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Roy Chong Debunks Property Financial Myths

When is the best time to go into property investment? I had a chat with Roy Chong, one of property’s success stories, on his insights and experience in real estate investment and the potential of the current Singaporean property market.

Roy is the author of “The Ultimate Guide to Commercial Real Estate Investment” and was featured on the Straits Times for the tremendous success of his book launch.

In this podcast, Roy shares his approach to property investments and tackles some common misconceptions potential investors have which may prevent them from owning a property which will last for generations to come.

Transcript: 

Introduction

David: Real estate- there’s a lot of echo actually. The microphone is not working. Hello? Can we repeat? We’ll do it again. Okay, we’ll do it again. So, I have Mr. Chong together with me today. Mr. Chong’s surname is also Chong, my name is also Chong.

(Roy laughing)

(both speaking in Mandarin)

David: So apparently, we are from the same ancestor.

(David laughing)

Roy: Same dialect group as well.

David: So, this is Mr. Roy Chong with me here. He’s a very senior real estate agent, and also a senior executive in the world of real estate industry for 20 years, you mentioned?

Roy: Yeah, coming to 20 years.

David: Today, I have him together with me. (He is the) Advisory Group Division Director of ERA (and) author of the book called “Ultimate guide to commercial real estate investment in Singapore.”

(laughing)

David: That’s a long title.

(Roy laughing)

Roy: That’s a book I wrote around eight years ago.

David: Eight years ago?

Roy: Yes.

David: And it was the number one bestseller in the Straits Times?

Roy: Yes.

David: Yep. So, why commercial?

Why commercial real estate?

Roy: Why commercial? Because I have spent almost more than 10 years focusing on commercial real estate, and it was during this period of time when the cooling measures just came out.

David: Yeah.

Roy: When it came out, many consumers shifted to go and buy commercial as well as industrial (property) with the intention to escape ABSD (Additional Buyer’s Stamp Duty). During that period, I felt it was dangerous. Dangerous, why? You do not just buy something to avoid ABSD in terms of investment.

David: Yeah.

Roy: You have to do your proper analysis and know what you’re buying. During that period, a lot of consumers, to be frank, don’t even know what they purchased. Some of them even went into buying industrial property, thinking that (it was of) commercial office status.

David: Yes.

Roy: There is a big difference. What happened was, I myself am an investor. So, I went in and wrote that book to share with consumers that investment is more than just following what

other people are doing. They must do their homework. They must assess their current portfolio. They must have what I call the most important thing – the risk assessment.

David: So, you mentioned that it is dangerous to just buy and avoid ABSD, I totally agree with that. Prior to this office here, I was looking at buying one of the Sin Ming, there is this-

Roy: The Sin Ming industrial project, right?

David: Midview City.

Roy: Yes.

David: Apparently, a lot of people are using them as commercial offices.

Roy: You have to see how the URA (Urban Redevelopment Authority) defines it. There are categories such as B1 (Business1) and B2 (Business 2), so there’s a certain area where people have misconceptions on these things. That’s why it is important to know what they’re doing. If you use it for the wrong usage,- I don’t think anyone would want to buy something, use it and fear every day that one day the authorities will knock on the door.

David: Okay. So the book talks about them?

Roy: Yes.

Measures by the government – ABSD & TDSR

David: Okay, to be frank with you, the last time I received your book was when you came from my- one of the last day-

Roy: That’s the first edition.

David: That’s the first edition?

Roy: Yes.

David: By the way, thanks a lot for coming.

(both laughing)

David: I brought that book back home. Unfortunately, I haven’t started reading it.

(both laughing)

Roy: Oh it’s okay.

David: I wasn’t able to find out what the book really is about? I really would like to go and read in detail since now you’ve mentioned that it’s actually very dangerous to just buy (property) to avoid ABSD. I always thought ABSD is there for some reason, is it to prevent inflation, or?

Roy: The ABSD is definitely a good measure. After the ABSD, the best measure is what I call the TDSR (Total Debt Servicing Ratio).

TDSR came out in 2013, somewhere around that time. That was one of the measures- In fact, before TDSR came in, when the government put out the cooling measures, property purchase was still increasing. You have to understand, Singapore- The unique part about Singapore compared to other big countries is we have limited land but with increasing population. So, it’s very similar to what I call- If you want to study the future of Singapore real estate, just take a look at the past.

David: Hong Kong

Roy: Oh yeah, Hong Kong. Because we were just following in their footsteps.

David: Correct.

Roy: Yeah. So, that’s where it gives confidence not just locally. But when TDSR and ABSD

are combined, they wipe out what we call the speculators.

