Although I made a mess of my first property investment, using the same housing loan, I managed to make a bit of money after holding another property for a short time of 3 years. In the same year I bought my home (it is more than just a house), I also bought another property which was an apartment. It was sold at a 'special' controlled price as the land in which the apartment was built is owned by the State Economic Development Corporation where it is situated. Perbadanan Kemajuan Negeri Selangor (PKNS) or the Selangor Economic Development Corporation is a well-known entity in Malaysia, which has been developing township since 1980s. Being on its panel of lawyers since 2003, we have the privileges of getting to know a few of their 'inside' information including where is their next development area within the state of Selangor.
I am not that BIG of a player to really buy or create a landbank near any of the land of the PKNS has targeted to be developed, so, I did the next best thing, buying their properties. In mu case, I bought one of the properties which they built through a joint-venture partner which has developed the office which I occupied between 2000 to 2007. I am currently occupying another rental unit of theirs but during that 7 years, my current office was still a squatters area. My old office was just 500 square feet and I was courting the developer for a piece of their legal work. Until now, I failed at getting any legal work from them, especially that particular PKNS's joint venture development company's owner (the real owner behind the well-known political connection the company has) has a daughter which is a lawyer (just down the road actually).
Again, I did the next best thing. I befriend the owner of the development company. I now know the owner, his heir apparent and even his trusted business partner. My legal firm has even recommended the companies' properties to prospective tenants including to banks. You can always gain something from another business owner regardless whether they use your service or not as a lawyer or not. So, in my personal capacity, I bought an apartment which they were building in 2004. My wife then recommended it to her sister. The apartment complex, which comes with a pool is very much high-density, was completed in 2006. We bought it at RM72,000-00/USD$20,600-00 (the special price I mentioned earlier) and tried to rent it out. I bought it using a 100% housing loan and I booked the apartment by paying only RM500-00/USD$145-00.
When we got the key to it in 2006, we managed to get it rented out to a students with a few of his friends. As we signed the tenancy with the student's parents, we thought it was a good deal. It was not. Their son failed the short course he took in the nearby university and we were left with 3 untrustworthy friends who were so unreliable in rental payments. We asked them to go out, discussed our options and finally decided to sell the unit. As a lawyer, I was actually fuming as I failed to enforce a tenancy agreement I have drafted and executed. It shows how incomplete Malaysia current law on tenancy is (which is within the ambit of the National Land Code 1965). The law left too much for a tenancy to be disputed. You cannot even evict a tenant properly without having to go to court of law. In the United States and certain countries, there are sheriffs and bailiffs whom you can rely on to help you evict your tenant.
That was all made okay when we managed to secure a buyer for the house for RM99,000-00/USD$28,285-00 after investing nearly RM6,000-00/USD$1,700-00 of our own money for stamp duty, marketing and . In short, we made a profit of nearly RM19,000-00/USD$5,400-00 within 3 years. That made us a 'flipper', which are those who buys and then sell the property for profit, after holding it for a very short time. Flipper are usually those who buys second-hand property, do it up and then sell it, which is very much unlike us, but I believe it made us nearly the same as them. When I made that much money, it made me a believer in property investment and wanted to invest more....