Ryan Lim

3 key drivers of successful investment management

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Pay close attention to these aspects of your purchase to guarantee long-term success.

One of the many advantages of investing in residential property is that you can choose how involved you want to be in the investment. Many investors treat it as a completely passive investment and outsource the management of the investment and finances to property managers and trusted advisers. Others have a real passion for it and it becomes almost a hobby. Once you have purchased the property, there are three aspects to managing the success of the investment: the property, the tenants and the financials.

The property

Depending on the type and location of the property there are many things you can do to boost the capital value of the property as well as the rent you receive in the meantime. This can, but doesn’t have to, include extensive renovations. Often a new paint job in some of the rooms is enough to really improve the appeal of the property. An example I saw recently was new carpets in the living area of a townhouse investment. The cost was $6,000 and yet the rent increased by $80 a week.

The carpets therefore paid for themselves within 18 months. There are so many examples of this and don’t forget the outdoor areas either. An appealing-looking property from the street is a great first impression and it doesn’t cost much to plant some nice greenery and paint the front fence.

The tenants

Managing the tenants of the property is the main ongoing task of owning an investment property. Most investors outsource this to a property manager who handles all the liaison including finding and screening new tenants, negotiating the rent, looking after complaints, collecting the rent, and ensuring the place is kept in good order. For this they charge a fee based on the rent amount, usually five to eight per cent of the rent. They will also charge for advertising and often other charges when a lease expires and new tenants are required. For these reasons several of my clients choose to do this themselves and therefore earn a higher effective return on their property.

Even if you employ a property manager you should not assume it is an appoint-and-forget arrangement. Of course some managers will be better than others, and unfortunately there are many who are lazy. A common example I see is that they do not do enough research of what rent your property could be achieving in the current market. They tend to focus on just having it occupied. I strongly recommend doing your own research of the area once to twice a year and especially when a lease is coming up for review.

I had a client who, after doing her own research, had the property manager increase the rent by $55 a week after they recommended the lease just be rolled over with the same tenants at the same amount. It turned out the existing tenants stayed on as they recognised what the market value in the area was.

The financials

Many people just assume a mortgage is a 30-year term and that it’s a matter of paying it off over that time. The fact is mortgages can easily be renegotiated and refinanced with the same lender or moved to a new one. Market conditions, product features, and competition change so much. In addition to this, your own financial situation does as well. You should review your mortgage every six months, or better still if you have a mortgage broker make sure they are doing it for you. So many things can affect the rate you are paying and these have large impacts on the financial performance of your property. Recently I was able to save a client 1.3 per cent on a $525,000 mortgage just by getting the property revalued and negotiating with another lender. This saved her over $6,500 a year on her mortgage repayments!

Another simple tip is to get your ATO classification changed to include a property investor. This allows you to effectively deduct your negative gearing and other expenses during the year rather than claim a refund when you file your tax return at the end of the year. It is simple to do and can really help with month to month cash flow. Speak to your accountant about this.

If you’re willing to have a more active role in managing your property investment, there is a lot that can be done to give your returns a great boost. The more proactive you decide to be the better off your returns will be in the long run.

Source: smartpropertyinvestment.com.au

Expo on crowdfunding and fintech

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LISTED Australian crowdfunding company CoAssets is organising the inaugural Expo for Property, Investing and Crowdfunding (Epic) in Kuala Lumpur on Oct 24 and 25 to highlight the potential of crowdfunding and financial technology (fintech) in Asia, as well as to connect investors to businesses.

“Crowdfunding in Asia, specifically in Malaysia, is gaining much interest.

“With the Malaysia Securities Commission (SC) issuing six equity crowdfunding licences in June 15, we believe more and more people will want to know what this new trend is all about,” said Getty Goh, CoAssets chief executive officer.

“Although CoAssets does not have an equity crowdfunding licence and we have not done any crowdfunding in Malaysia, we have been active around the region and would like to do our part for the local crowdfunding community.

“Hence, we felt organising a major expo would help bring topics like crowdfunding as well as fintech to a wider audience,” he said.