David: Visual investors.

Roy: Yes, because in the early days- in the 2000s, the bank loans, even when there are no assessments, can be 90%. During that time, there is even what I call the deferred payment, that means you just put down the down payment. You don’t need to take any loan until its TOP (Temporary Occupation Unit). So, that period is where people come in to do speculation and one unit can be sub-sold many times.

David: Yeah, about sub-selling. So basically the unit before it gets exercised, right?

Roy: They just sub-sale.

David: Is that what they call the flipping of options or something?

Roy: Yes, correct. That was the period whereby the government really saw the danger of that so they started to come in . Now, because of this measure, I would say that we

should be very thankful because these measures made it very robust.

David: Right.

Roy: It’s also been proven. During this COVID period, you don’t see the price dropping. This is because with TDSR, the owner of all the properties, even if they own two, three or four, they have holding power.

David: Yes. That in a certain sense actually sets up a protection mechanism, correct?

Roy: Yes, I feel it’s a reverse mechanism. If one day there are any external events (causing) property prices to keep dropping, they will just outlive one or two (events), it will create more interest to buy back.

David: For our viewers right now who some of them are property agents, they are going to be interested in finding out about how they can safeguard themselves. I think it is safe to tell these people that we are quite safe, right? In terms of-

Roy: We are very safe because of the infrastructure and because of TDSR. It has been in place for almost seven years. So, all those speculators that could not hold would have just offloaded.

(David laughing)

Roy: Now, it’s in fact reversed. I have thoughts because I may be releasing another book next year. But now, it’s a little reversed compared to the other time. Just now I mentioned, we should not buy something just to avoid ABSD. But the key thing now is, it is reversed for a lot of consumers, they don’t want to invest just because they don’t want to pay the ABSD. I felt if they have this mindset they are going to miss (the opportunity) because a person in their whole life will generally have three rounds of real estate cycles to go through.

David: Can you explain more on that?

Three cycles of real estate

Roy: You see, real estate cycles, no matter what there will be ups and downs. Of course, because of inflation and Singapore being very unique, we cannot use the way we study the US and other megacities. Our population is there with limited land. Even if we do reclaim land, how much can we reclaim?

Because of this, this cycle cannot keep going up. Now, this cycle is different from what I studied around 20 years ago. 20 years ago, a cycle was almost typically 7 to 10 years. But now with these cooling measures controlled by the government, the cycles have changed. We have to look at the key thing, which is what I said – there’s 3 cycles. Typically if every cycle is around 10 years and investors start to invest in the late 20s, they can play around with it.

David: Yes, correct. Okay. So 30 to 60-year-olds. That’s the reason we have 3 cycles. And right now a new cycle is beginning. You-

Roy: Yes, a new cycle is beginning. And it’s no longer a short term investment. It’s a very good plan for long term (investment), especially for people who are employed.

David: So, why people who are employed?

Roy: You see, when people are employed, their salary is more or less fixed.

David: Quite fixed.

Roy: In terms of investment, they only have a few things. I always advocate people to have a diversified portfolio, be it in equity, bonds, all these things. Property is something that is very robust.

David: Yes.

Roy: Very robust, although it’s not so liquid-

David: It’s a lot less liquid than-

Roy: If you say less liquid, I would say yes and no. Unless you (purchase a place) that is very unpopular.

(David laughing)

Roy: But, it’s difficult to get an unpopular place now in the next 10 years. Why? Because of the infrastructure.

David: Right.

Roy: More roads are built, more MRTs (Mass Rapid Transit)- When I say illiquid, it’s like you may have to wait three to six months to offload.

David: So back to the employees, why is it the employees who will have to diversify their portfolio?

Roy: You see, when I have consultations with clients, a common fear is, “I’m employed. If I’m going to invest in property, what happens if I lose my job?”

David: Yeah.

Roy: But my thought of it is: It is because you are employed. That’s why you need to invest.

David: Yeah.

Roy: That’s the reverse because in Singapore the biggest asset we have is property. And that is something that can help you grow your wealth. But I’m not saying that the self-employed should not invest, but I would say that those who are employed have to invest because they already have one investment that is compulsory by the government called CPF (Central Provident Fund).

(both laughing)

Roy: That’s a wonderful thing. You like to invest, or you don’t like to invest, the government takes the money to invest for you so you get your interest there. But, our inflation rate is also increasing.

David: Yes, more than actually here.

Roy: So to put it this way, if you are self-employed, no, employed-

David: Employed, yeah.

Roy: How can you save? You calculate. Of course I’m talking about the average, with the medium income of $7,000.

