(Sumber : M-Planet Ezine)
Azizi Ali, 48, is as versatile as it gets. A pilot, publisher, property investor and coach, author, qualified financial planner – or to put it succinctly an all-round entrepreneur. A voracious reader (he reads three books in a week!), unsurprisingly Azizi credits his success to his healthy appetite for knowledge. He quips, “The more books on money matters that you read, the wealthier you will be. This is not just a tagline. It is the truth. I wish somebody had told me that 30 years ago!”
Most of us would’ve heard of Confucius’s quote, Choose a job you love and you will never have to work for a day in your life. Azizi is a fine example of “living” that advise. His five-figure income is derived from his passion. As he puts it, he does not have to work but finds no reason to retire from doing what he loves. He says, “I only do things I like in my life. I like to fly. I like to write. I like to speak. I like business.”
StarProperty.my chats with the high-flying Azizi about his passion for money matters, his successes and a music business that cost him RM100,000.
Tell us about yourself. How did you start in property investment?
When I started my career, despite being hardworking, I only made little money. I did not have any financial knowledge and was broke most of the time. This went on for about four years. At that time, I was about 20 or 21 years old. I started my career very young. I am a pilot by profession.
Are you still a pilot today?
Yes. After a while, I wondered if I will be living hand-to-mouth until retirement. I wondered what was wrong with me. Even my colleagues then, even if they were older and married, and making the same amount as me, they were doing okay but I was broke. So something is wrong. I realised what was wrong was my knowledge of financial matters, which was practically non-existent. So I started educating myself on financial matters. The intention was not to become a millionaire, but so that I would not be broke again. This was in 1985, where there were not as many books on money matters. So to educate myself, I did what most people would do. I asked people who I thought were experts at the time. They gave advice but they were not the real experts. Though their advice was not all wrong, but it was incomplete.
As I educated myself, I began to have some money. I wasn’t broke anymore, which was great. I read more books and asked more people. But after a while, I realised that some of the advice given was opposite of what the books said. After a while, I leaned more on books. I was repeating the formula of reading more books and I knew it was working and have enough money for investments. So that’s why I tell people today, the more books on money matters you read, the wealthier you will be. This is not just a tagline. It is the truth. I wish somebody had told me that 30 years ago. I would be a lot richer.
The reality is that much of the information out there is biased. For example, insurance. Who do you ask information from? Probably insurance agents. That’s why the information is biased. So people don’t make as good a decision as it could be. That’s why you have to get different points of view.
I started investing when I was about 25 or 26 years old. Like most people, the first place was stock market. I started reading books on stocks which helped a little. Like most people, I made a little money, and lost a little money. I did a lot of work. Most people rely on tips. All in all, I suppose that I did not make money from the stock market. After a while, I started investing in properties, and then business.
My first business was a music shop, selling cassettes and CDs, in 1990. In my eagerness to become an entrepreneur, I did research, but too little. In the end, after three or four years I lost over RM100,000. Now I can laugh about it. At that time, it wasn’t funny (laughs).
Why did your music business fail to take off?
Actually, if I had done proper research, I would not open the shop. I was blinded by the light of business, and was so eager that I jumped into it. There were a lot of things that I didn’t know about before I started. The margins were very low, less than 30% − which means that I had to sell a lot to pay the rent. Plus, cassettes are so small and hence, easily stolen.
What did you do after that?
The good thing is that even though the business did not work, my personal finance was better.
You were doing other things at the same time?
Yes, just like now. Although my name is synonymous with property, it is just a small part of my business. We have to put the money from business somewhere. One of it is properties. It is very good but it’s not the only game in town. At the same time, my main business is still business. Property is just a small part. See, a couple of years ago, I bought a house for RM800,000. When it was completed, I sold it for RM1.1 million. So the profit was RM300,000 and at that time, RPGT (real property gains tax) was still at 30%. All in all, my profit was RM200,000 after two years. I suppose that’s not too bad. But in business, I can make RM200,000 per month. So where should I be concentrating on? It’s a no-brainer.
How old were you then?
I started my publishing business when I was about 37 or 38 years old.
When did you start investing in properties?
I bought a house for own stay in 1987. Property investment for rentals started in 1995.
What was your first investment?
Condominium, which I rented out. At that time, my formula is for rental. I have sold most of it.
What’s your property portfolio now?
Not a lot. I sold most of it in 2010. The net worth is maybe six million.
Why did you sell most of your properties? Is it because of the “property bubble”?
Yes. I was reading a few books that explained about the US crash. Some reasons was the low interest rate, user-friendly mortgage, questionable borrowers and current owners refinancing. I shuddered when I read it. It is exactly like in Malaysia. That’s why I wrote the article, “The US property crash, could it happen here?” For most current owners, even if their house is almost paid off, they refinance to get the money to invest in other properties because property prices have increased.
What if these owners refinance to invest because they don’t have enough cash?
In that case, they could refinance but they have to be careful with the loan’s terms.
Do elaborate on “loan terms”.
