Million-ringgit tips

Million-ringgit tips
Byline: Ahyat Ishak
Edition: Main/Lifestyle
Section: Real Estate & Decor
Column: Advisory

KEEP your day job and be a property millionaire! Yes, that's right. I don't come from the same school of thought as those gurus who tell you that you should `fire' your boss and jump full time into property investment. There are strategies where you can continue with your job and still make immense wealth through property investments and this is called the MSI strategy.

In this day and age, it would be a crime if you only had a single source of income (SSI). Everyone's personal goal must be to have multiple sources of income (MSI). So I am suggesting that your current job remains as your primary source of income (PSI). This column is dedicated to making property investment your key vehicle in MSI and possibly makes it larger than your current PSI. When this happens, you have the choice to work or do property investment full time.
Here are some tips to help you kickstart your million-ringgit property investment business:

* 1. Treat it as a business

First thing is to treat it like a business. If you are serious on embarking on this journey, property investment can't be a hobby, otherwise it may end up being a very costly hobby. When you see it as a business, you are forced to take things seriously and learn the basics of business; for example, accounts, financing, taxes, legal and administration matters. This will make you more critical in your buying decisions.

* 2. Treat it as a FULL-TIME business

Nobody says they are a part-time parent and a part-time worker. Most urbanites are what I call your superman-next-door (or superwoman too of course). You are a super-worker by day and a super- parent by night. Similarly, your property business is full time too, just that you may only manage to deal with it during the evenings and weekends. Remove the mindset of doing anything part-time as it never makes a significant difference. You will only get `half- baked' results and nothing `half-baked' is good, except for half- boiled eggs!

* 3. Corporatise the business

What this means is consider opening your property investment company. Some people like to open a new company for every property they buy. I prefer to think of this business long term and park all the properties under one company. Both have their pros and cons. By doing this, you can build a good track record that allows you better credit ratings and easier asset distribution as everything can be split based on equity of the company. In both instances, you can gain many benefits such as tax breaks and the shifting of exposure to credit away from the individual to the company.

* 4. Set up your property investment headquarters

Now that you have a proper property investment business, you need to set up your headquarters. No, I'm not asking you to rent an office suite in KLCC. Just dedicate a small area in your home to all things related to property investment. If you have your own office, allocate a cubicle strictly for that. In both cases, it may just be a small table with a drawer where you can store your files and documents. This will do wonders in `anchoring' down your investment business.

* 5. Maintain good record of documents

Apply best practices in any business that you run, and in anything that you do for that matter. ISO and 5S are two basic standards that you should apply. No, you don't need to engage a consultant for this. Just google the main principles and the basics and apply them. It's not about the certification, its about getting things in order. When you are going to be busy with both your job and property investment business, you need to have everything neat and organized. In the early stages, you may not have someone to help you with the administrative matters, so it's good to get it right from the start.

* 6. Monthly reviews

Do this even if you only have one property. When your portfolio grows to 5, 10 or 50 properties, this discipline will enable you to maintain your grasp on the macro planning of the business. The idea here is to always do the right thing from the beginning. Have a checklist for what needs to be reviewed; for example, rental collection, tenant management issues, and loan servicing. Monthly reviews allow you to avoid prolonging problems like rental collection and unnecessary leakages such as late payment charges, and et cetera. You should also start your reviews with general information of your properties. As your portfolio gets larger, you may not even remember simple things like the size of the unit, original purchase price, and you may even forget that you own it!

* 7. Strategic Planning

Think strategically all the time. Make a buying decision with the ends in mind, the exit strategy. Plan your strategy for the short term, medium term and long term. You need to set certain goals to buy 2-3 more properties. You need to consider when to increase rents and when to dispose. You need to plan the financing periods in advance in order to suit your cash flow.

* Ahyat Ishak, an active property investor. Share your views and comments on www.ahyat.com or connect on Facebook, Twitter or LinkedIn.