By Sherry Koh Dec 17, 2010
The humble properTee investor
Over the years, real estate investment consultant Gavin Tee, 44, has helped many people through his involvement in philanthropy, politics and property consultancy. It wasn’t until recently that he decided that he should make himself rich as well, apart from just coaching people and making them rich. Today, he and members of his investment club Swhengtee International Real Estate Investors (REI) Club, which was founded in May 2010, purchase property blocks and units in bulk. In a recent release addressing Malaysia’s real estate outlook for year 2011, Tee says, “There will be a very special phenomenon in 2011 because the best and the worst opportunities in the real estate market will emerge.”StarProperty speaks to the humble Tee, who is also one of the partners of mYoga at his office at The Boulevard, Mid Valley City.
Tell us about yourself.Basically, I got involved in property industry for approximately 19 years. I began my property career with MBF properties followed by working with an real estate agency and a developer as a marketing manager. I set up my own real estate agency 15 years ago. Three years ago, I changed my approach towards the real estate industry by venturing into real estate investment education . In October 2009, I transformed into an investor. Instead of just teaching people on how to invest, I am leading people to invest. So that’s how I changed myself in the last 19 years.
Were you in real estate all this while?I stayed in the US and Canada for seven years since 1985. I majored in International marketing and I love marketing. In the US, I run my own business for two years before returning to Malaysia. The first thing I did upon returning was to apply for a job and got involved in direct selling of a slimming product. A few months later, I took the franchise and started the business on my own, sadly to say the business failed within a year. So I closed the outlets and I lost some money. I then applied for a job and accidentally jumped into property industry, which I thought it wasn’t my interest and was just for money-making purposes.
But once I stepped into the world of real estate, it was so much more different than what I had perceived. In the first month of employment, I beat all 200 sales persons nationwide and became the top sales person, making RM10,000 per month. It was huge amount of money for a fresh graduate.
That’s how I got into property, and since then I treated myself as a professional, meaning that we not only offer our services but also advisory. I wasn’t an investor then because I did not think of earning that way and I thought that I only deserved consultancy or agency fees or commission. However, all the while, my interest is in sharing. It’s my character. During that time, I also organized a lot of events for NGOs (non-governmental organisations). I was very active in NGOs for 15 years and at one time, I held 15 top positions in NGOs, politics and so on. I was spending 70% of my time in social activities of course from there I built my networks. That’s how people knew me in the first 15 years, as an NGO man. Not many knew me as a property man because I only served some personal and corporate clients. It was three years ago in May 2008 that I had my first official sharing with the public under The Swhengtee Property Talks.
After 15 years of hard work in the social scene, I found that in NGOs, no matter how hard you worked, people would still think you have a personal agenda. For us, we did not think about what we can gain.. It was so hard to raise funds. And sometimes we had to come out with our own money. You know we were quite poor because we neglected our own business. However, people still did not appreciate what we did and that was so frustrating. So instead of getting funds from friends, I aimed to make everyone in my circle wealthy so that when we wanted to raise funds, we did not have to plead with people.
Everybody was very excited. They were making money from property investments. They had no problem in contributing because they made money from our networks, my teaching and new opportunities. In October 2009, I started investing in group purchases. Every property I purchased, I advised people to buy. Now, almost every month our group purchase one project.
SwhengTee International Sdn Bhd was set up in May this year (2010), whereby we started the business as an investors’ club in June.
So, SwhengTee International is very new. Yes, very new. But the property talks have been going on for the past three years. Initially, my students got together with me every one or two months. We organized dinner and I made presentation to update property market to them.. Until such time I think it is better for me to spend my own money to set up a physical club with facilities, ie seminar room, library, etc. .
In the last 2 years, we focus on Chinese-speaking market even I had bilingual program. However, we will put more emphasis into the English-speaking market from now onwards.
To reach the public, I came out with a TV programme broadcasted on Astro 304, and I also published a book in Landlording, as well as setting up a Real Estate Investors Club and organizing 100 investment talks in 2010. We got all these things done within 4 months, it was unbelievable.. The most important thing is that we invested in a lot of properties and so far our group have reached a total investments value of RM200 million.