Goh said they had lined up many prominent speakers to share their crowdfunding expertise, including Elizabeth Siew, lawyer and managing partner of Iqbal Hakim Sia & Voo, and representatives from PropellarCrowdPlus and Eureeca, two of the six approved equity crowdfunding platforms in the country.

Property advisor and investment coach Milan Doshi will also be speaking, giving attendees a good mix of property, investment and crowdfunding presentations during the two-day event.

To create greater exposure to the crowdfunding ecosystem, CoAssets has shortlisted six startups to showcase their products and offerings at Epic. Startups looking for funding and business opportunities in Malaysia will also be participating in a pitching contest.

The most popular startup with the highest vote will be awarded with RM10,000.

Some of the startups involved in this contest include I Transcend, ParkEasy, Square Social Com-merce, ImageCrowd and Busttle Eco Ride.

There will also be a lucky draw, with participants standing a chance to win RM10,000 cash in prize. In addition, developer Hatten Properties will sponsor a three-day, two-night trip to Malacca.

Prior to this upcoming event, CoAssets successfully organised an Epic expo in Singapore in July.

The event attracted more than 900 participants, comprising industry stakeholders, businesses and investors. It also drew 16 exhibitors from eight countries, namely Singapore, Malaysia, Thailand, Indonesia, Mongolia, Cambodia, Australia and the UK.

MayBank, Propertyguru and Seristine Properties Ltd were among companies that attended the Singapore event.

In total, more than S$9mil worth of business deals were generated.

“We received positive feedback from exhibitors and event attendees,” reported CoAssets chief techinical officer Seh Huan Kiat.

“This is because unlike other expos, we try to organise sessions for businesses and investors to directly connect with each other.

“One such event is the Speed Networking Session, also known as SNS. This is similar to speed dating but it gives business owners an opportunity to meet as many investors as possible and vice versa.

“This provides some structure to break the ice, and we have found that exhibitors and attendees were able to have meaningful business discussions after that.”

Source: The Star Online

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More information, kindly visit http://s.coassets.com/FF1

Developer interest bearing scheme proposed for first-timers

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PETALING JAYA: Mah Sing Group Bhd is proposing to the Government to bring back the developer interest bearing scheme (DIBS) for first-time home buyers.

The developer is also suggesting a review of the real property gains tax (RPGT) as among several measures to boost the sector.

“The property industry has a larger multiplier effect than other industries. Hence, stimulating the industry should therefore have a larger impact on the wider economy,” group managing director Tan Sri Leong Hoy Kum (pic) said in a statement yesterday.

As part of its wishlist for the upcoming Budget 2016, Mah Sing requested that DIBS be reinstated, but only for first-time homebuyers. This, it said, will make it easier for genuine homebuyers to lock in properties at current prices.

“We laud the Government’s continuous initiatives to encourage home ownership, especially for these buyers,” he said.

The property company also suggested that the Government conduct a review of the RPGT to encourage property investments.

“We are also aware of the government’s concerns about the affordability of properties,” he added.

Leong said total property transactions in Malaysia for the first half of 2015 fell 3.5%, while the value declined 6%.

He said that there was minimal speculation in the market as the number of borrowers with three or more outstanding housing loans made up for only 3% of total borrowers with housing loans.

In Budget 2014, the Government increased the RPGT on properties sold within the first three years of purchase to 30% from 15% previously, and also abolished the DIBS as a measure to curb the speculative market.

“In 2010, the government allowed a flat rate of 5% gains tax across the board and a minimum exemption of RM10,000 gain. Many lauded this move as it has greatly encouraged property transactions,” Leong said.

Mah Sing also urged Bank Negara to relax the lending requirements for first-time homebuyers as well as second-time home buyers looking to upgrade due to bigger families. Easier access to end-financing will assist genuine property purchasers, it said.

It added that the Government should increase the housing grant for youths to compensate for the implementation of the goods and services tax and higher cost of living.

The Government introduced the Youth Housing Scheme in Budget 2015 providing assistance to first-time homebuyers, such as a RM200 monthly financial assistance, 50% stamp duty exemption on transfer documents and loan agreements as well as a 10% loan guarantee.

