPF fund is one of the best resources for younger people to start their first property investments. Under account 2, EPF holder can withdraw all of their money to purchase new property or to settle part of their housing loans. I’m capitalizing this resource to save interest and to boost my equity especially during refinancing period. Of course some people are saying, EPF is solely for retirement fund. But as I always say, if you can manage your own money better than those professional fund manager why not you do it on your own. For the past 30 years EPF is declaring average yearly dividend of 5%. Do you know that with property, you are making much more than this especially if your property is generating positive cash flow while enjoying steady capital appreciation?  Keep in mind, property is the best tool against inflation. Imaging if you are retired with 3 properties fully settled with net rental income of RM5000 per month. Will it be better than getting cash RM500K from EPF the day you retire? Think smart and wise. Don’t argue with me.

Leverage against your current network is also important in wealth building as this group of people will facilitate you all the way in achieving your goals. The network that you need to keep closed relationship is valuers who can give you good advices on what, where, when, why and how to find good deals. Some of friendly valuers in town are Henry Burther- Mr Aaron, CH William- Mr Ben and VPC- Ms Catherine. They are very helpful in providing their professional advices as they also want their clients getting good deals. You also need to have lawyers who can give you advice on the legal issues and of course charging reasonable legal fees. Bankers is one of the most important network you need to keep as they are the one who provide more facility to you to leverage further with calculated risk. Never try to ignore them, make sure all your facility is paid on time. I always remind my client that if you really want to be wealthy through banks facilities, make sure you don’t default any of your facilities including credit cards.

From here you can see that I’m leveraging my current resources to add more property into my portfolio. With additional of RM130K cash in hand I can virtually add another 2 units of properties worth RM700K!! Followed by capitalizing my EPF money from account 2 to reduce further my loans throughout time. Meanwhile I keep good relationships with all my good friends like valuers, lawyer and banker to search more good deals and hoping to add more property into my portfolio every year. It does grow annually so far as all I need to do is repeating the whole process again and again. That all. Happy Investing.

 You cannot Grow Land.. CK Wong & KH Wong

Related posts:

1. 8 Prosperous Resources in Building Wealth
2. Excuses in building SOLID WEALTH
3. Leveraging
4. The Affluent Wealth Continiously Grow