The investment worth RM200 million is as a group? Initially, we purchased as a group. In the last few months, we turned into ‘en bloc purchasers’. Property investment is not just buying at lower prices but also managing and enhancing the property’s value. The most important thing is that you must be able to dispose it at the right time and good price. With ‘en bloc purchase’, we can enhance and turn RM1 cash investment into RM10 return. For example, using the space more efficiently, get the right tenancy mix, renovation and son on. We just bought the VSQ building behind Armada Hotel (Petaling Jaya). We want to be involved in both purchasing and managing. We want our investors do not only make 10% per year, but make a 100% return on their investments.
You talk about enhancements to mark up a property’s value. How do you go about it?For example, if it is an office building, you can get quality tenants. Get the right management team, design the concept and market it. Just like a shopping mall, you can design a theme, you give the mall a life, which can determine its future and value. It sounds easy but you need to conduct a proper study and research.
We purchased the whole block of Bukit Ceylon Condo. We arranged a central management for the 40 units. We pool the rent to make sure all investors collect rental from their investment , which means that even if 30 units are rented, the remaining 10 units also share the rent and costs. Investors are busy, especially if they have 10 properties, they may not have time to manage. We have a group of professionals such as architects, lawyers, bankers, interior, feng shui masters and so on. Therefore, we are able to enhance the value. We also sell properties through our networks. If you want to sell your property to the right people at the right time and right price, it’s very difficult. There are too many properties out there.
What do you cover in your three-day course?I
cover a lot of things in the three-day course. Landlording is one of the subject. When you are rich, you have to be happy. Most of the rich people in Malaysia who own a lot of properties are not happy because they face a lot of problems, particularly dealing with tenants. I teach the property investors how to reduce or minimize the risk at all stages. We also teach them how not to make common mistakes. And, of course, what to buy and how to sell, that is, Portfolio Management.
Do you think that there’s a property bubble?We look at it differently. There are quite some properties which are over-priced especially those so call special projects. But generally the Property price in Malaysia still low, maybe only 5% is too high. One of the principles is we do not speculate but look for the potential ones. The property market in
Malaysia is already a good opportunity. Prices of properties that are supposed to be very high somehow are maintained low for 15 years. Prices of those that are not supposed to be that high are in demand because of new concepts. When you go global or become more commercialized, there are lots of opportunities from the differences. Mont kiara is one of them.
The bubble seems to be exist only when it is overpriced and oversupplied. Malaysia is adjusting quite right. For example, high-end condos in KLCC are oversupply but not overpriced. The land in the city centre is getting scarce. It’s not a bubble but it is an inactive period. Last year, I presented a talk, “Is the worse over?” and I told them that by November last year (2009), the worst will be over and we have seen the price rose by a 10% to 20% this year. However the oversupply problem will not end. It will take at least three years to absorb. This is the thing about Malaysia; everyone builds the same thing. During the last three years, people were building high-end condos. However the current trend is that people are moving into commercial building and offices.
There are some small bubbles scattered but not in general.
So you are saying that in Mont Kiara, the prices will adjust in the next two to three years?I will say the oversupply problem will be reduced to a “comfort” level 3 years later. It may reach 80% to 90% occupancy by then. Some properties in Mont Kiara and KLCC right now have only 20% to 30% occupancy.
For those paying monthly installments, no matter how low, be quick to rent it out. But a lot of condos in KLCC and Mont Kiara are sold to foreigners, some of which were cash purchasers and they left the property as it is. That will affect the whole development. So that’s why when we buy, we buy the whole block so that we are in control. We set up the club to gather those who have the same approach, common interest, knowledge and those have capital in order to make a very fast decisions. In property, when opportunities come knocking at the door, we have to make speedy decisions and act fast to tap on the opportunities. The Malaysian market changes rapidly today, compared to the last 20 years.
Portfolio management is very important. We know when and where to buy, rather than just follow the news. We study the past and movement of every single category and area. We may not know every single thing, but we have a lot of experts and sources of information to tap into. In the long term, we want to be involved in international markets because globalisation has to take place. Since 2007/8, globalisation took place for countries such as Middle East, Korea, Singapore and Hong Kong. I am expecting Malaysia property market will soon to be globalized and expecting a super cycle in 2013.