The company also suggested a full exemption of stamp duty for those buying their first residential property to reduce the transaction cost, compared with the current 50% exemption.

“We would also like to urge the Government to extend the exemption or lower the stamp duty rates for all property transactions,” said Leong.

Furthermore, Mah Sing hopes the Government will consider further reducing personal income tax for the middle income group, so the rakyat would have more disposable income to invest in the property market.

It also suggested changing the status of low-cost housing to affordable housing, in order to allow the lower and middle income groups access to homes with better amenities and facilities.

“Currently it is adopted in Selangor. We hope to see a nationwide initiative towards building homes that meets the rakyat’s needs,” it said.

Source: The Star Online

GST First, Point of Sale (POS) Compliance Later

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Chinese chambers say authorities should not rush small businesses into installing a point of sale (POS) system, adding that it’s more important to educate them on GST compliance. JOY LEE reports.

SMALL traders should be given time to fully understand and comply with the Goods and Services Tax (GST) regime before the authorities enforce the compulsory use of point-of-sales (POS) system, says the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

National council member and chairman of SMEs and HRD committee, Koong Lin Loong, says small business owners are still unsure about how to be GST-compliant and are demanding better clarification on the requirement for a POS system.

Last week, Deputy Finance Minister Datuk Johari Abdul Ghani said traders must install POS systems to issue invoices that were printed and numbered, in compliance with the GST standard by Oct 1.

The ministry had identified six categories of businesses at retail level that had to have the POS system or at least a GST-compliant cash register, namely pharmacies, bookshops, grocery and sundry stores, hardware shops, mini-markets, eateries and entertainment outlets such as pubs and karaoke joints.

“We should not rush into forcing all these retailers to have a POS system. I think there should be more emphasis on educating them on full compliance of the GST first. Getting the POS is a good thing but there needs to be a timeframe for SMEs to adjust to the GST system first,” Koong says.

According to Koong, other countries that have implemented the GST such as Australia have also allowed pre-printed invoices as long as they contained details that are GST-compliant.

He notes that expectations for local SMEs to install a POS system over the next two to three weeks may be “harsh”.

“According to the Customs director general, all GST-registered company should not use handwritten invoices. They must use computer-generated receipts. So traders are confused because now they have to install POS. A lot of them don’t have POS and cash registers.

“Is it not good enough to use computer-generated invoices that is GST-compliant? Do they need to get new cash registers?

“There needs to be better clarity on what is a POS and a GST-compliant cash register for these small traders. SMEs want to comply but they are not sure how to,” says Koong.

He is also urging the authorities to give more leeway to small businesses in meeting deadlines, given that the past six months has been a transitional period for them to find their way around the new tax system.

He says SMEs are getting better after this learning stage and expects things to improve over the next six months as the authorities look into problems peculiar to individual industries.

Koong also applauds the Customs Department for their efforts in hurrying the GST refunds to businesses.

“Customs has done a good job in making the refunds. There were delays previously as there were cases of companies that had wrongly put the amount of the refunds, submitting the wrong forms or had inaccurate bank account and contact information.

“Customs has already clarified that they are not doing any auditing. They are also trying very hard to contact the companies for more information so that refunds can be made. This is good effort on their part,” he says.

Under GST Regulation 2014, refunds of input tax are to be made within 14 working days of online submission of claims, or 28 working days when done manually.

Over 92% of companies that had submitted their GST for the month of April have received their input tax refunds.

Koong believes that companies that have all their information in order should not have any issues in getting back their refunds.

One such company is education services provider LeapEd Services Sdn Bhd.

“We started preparations early. We brought in specialists to train our staff because we wanted to be prepared to manage the new system. We made a heavy investment to be GST-compliant because we wanted to be fully compliant.

“I think if a company is fully compliant, the system should work and there shouldn’t be much of a problem,” says CEO John Chacko.

Source: The Star Online

Zeti: Ringgit will Regain Strength Again

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KUALA LUMPUR: Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz is again brushing off suggestions to peg the ringgit, saying that doing so would do more harm to the Malaysian economy.

