From poker to property – See Wei Jie’s story

From poker to property – See Wei Jie’s story

Proving that it is possible for young professionals to get on the property ladder, See Wei Jie, an analyst in the financial services industry is the owner of two strata units of which he is currently renting out.

How did it all begin?

When asked – when and how did you first earn your first RM1,000, most Malaysian youths’ will say that it was part of their first paycheck in their early twenties. See Wei Jie, on the other hand, made his first RM1,000 at the tender age of 13, profits earned from trading Yu-gioh cards, a collectible trading card game.

At a time where Wei Jie’s peers were busy navigating the trials of secondary school, this enterprising lad was already employing the classic ‘buy low, sell high’ gambit.

Wei Jie said, “I was the go-to guy for ‘exclusive’ cards until I got caught by the discipline teacher, that is!”

Fast-forward six years, Wei Jie had the chance to explore his trading skills through casino games while studying in the UK. Proving that even the mighty can fall, he revealed that he actually went into debt after losing GBP10,000 in blackjack.

“I went too hard and too fast, without having enough knowledge of the game as well as sufficient capital to cushion any black swan (an unpredictable extreme event). Having no money to eat for a few months jerked me back to reality. I realised that I was depending too much on luck and allowed emotion to sway my rationale,” said Wei Jie.

To pay off his debts, he took on a job as a poker dealer, where he picked up Texas Hold’em poker. Wei Jie began learning the game seriously – by observing the patrons, watching youtube videos, reading articles/blogs and by practicing regularly.

“I am telling you all this because there is a lesson in here somewhere,” Wei Jie quipped.

“Only when I felt I was prepared – knowledge-wise and mentally, besides collecting adequate capital (bankroll) did I quit my job and start to play the game seriously. Within 6 months, I managed to win GBP11,786 (over 360 hours of game-time) – slightly more than the amount I had lost before,” he said.

This life experience was what enlightened Wei Jie on the significance of taking calculated and calibrated risks, the impetus behind his property-investing journey.

Wei Jie’s interest in the property market was piqued when he attended a ‘FREEMEN’ seminar in May 2014. The talk enlightened him on becoming financially free through building asset–based wealth and creating passive income. “It opened up my eyes on how the property game could be played on a completely different level if you are creative enough. That is why I determined that I will focus on property investing as my wealth creation strategy,” he explained.

Venturing into property

On how he gleaned his know-how on property investment, Wei Jie said that he attended numerous seminars and workshops, which exposed him to not only a wealth of knowledge and teachings from property experts and fellow investors but invaluable networking opportunities as well.

One of the recent seminars he attended was the “StreetSmart Interior Design Riches Program” by Adrian Wee, Founder of ID King Academy.

“It gave me a whole new angle on how to play the property game from the ID perspective. As per the words of Benjamin Franklin, “An investment in knowledge will always pay the best interest,” he added.

When it comes to investing in property, Wei Jie explained that one has to understand how to “play the odds” and try to take as much smart risk out of their ‘play’(property investment) as possible. It is all about minimizing losses if you lose and maximizing winnings when you do win.

Strategies

Wei Jie believes that rental properties are a great start for investment, as you are able to enjoy positive cash flows while leveraging on the potential capital gain from property appreciation.

His mantra when purchasing property is to always buy one that is below market value and to ensure that the rental income received would cover the monthly expense comprising of monthly and lump-sum expense, thus guaranteeing a positive cash flow (formula below).

       Monthly Cash Flow = Rental [Monthly (Home Loan Installment + Maintenance Charge) –Lump-sum(Sewage Charge + Assessment Tax + Quit Rent + Insurance)]

This means that your tenants will be the ones paying your mortgage for you. Also, the additional profit made from the property can then be used to purchase your next piece of (bigger) property.

“I started small, with a cheap apartment unit in Petaling Jaya I purchased in October 2014.  The cash-out from the investment were then used to purchase a bigger unit in KL the following year,” he shared.

 

Property Description Purchase Price (RM)

 

How did you raise the deposit? Current monthly rent (RM) Percentage of purchase price (min 7%) Current Market Value (RM)
Apartment, Petaling Jaya

650 sqft – 3 bedrooms&

2 bathrooms

88,000 Savings & poker winnings 700 9.54% 100,000

120,000

Condominium, KL

1200 sq ft – 3 bedrooms &

2 bathrooms

365,000 Savings (inclusive of rental income) & borrowings

 

2,530 8.32% 450,000

500,000

 

On determining what a good monthly rental rate is, Wei Jie shared that it should be at more than 6% of the property’s purchase price. He said, “At 6% you would be breaking even, hence to make profits, you would want a figure of at least 7%”.

