Tis The Season To Shop in Malaysia – For Below Market Properties

Lawyer cum investor, Ron Ong, believes 2017 is the year to go shopping for Malaysian properties due to the availability of many bargain priced units.
Is there a prolonged winter season for the property industry in Malaysia? “Not at all,” smiled Ron Ong Kit Wee, a young lawyer based in Petaling Jaya, Selangor, Malaysia. “For me, this year up to 2018 is a prolonged shopping spree!”
For the seasoned investor, this is nothing new – during every downturn, it’s time to pick up bargainpriced properties. But, Ong, currently the Managing Partner of Messrs Kuek, Ong & Associates, has a slight advantage.
He is a conveyancing lawyer since 2013 with a wide network of friends in the property industry in Malaysia – they include agents and developers. At last count, he owns about 19 properties – most of them jointly with his family and friends. While most investors consider 2017 a bad year for property investment, Ron believes that with proper planning and research, there is an opportunity in every crisis.
Asian Property Review caught up with him to find out his reasons for being optimistic.

APR: Why do you invest in property?

RO: Historically, property is a safe investment, as real estate is always in demand. Through wars, disasters, economic crises and recessions, the returns associated with property are less likely to be volatile. Even if the value of the unit drops, it is still an asset, one that you can use as a home.
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APR: At 29, you already co-own 19 properties. Tell us how you managed it. When did you buy those properties, and how did you get loans for them?
RO: Most of the properties are managed by our own property management company. We bought them mostly within these past 2-3 years. I understand the requirements for bank loans so don’t have an issue with that. All my purchases are financed by banks.

APR: How long have you been investing in property?
RO: I began investing in property after a short experience in conveyancing, where I met a group of investors who invited me to take part in their venture. That was about 2 years back.
APR: Some experts believe that 2017 is a bad year for investment. What do you think? How do you manage with the slower economy?
RO: There is never a bad time to invest in property. While the economy looks as if it is on a downturn, everyone still needs a home to live in. History has shown us that property prices are not heavily affected by the economy. As investors, we should actively acquire more properties during a market slowdown.
APR: How does your legal knowledge specifically, conveyancing play a role in your property investment?
RO: While I am a conveyancer, I am also a property investor myself. Being well versed in the legal aspects of property purchase and selling, I know the rules and regulations set by the government regarding property transfer, and thus it is easier for me to know if a property can be obtained in a simple manner or if it would require more effort on both side.
APR: Property ‘investors’ versus ‘speculators’ – what is the difference?
RO: The difference between investors and speculators is their intention in acquiring a property. An investor will acquire the property to hold it as an asset, usually to rent it out, producing a flow of income, or to live in it. On the other hand, a speculator buys property with the intention of making a quick profit by selling the property, in an environment where prices are appreciating, for example, during a property boom.
APR: Are all your 19 properties rented out with good rental yield, or do you personally flip properties?
RO: Most of the units are rented out with reasonable yields and some of them can even generate a few hundred ringgit extra cash flow per month. There are also 1-2 units that have negative cash flow but I am working on it by adding value on them and then renting them out with higher ROI with at least 4-6% p.a. Personally, I don’t prefer to flip properties in this current climate as I am more of a fundamental property investor.
APR: How much have your properties appreciated since you bought them?
RO: On average, between 10-30%.
APR: What are your investment strategies including investment time horizon, type of property, location, developer, etc?
RO: Currently for sub-sales, I focus on residential and commercial properties that are at least 20% or more below market value. I also ensure that the property is at least able to generate a fair ROI which is around 5%-8%. Location-wise, I am still focusing around Klang Valley and Kuala Lumpur area as there is an abundance of good properties here. Projectwise, we only purchase by way of bulk purchase and mostly with reputable developers in town.
APR: Do you have any investment mentors?
RO: Not really, I learnt all these through my years of handling conveyancing work and through my association with other senior investors. I also attended a lot of property seminars, conferences and talks throughout the years.
APR: As a conveyancing lawyer, what are the challenges you face during this prolonged slowdown?
RO: Conveyancing can be a very time consuming task, as we have to collect various information. Additionally, conveyancing has strict time frames, and both the buyer and seller may miss deadlines for submitting documents. There are also individual sub-sale contracts to deal with which have different requirements and which require certain styles and form. All of these are challenges that a conveyancing lawyer has to manage – even during bad times.
APR: What is your advice for first time home buyers?
RO: Look for the right property agent and the right lawyer to assist in your transaction.

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