I am very interested to be involved in studying how to transform Kuala Lumpur into a global city. That will make a big difference to the prices of property. People may think RM1 million is expensive, but that property might turn into RM10 million. I always believe that the minority, a small group of people, will own the majority of property in the prime city centre. If you don’t want to be involved, all the public listed companies, foreign companies and government institutions will occupy these prime properties. Therefore, it is good for us when we can group our club’s investors together, to get involved.
We are looking into buying prime properties in the city centre where our members can be a part of these prime areas; sit back and wait for globalisation to take place and then enjoy the multiple success. We don’t treat it as property, but as an opportunity for business. We look at property investments as a business.
How many talks do you conduct yearly?In 2010, we conducted 100 talks, both large and small.
Do you teach specific strategies?Overall. Sometimes I have guest speakers from legal and finance, as those areas are not my expertise.
What’s your property portfolio?We buy everything at different times. As a group, we have purchased Gated and Guarded bungalows, factory light industrial, medium-cost apartments, office tower, hotels. Almost everything, except land right for now.
Can anybody just join the club?We want people who are passionate about property investment and treat it seriously as a business. So, it is conditional. I think next year, membership is by referral or invitation only
What if someone is really passionate but does not have the finances to invest at the moment?I always advise people need to learn first. People can spend five to 10 years’ savings, but when you ask them to attend a one-day class, they are reluctant. They totally ignore the importance of education and simply purchase with all their life savings. It’s quite sad to say that they only follow what is hot. And most of these ventures may not make them money.
And I always said that for more than half of Malaysian properties, you don’t make money. Even if you gain 5% per year, you are losing money because of inflation and the interest factor. Through our surveys, 90% of first-time buyers are not happy or did not make money from their first purchase, including myself.
What are some of the common mistakes that you can share with our readers? We have a course called ‘10 common mistakes’. Firstly, a lot of people are not able to verify information. So when they step into a showroom or read the a brochure, almost every project looks perfect to them and worth for investing. They only look at two or three projects and they step in to buy. The mistake is that people don’t treat it as a business and they don’t want to learn.
Today, there are changes every single second. So if you are not in the market and don’t have the knowledge or proper network to source for information, you are basically going to be a poor home buyer, not an investor. Secondly, young people don’t know how to leverage in terms of financing. They don’t know how to calculate all the expenses, they mismanage their investment and end up losing money in the end. The more ignorant you are, the less knowledge you gain. That is why I share my knowledge with the public through the media such as tv and newspaper write up and ads. As part and parcel of our seminar programs we also promote our DVDs and TV programme to increase our members and investors’ knowledge on property investment.
What do you think of Government’s ruling on the LTV ratio?There are a lot of people complaining. When you look at the loan part, I think it’s more important for the bank to value the property properly before giving loans and not for the Bank Negara to introduce the capped margin on loan. To minimize the risk , the property we purchased must be lower than the market value, with high potential to appreciate.
Even if you take a 100% loan for a property which purchase price is under market value, then, it is safe for the bank. But if the property is worth RM1 million, speculated until RM1.5 million, hence, even if 60% loan is given, it is still unsecure for the bank. The government must educate people on how to invest and not discourage them from investing. It’s a free market. No matter what it can’t be halted. Eventually the property market has to move according to the international and regional pace.
I still think our property price is low. We pay high prices for our cars, travelling and infrastructure. Some of us pay the same installment for a car and a house. In addition to this, there are other expenses such as petrol and parking costs. The transportation costs are more than housing expenses. In some countries, housing is three times more than transport as the property prices are very high. So our property prices are relatively low.
Any advice for investors? The best thing to do is to invest in the right property, those that have the potential to appreciate. What you are purchasing must has the potential – in terms of capital appreciation and rental. This business is very simple.
Yes, very easy to lose money as well.(Laughs) Not really. If you really spend some time (learning), it is still very easy to invest, especially in Malaysia.
Why did you decide to invest in mYoga?Well, health is wealth. They go hand in hand.
For information on Gavin Tee’s seminars and/or Swhengtee International Real Estate Investors, visit
www.swhengtee.com.my