Wei Jie’s advice to potential (beginner) investors is to always maintain a positive cash flow so that you will have the ability to continue to grow your portfolio without cornering yourself in a tight corner and not being able to service your loans.

Another tip is to avoid borrowing for unnecessary expenses, such as purchasing an expensive car, as you would not want to affect your capability (debt-service ratio) to continue to borrow and invest in more properties.

Besides that, try to create additional streams of income, preferably a passive one. A penny pincher himself, Wei Jie parks his second-hand car outside and rents out his own parking slot in his condominium unit. “I don’t’ mind the slight inconvenience for an additional RM130 a month,” he said.

His card-counting and poker days also taught Wei Jie certain skill sets – well-developed analytical skills and a sense of tactic and strategy.

“I leverage on the inefficient nature of the property market – what I look for is not a particular type of property, but the person who is willing to, for whatever reason, sell his/her property to me at a price below the market value,” he explained. Wei Jie’s search for the favorable rental properties is facilitated by his very own 6-steps property-sourcing guide, which incorporates strategy, probability and psychology.

1.     Scanning

Start with an area you are familiar with, preferably a location nearby as this facilitates maintenance of property and management of tenants. Find out all the properties within the area and keep it under your radar for research and constant monitoring.

2.     Researching

Quantitative

  1. Value of similar transactions in the area
  2. Banks’ valuation on property’s current value
  3. Rental rates for similar units
  4. Monthly and lump-sum expenses

Then, using the information above, calculate and determine:

-the highest price you are willing to invest

-the lowest amount of rent you are willing to charge

Qualitative

  1. Location, accessibility, availability of amenities & facilities
  2. Occupancy rate in the building
  3. Maintenance quality of building
  4. Future development around the area

Fundamentals

  1. Land title(strata vs master, bumi lot vs non-bumi lot)
  2. Land type (freehold vs leasehold)
  3. Availability of Certificate of Fitness
  4. Developer’s strength and reputation

Paymaster(tenant)’s profile

  1. Demographic
  2. Employment
  3. Financial profile & credibility
  4. Third party reference
3.     Searching

  1. Online (website listing)
  2. Onsite (banners, tenants, neighbours, security guards)
  3. Networks (property agents, investors, investor group)
4.     Viewing (Confirmation of research facts)

  1. Status (owner occupied vs tenanted vs vacant),
  2. Condition – water leakage, sewage, electricity, flooring, wall, fitting, fixture & furniture
  3. When & how much it was bought for (Is it RPGT bound?)
  4. Reason for selling (what is the catch?)
5.     Negotiating (Price Vs Terms)

  1. Figure out the owner’s lowest wiling-to-accept PRICE (ask for asking price, complain & critics, offer rock-bottom price with the aim of arriving at your willing-to-invest price)
  2. Find out as much as possible from the agents – such as whether the owner is looking for a quick sale and how long the property has been on the market
  3. Negotiate on TERMS (subject to early vacant possession, loan approval, legal due diligence, rebates, fitting & furniture, repair and renovation etc)
  4. Create urgency by signing booking form and offer a post-dated cheque
6.     Closing

  1. Loan application (apply to at least 3 banks to ensure loan approval within timeline)
  2. Legal processes (appoint trusted lawyer to ensure due diligence and preparation of Sales and Purchase Agreement within timeline)
  3. Change name for utilities (TNB, SYABAS, Indah Water, Gas Malaysia, Wifi)
  4. Source for tenants

Setbacks

Wei Jie’s journey has not been all bed and roses, though. Elaborating on a setback he experienced recently, he said, “I lost an opportunity to secure an unrealised profit of RM 150,000 from a 20% below market price property deal. I was badgering the owner to lower his selling price further and ended up losing out the property to another buyer. Sometimes you have to accept what is best and not have unrealistic expectations”.

Future plans to financial freedom

Taking it all in his stride, Wei Jie revealed that he would continue to expand his rental property portfolio. “I plan to acquire at least one property every year,” he said. Wei Jie is also planning to explore a lease-to-lease strategy for rental properties and vacation rental apartments on AirBnB, as well as applying his newly acquired knowledge on ID renovation.

Touching on how it is tougher for Gen-Ys these days to get on the property ladder, the future motivational trainer shared the Cockroach Theory wisdom – 90% of results comes not from an event (what happened to you), but from your response to the event.

As Wei Jie puts it, “When faced with a flying cockroach, it is up to you to react out of fear and scream or to compose yourself and get rid of it!”. Ultimately, he says, “Channeling your time and energy into viable ventures such as property investment is the key to financial success. If I can do it, anyone can”.

 

 

 

 

 

 

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