How You Can Become
a Multi-Millionaire
Real Estate Investor!!
by
Milan Doshi
Best-Selling Author
& Independent
Financial Trainer
Mastering the 6
Golden Success
Rules in Life
st
1
Golden Rule
In order to
EARN & INVEST More
You First Need to
LEARN More
2nd Golden Rule
Another Way to
LEARN & GROW
is by
NETWORKING
with other like-minded
people
rd
3
Golden Rule
EARN As Much as You Can,
As FAST As You Can
th
4
Golden Rule
SAVE (not necessarily min
10%) As Much as You Can
th
5
Golden Rule
BORROW (always ensure
Potential Returns >
Borrowing Costs) As
as You Can
Much
th
6
Golden Rule
INVEST WISELY
As Much as You Can
In the Long Run, it’s not How
Much Money You Make that
will determine Your Future.
It’s how much of that Money
You Put to Work
by SAVING It, & by
INVESTING It (wisely)
~ Peter Lynch
RISKS
versus
RETURNS
of Various
Investments
Where Does REITs and
Properties stand vis-à-vis
Other Investments
Offensive Investments
* FOREX/Options/
Commodities/etc
Potential
Return
* Hedge Funds (>30% pa)
* Stock Market (20-30% pa)
* Property * Equity Funds (10% pa)
* Bonds/Bond Funds / REITs (6-8% pa)
Inflation
* Endowment Policies (2-4% pa)
* Fixed Deposits (3% pa)
Risks
Appreciation of = 45% pa over
1 year (Rights/Divids excluded)
A-REIT
(listed Nov’02)
KLCCP Bhd – the
closest to a REIT
Appreciation of = 21% pa over
10 months (Rights/Divids excluded)
Benefits of Investing in REITs
Portfolio Diversification
- REIT’s own Multi Properties,
Diversified Tenant Pool, Different
Lease Lengths, etc
Income Distribution
- 90% of Net Income is distributed
to unit holders as dividend. No
Tax on Rental Income.
Benefits of Investing in REITs
Participation in the Property
Market
- You can own small stakes in big
properties
Professional Management
- No worries about Tenant and
Property Management
Benefits of Investing in REITs
High Liquidity
- Can buy and sell as normal shares
Low-Risk, Stable Investments.
Low Correlation profile against
other asset classes
Low Transaction Costs
- Same as per shares
Market Capitalization of REITs
Singapore: 2% to 3% (S$4 billion)
Australia: 8% to 9%
Malaysia: High Growth Prospects
Upcoming REITs:
Axis (Offices + Warehouse) - listed
YTL (Hotel + Shopping Center),
Sunway City, Landmarks
(Sg.Wang), MRCB, KPJ Healthcare
Official versus
“Unofficial” Inflation
Official Inflation Rate: 2 - 4% pa
“Unofficial” Inflation Rate: 6-10% pa
Types of
Property
Investment
Strategies
1.Buy from Developers and
Resell Upon Completion
Important to Buy the …
From the Right Developers
Right Property Type
in the Right Location
at the Right Time & Price
Sell on Completion
2-3 years at
20-30% higher
Repeat the
Formula!
Example
Book Apt @ 500K
D/P = 100K (-)
Loan = 400K
Sell on Completion 3
Years Later …
Sell @ 600K (?)
Loan @ 6% = 435K
Profit = 165K (+)
Gross 165K – 100K
Profit = ------------------ % = 65% over 3 yrs
100K
= 18.1 % pa (compound)
Disadvantages !!
Price is Cheap but the
RISKS you take are
extremely HIGH
Makes Sense to Pay Slightly More
to Buy Ready Made.
You know exactly what you
are getting + the Risks is
much lower
Structuring
Your
Property
Portfolio
5. Raw Land/
Development
4. Commercial Properties
(Shops, Offices, Factories, Warehouses)
3. Ready Made – Buy for Appreciation
(Landed Houses)
2. Ready Made – Buy for Rental Returns
(Medium Cost Apartment)
2. Buy Ready-Made Medium Cost
Apts – Buy for Rental Returns
Rental Returns: 7-9% pa
Appreciation: Poor (< 2% pa)
Easy to Buy with Zero D/P and +ve
C/F (suitable for beginners)
Tenant Mgtm will be challenging
3. Buy Ready Made Landed
Houses – Buy for Appreciation
Rental Returns: Poor (3-5% pa)
Appreciation: Good (3-5% pa)
Total Returns: 6-10% pa
With minimum D/P, you will have –
ve C/F (Rental < Installment)
Timing is very important
HIGH RISKS due to –ve C/F
4. Buy Commercial Properties
Rental Returns: 6-8% pa
Appreciation: Good (3-5% pa)
With minimum D/P, possible to get
Zero C/F (Rental = Installment)
Location extremely important
Possible to get “Lifelong” Tenant
Suitable for Wealthy Individuals
5a) Raw Land – good way
for the super wealthy
to “park” their surplus
funds for their future
generations
Tip: Buy in Areas where the growth is
heading towards
b) Plantation –
expertise needed
5c) Homesteads
d) Property Development
– your ultimate aim to
make profits of 30-50%
per project
6. Buy Basic or Run Down
Properties, Renovate, Sell Off
Example: Garry bought a run-down
bungalow in Bangsar @ RM1.5m
Tear Down + Rebuilt + Furnish = RM1m
Sold 6 months later @ RM3.3 m
Gross Profit = 800K for 1 year work
7. Specialize in Abandoned or
Haunted Properties
…. if you can find the
owners. Restore the property
back and sell it off.
8. Specialize in Auctions
All auction properties are sold on a “as is,
where is basis”. Clause in the Proclamation of
Sale stating “Prospective Bidders are advised
to inspect the subject property and check on
the issuance of separate individual titles/strata
titles, seek Legal Advice on the Conditions of
Sale, conduct official parent Titles search at the
relevant Land Office and make the necessary
enquiries with the Developers and/or other
relevant authorities on the terms of consent to
the sale prior to the auction sale”.
9. Buy in Areas where
Accessibility is being Upgraded
Example: Old Klang Road, Kesas, new
Guthrie highway, etc
How You Can
Retire a
MultiMillionaire
via Properties
Goal:
Become a Millionaire by
the time you Retire by
a) buying 1 medium cost Apt worth
RM100K every 5 years
with
b) Zero to Positive Cash Flow with the
Potential for Long Term
Appreciation.
Assumptions:
1. D/P = 25K (25%) so that C/F=0
=> Saving of RM416/mth x 5 years
2. Loans @ 8% for 20 years
3. First Apt @ 30 years is own use
4. 1 Apt bought for Investment every
5 years starting at age 35 until
age 55 years
5. No Inflation & Compound Interest
Property Investment Time Line
Age:
30
Own
1
Inves
tment
35
40
45
50
55
60
F
2
FV
250
F
3
4
5
6
225
F
200
F
175
F
150
F
125
1,12
5
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