The ringgit has hit new 17-year lows against the US dollar in recent weeks, declining 26% year-to-date and closing at 4.395 yesterday. The ringgit was pegged against the greenback at 3.80 during the height of the Asian financial crisis in September 1998 and was unpegged in July 2005.

“If you peg the currency, something else will adjust and that means prices or demand conditions, and those might have a greater cost on our economy,” she told reporters following her speech at the Malaysia-OECD High-Level Global Symposium on Financial Well-Being.

Zeti also does not envisage implementing capital control measures at this point of time. “We have market mechanisms that adjust. What we want to demonstrate is that when we have fundamentals that can allow us to adjust, then when the uncertainty subsides, our currency will regain its strength,” she said.

Prolonged weakness in the ringgit, coupled with uncertainty on the global economic front as well as a slump in commodity prices, have also weighed on the local equity market.

Experts said the ringgit could hit another low later this week if China’s manufacturing data, which will be released today, comes out weaker than expected.

The uncertainty surrounding a US rate hike has also played a part in the foreign-fund outflow from local equities and bonds.

MIDF Research said in a report on Monday that the market has seen a year-to-date cumulative net foreign outflow to the tune of RM17.7bil.

“There is a lot of uncertainty in the world. We have to demonstrate that we can live in that uncertainty and survive it,” said Zeti.

She pointed to Malaysia’s resilience during the global financial crisis of 2008/2009 and said the country was quite capable of recovering from economic setbacks quite quickly.

“When there was the global financial crisis in 2008 and 2009, we had huge outflows, much more significant that what we are seeing now, and even then, we were able to intermediate those flows,” Zeti said. — By Wong Wei-shen

Source: The Star Online

5 Tips for buying an Investment Property

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1. Choosing the right property at the right price

Investing in real estate is usually all about capital growth, so choosing a property that is more likely to increase in value is the most important decision you will make, so buying at the right price is absolutely critical.

Unlike buying shares where the value of a company is transparent, real estate is more difficult to price, this however provides you with the opportunity to acquire an asset below its real market value if you are patient and knowledgeable. The key for you is to do your research, work out what everything is selling for in and around the area and then you’ll discover that soon you’ll become very good at working out what a property is worth – you’ll know a bargain when you see it. Never consider purchasing real estate in an area that you are unfamiliar with, particularly when you are approached by real estate spruikers marketing interstate or offshore properties, many of these real estate marketing companies are paid very high commissions resulting in the price of the property being hugely inflated. If you do find a property that you like and are unsure of its real value we’d suggest contacting us or another lender so you can arrange for an independent valuation to be done on behalf of a bank and once you are armed with this information you can often use this as a good negotiating tool.

 

2. Do your sums – Cash Flow is always king!

Investing in property is a proven path to long-term wealth, however you should consider it a medium to longer term type of investment, so you’ll want to make sure that you can afford to maintain your mortgage repayments over the long term. You will not want to have to sell your investment property until you are good and ready and if you were to encounter some financial stress, this could force you to offload the property at the wrong time.

Once you own an investment property it can be quite inexpensive to keep it and service the loan, that’s because you earn rent and get a tax deduction on many of the expenses associated with owning he property and remember that over time rents tend to increase as does your own income – so expect things to get easier over time.

 

3. Find a good property manager and let them to do their job

A property manager is usually a licenced real estate agent that is a professional in their field, their job is to keep things in order for you and your tenant. They can help you with ongoing advice and help you manage your tenants and get you get the best possible value from your property, a good agent will let you know when you should review rents and when you shouldn’t.

The property manager should be able to give you advice on property law, your rights and responsibilities as a landlord – as well as those of the tenant. They’ll also take care of any maintenance issues, although you should approve all incurred costs in advance.

The property manager will also help you find the right tenant, conduct reference checks and make sure they pay their rent on time. It is important also that you don’t interfere too much with tenants because there are laws that give them rights, so always try to respect them. You should however make regular independent inspections of your property to make sure that the tenant is looking after your investment but always go through your agent and give plenty of notice.