This is how it should be. If the environment is of low interest rate with rising property prices, then take as much loan as you can. This is because you can multiply your net worth very fast, assuming that you can pay every month. That formula of taking as much loan as you can and buying as many as you can was correct one or two years ago. The environment has changed and will continue to do so. Interest rates have increased. There’s the LTV (loan-to-value) ratio of 70% for third property onwards. There are more things to come, some of which you and I have never seen or faced before.
Anybody with monster mortgages will be in serious pain. So back to your question of “If you have almost paid off but do not have the capital to buy other properties, should he/she refinance?”. The answer is yes, but don’t take too much and more importantly cap the interest rate. Don’t use the current fluctuating rate, based on BLR (base lending rate). It won’t be low forever. Just to share, I have one RM1.5 million loan. The rise of 75 basis points in 2010 has caused my payments to rise by RM500. This is only 75 basis points. Can you imagine if the interest rates rise by 2 or 3%? I also will feel the pain.
Do you go for residential or commercial properties?
For me, it has been residential all the while − both condos and landed. I know that the big money is in commercial properties – higher rentals and capital gains. You need to have some knowledge of the commercial market because if you choose incorrectly, it could be empty for years. So you must really do your homework. But where there is danger, there are also opportunities. Now, I am looking at below market value properties. There are a lot of options now.
When did you start investing in auction properties?
Before that, I was buying from developers. Now, my staff cuts and highlights the interesting auction properties. I can’t take them all. The quantity has increased significantly.
Are these auction properties in good areas?
Having said that, 95% are not interesting to me. But lately, the quality in good areas has also increased. In fact, I don’t even do this full time. I only spend 10 minutes every morning to look at it and go for the interesting ones. I share some with my clients.
Do you concentrate in certain residential areas?
I go for PJ. It saves me a lot of work because I am familiar with the area, the supply and demand, and the prices.
Do you do no-money-down strategies?
Yes, the whole concept is find one below market.
Are no-money-down strategies very difficult to apply with the LTV ratio of 70%?
Yes, it is hard, but it can be done. I think the LTV of 70% is good for most people. Otherwise, they might end up taking too much loans, which they can afford now but as situation changes, they might not be able to afford it. So this might save their life.
What are the common myths about auction properties?
Despite the quantity of auction properties, I would say that 90% are not appropriate for investors. One, incorrect locations. Two, nature of auctions – the first auction might be market value, therefore it is not appropriate.
For auctions, you must do homework. Actually, in all investments you must do your homework. Whenever there are opportunities to make lots of money, it also comes with opportunities to lose a lot of money, like gold. The price of gold is rising. I put much of my money into gold in the last couple of years, which I am happy about. At the same time, gold is also full of traps. If you buy the incorrect form of gold, you may not benefit even if the price is rising.
What do you mean by “incorrect form of gold”?
Jewellery. Is it gold? Yes it is. When you buy from shops, you pay more to cover for the workmanship and profit. In that case, you already overpay, already in the negative. When you sell back to the shop, you cannot sell at the same price you bought. At best, they will buy it back at market value. They will usually buy at market value, minus 25%. That’s two negatives. Three, you can only sell back to the same shop you buy from. Fourth, if you do not have the receipt, they won’t take it back and most people don’t know where they kept the receipt. Fifth, when you go back to the shop, you cannot get cash, but instead you can trade it in for another piece of jewellery. So, five negatives. From an investment point of view, it is useless. So despite the rising price of gold, you may not benefit from it. That’s one of the traps. To know more, you can read my book – Get Into Gold.
Do you conduct a lot of seminars?
About one in every three months.
What are your seminars about?
All about money − property investments, investing in gold and information marketing.
Are they one-day seminars?
Yes, one day. I will cover the critical success factors for property investments. There are a lot of things to talk about properties. What you want to know is the critical success factors. One of them is buying below market value. Then you have to know the three elements of property investment which is physical, financial, and legal rights and obligations.
Financing is extremely important. Most landlords don’t make money from investments. So I share on how they can reduce these risks significantly. I share on how to reduce work, automate processes and system of doing this. An average investor takes loans that amount to a few hundred thousand, so they cannot afford to get it wrong. What more if the loans are in the millions. I am not only a businessman. I am also a qualified financial planner. So I look from both sides. I feel concerned for my fellow Malaysians when they lose their houses. When they search for mortgages, they only look at one thing, the lowest interest rate at that point in time.
What I do now is the personal coaching programme.
What are the terms and conditions that borrowers should take note of?
Flexibility of loan.
Are you referring to types of loans?
No, beyond that. The actual terms and conditions of the individual loan. For example, most banks have a lock-in period. That’s fine, but on top of that, some loans don’t allow you to pay extra. For some, you can pay more, but the extra payment doesn’t reduce the principal amount, which defeats the purpose. Some of them allow you to pay extra, but it must be in multiples of RM1,000, for example. I am not saying that interest rate is not important. But that’s just one of the criteria.
Tell us about the personal coaching programme?
After they sign up and meet me personally, we have one tele-seminar (seminar via telephone) for one hour per month. I will talk about specific subjects, for example, auction, estate planning, investing in gold, and so on. It is a conference call where all members will call in and listen. From time to time, I will also invite industry experts to talk. It is just like a seminar but through the phone. We also have a 20 minutes tele-coaching every month, which means that members are in touch with me on a regular basis.