The good news is that the cost you pay to your managing agent is usually a percentage of the rent paid, is deducted from the rent and is tax deductible

 

4. Understand the market and the dynamics where you are buying

Consider what other properties are available in the immediate area and speak to as many locals and real estate agents as you can – they’ll let you know if one side of a street is considered superior to the other. I always like to let competing agents know that I am looking at another similar property to see what they the say, it’s a good trick to get inside information. Make sure you do the leg work and consult professionals you can trust. Accessing independent information from a source such as RP Data can give you information on average rents, property values, demographics and suburb reports.

You can access a lot of information on the Internet but if you want a free RP Data Report, contact us and we’ll be happy to provide you with one free of charge as we subscribe to their services. It is also a good idea to find out what changes may be happening in your suburb and local council can often help here. For example, a major construction next to your property could make it harder to find a tenant at the right price or a planned by-pass may mean traffic will be reduced and this may increase the value of your property quicker than expected

 

5. Negative gearing

Negative gearing can offer property investors certain tax benefits if the cost of the investments exceeds income it produces. Australian law allows you to deduct your borrowing and maintenance costs for a property from your total income. However, you can only get a tax benefit if you earn other taxable income in the first place. So, while you are actually making a loss on the property, the advantage is that the loss can be used to reduce the amount if tax on your other earnings. However don’t buy an investment property just to get a tax deduction.

 

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Avoid These 5 Mistakes to Succeed with Your Small Business

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At one time or another, virtually everyone thinks about starting a business. The allure of being your own boss can be strong, but it’s important to remember that launching a new business is risky: According to a recent SBA report, about 50% of all small businesses will fail within just five years.

Managing a startup can be a minefield, especially when the pull of entrepreneurship clouds your decision-making – and when you go it alone with no business experience. But if you do decide to start your own business, it’s a great idea to learn from other’s mistakes and set yourself up for success. Here are five mistakes to avoid:

 

1. Inaccurately gauging demand for your product or service.

Remember – just because you like jalapeño-flavored pickled okra, that doesn’t mean everyone likes it. Too many small businesses fail because the owner overestimates demand. Before launching your venture, find out how strong the demand is for your product or service. Is it a product or service that most people need or want? Does it fit with current trends? For instance, a DVD rental store is probably not a good investment now due to the popularity of streaming services. Before settling on a business venture, ask yourself if the benefits to the customer are compelling and easy to understand. Test demand for your product or service by vetting it with a wide range of friends and family who will be brutally honest with you.

 

2. Entering a crowded market without a distinct competitive advantage.

You may cook an incomparably delicious hamburger or make a mean pizza, but before you try to build a business around that talent, think about how you are going to distinguish your business from every other hamburger or pizza restaurant. It’s important to consider factors like price, taste, décor, service speed, advertising and other choices and define how you can set your business apart.

Without a well-defined competitive advantage, it’s tough to compete in a marketplace like the restaurant business, where it typically takes a lot of time and money to build a viable brand. Make sure you have a competitive advantage that stands out.

 

3. Forgetting to count the costs.

Like any other large-scale project, such as building a house, successfully launching a business requires a thorough, upfront accounting of costs, both financial and personal. Under capitalization is one of the top reasons for business failure, so before you launch, make sure you have a detailed budget that includes not only startup costs but the living expenses you’ll have to take on before your business can start paying you. It’s best to assume it will cost more and take longer than you initially think it will. And it’s also important to include the personal and family costs since startups can be an all-consuming enterprise. It’s better to overestimate the costs and be pleasantly surprised than to project an overly rosy scenario and end up bankrupt.

 

4. Failing to delegate and ignoring critical functions.

No one person is great at every facet of running a business, so make sure you identify each critical function and delegate tasks to the best person to get the job done. Use your strengths to the company’s best advantage and offload functions that others can do better.

Also, make sure you never just ignore the things you don’t like to do. You can go bankrupt just as fast for failing to pay federal payroll taxes as you can if you don’t generate sales. There are many critical functions involved in running a successful business. Get the right people on your team and be sure each one is in the right position.

 

5. Not planning for profitability.

One of the first things you should do when making a business plan is to define the business model. Running a non-profit or charity can be satisfying, and it definitely takes business skills, but before you can succeed in any type of business, you’ll need to know your profit model inside and out.

What is your gross margin on sales? Your net margin? How many sales do you need to break even each day or week? What is the worst case scenario, and how would you overcome it? Establish the key performance indicators (KPIs) for your business that will let you know how your company is performing. Numbers don’t lie, they’re not emotional and they don’t make excuses. If the numbers show you are in a steep decline, take action and make changes before you crash. But you can only do that if you define and measure your numbers

So how can you increase your chances of being among the 50 percent of businesses that make it for at least five years? Luck and timing definitely play a role, but you can improve your odds with careful planning and a detailed strategy. Another way to mitigate the risk of business failure is to choose a franchise business. The top franchises already provide solutions and support to help new business owners overcome potential problems.

Successful franchise companies have proven products and processes, and they have historical data and financials to work with, which are valuable resources at the planning and operations stages. Most importantly, franchise companies can provide support when you need it to make good decisions and avoid the minefield of mistakes that doom half of all small business startups. But whether you choose an established franchise or decide to go it alone, remember to avoid these five common business mistakes, and set yourself up to succeed.

 


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Secondary Market a Good Hunting Ground

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The GST also has made sub-sale properties an attractive option as the authorities have made the distinction between those who sell 3 or more units of properties within a period of 12 months and those who sell less than 2 units or less.

The former would be required to register for GST while the latter will not need to levy GST on the buyer. This means that there is potential saving for buyers of sub-sale properties if one takes time to shop.

As in any market, there will definitely be properties that are priced below the market price and diligent investors who know where to look can definitely pick up bargains. However, one needs to keep the fundamentals in sight and not be lured by properties that are selling at too attractive prices. Ultimately, location remains a key determinant of the capital appreciation of a property.

Gain more than just know-hows, attend and discover opportunities, threats and latest trends in property investment today!

This 8th & 9th of AUGUST 2015, Wealth Mastery Academy once again brings to you our Flagship Event: Property Investment Convention & Exhibition 2015 in Kuala Lumpur!

This year we will bring to you Young Property Millionaires who will share with you how they successfully went from ZERO to HERO in the Property Investment scene!

√ Explore the opportunities to make Extraordinary profits even during uncertain times.

√ Discover how you can start investing even with low or no capital

√ Learn how to continue financing your property deals even if you think you have maxed-out your borrowing ability!

Demand For Property Remains Stable Despite Current Challenges

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KUALA LUMPUR, July 14 (Bernama) — Despite the economic and political challenges in the country, demand in Malaysia’s property market has remained stable, said Andaman Property Management Sdn Bhd Managing Director Datuk Seri Dr Vincent Tiew.

He said investors, mainly repeat and first-time home buyers, still continue to purchase and place bookings on new projects although there is a 50-50 chance for loan approval.

“The perception and general sentiment says that the market is doing badly, but the truth is, the sales continue and the buying momentum is consistent, not only from the rich but also in the mass segment.

“So the demand is still there, only that they have to see the right property type,” he told reporters today in conjunction with the Property Investment Convention 2015 to be held on Aug 8-9 here organised by Wealth Mastery Academy Sdn Bhd (WMA).

WMA Chief Executive Officer Datuk Terry Ong said the convention aims to help investors on upcoming market movements and trends for 2015 and the first quarter of 2016.

“Experts will present on various topics on investment strategies such as land acquisition, infrastructure benefits, developer movements and government policies, to share with the almost 1,000 participants we expect in this convention,” said Ong.

Meanwhile, BIG Plots Sdn Bhd Director Tan Hwa Chuan, who is one of the speakers, said the convention also hopes to educate investors and home buyers on how to continuously purchase despite the current negative sentiment in Malaysia.

“The current scenario is not as bad as in 2008 (global financial crisis), and some who have knowledge including overseas investors from China, Hong Kong and Singapore have continued buying, but they are buying it quietly because there is always a good property deal.

“The issue is they need to wait for the trigger point when the market rebounds, and when that comes, they will be the first to catch the ‘wolves’,” said Tan.

— BERNAMA