David: $7-8,000.

Roy: Yes, $7-8,000. Put it this way, if you’re making 7 or $8,000, of course, assuming you have very good money habits, you will allocate some for savings, your daily expenses, as well as your children’s future education. (However), even if you stinge on breakfast, eat less during lunch or skip dinner. It’s (still) very difficult to save $1 million.

(both laughing)

David: Yeah.

Roy: But, if you choose the right property through real estate, it’s just like a savings scheme after 20 years. The moment you offload that you can see the cash coming back. So, I feel this is one of the best investments for the consumer.

David: That’s provided that the market is on an up trend.

Roy: No, okay. This is the very interesting part. A lot of times, because I also give property seminars and I’ve listened to a lot of them, investment is more than just numbers. Of course, you have to study your numbers.

But why is it that there are a lot of people who study the numbers, but still never go in? It’s because of the internal fear. I noticed one very interesting part in some of the clients I gave consultation to. When the market is dropping, they will say, “Hey, the economy is not good now. The market will drop.” But no one would ever know-

David: When we go up.

Roy: Yeah. So when it’s very low, they say “Roy, (the market) is so low, why would you ask me to go in? Isn’t it dangerous and may just drop further?”

David: Okay.

Roy: Then, in the next moment the market starts to turn up.

David: Okay.

Roy: They’ll say, “Maybe it’s a technical rebound. Temporarily only.”

David: Yeah.

Roy: So, they still don’t enter. And when it climbs up in the next moment, they will say “Now it’s too high, I missed it.” In the end, this is what happens – market down, not going in, market up, not going in.

David: Forever not going in.

(both laughing)

Roy: So they will miss the 3 rounds of investment opportunity in their time.

David: So, Roy you’re saying that if I am an employee, which I consider myself to be, I work under my company.

(both laughing)

Investing for the Employed

David: Say that I’m an employee and I get a very stable income of about 7 to $8,000. What would you advise me to do?

Roy: I think the first key thing is you need to have a property first.

David: Okay.

Roy: For you to live in, okay?

David: Yes.

Roy: Put it this way. Everyone, if they really planned well, should be able to own two properties.

David: Oh, okay.

Roy: Because in investment, you can never call yourself an investor if you only own one property.

David: So with two, you will be considered an investor?

Roy: Yes, because one is for you to live in.

David: Okay.

Roy: The other one is really to let you grow your wealth. We don’t talk about advanced ways of investment. It’s very safe because of inflation costs, construction costs and everything else. Plus, developers are getting more aggressive in bidding for land. We should increase all the property prices. And when the future new launch prices go up, it will also help bring up the surroundings. So, it’s difficult to lose money in real estate investment,

David: Have you lost money in real estate, ever?

Roy: Actually, no.

(both laughing)

Roy: Reason being, you buy anything, let’s say 1 million.

David: Yeah, okay?

Roy: For investment, that means you rent it out. And assuming you never make the right choice.

David: Yeah, every bad choice.

Roy: You rent it out for 20 years. You take a loan of 20 years and you rent it out perpetually for 20 years. I can tell you if 20 years later, you still sell at $1 million, which is unlikely after 20

years of inflation, you still would have made money.

David: The rental?

Roy: Because why? Let’s say you just take a 50% loan. And 50% is fully paid by your tenant. Even if it drops to $800k, you still profit, because you only down your 50%, the other 50% is paid by other people’s money. So, the beautiful part in real estate is double leverage. What do I mean by double leverage? You leverage on the bank to own this property.

David: I’m actually learning something here.

Roy: And you leverage on the tenant to pay off your property. So, that’s where- and the interesting part is our interest rates compared to the rest of the world is considered low.

David: Very low.

Roy: Yes.

David: Very, very low.

Roy: But the issue is we are asians, you see . Even I was brought up in a very Asian way, whereby our parents tell us, “Don’t owe people money.”

(David laughing)

Roy: Because they feel that as long “As I don’t owe people money, I’ll be very relaxed and I know”- But the key thing is that is what I call the differentiation between being debt free and financially free. Debt free doesn’t mean you are financially free.

David: Okay, well, can you- this is super interesting. Can you go deeper on this? What is debt free and what is financially free?

Roy: Our parents are always- You buy something that is very conservative. You pay it off, then after that you have a roof until you retire and expire.

David: Yes, expire, die.

(laughing)

Roy: The key thing is that this is the biggest sin in real estate in a lot of investments. Yes, debt free is good, you’ll relax. But that doesn’t mean you are rich.

David: Cannot enjoy life.

Roy: No, the key is why not use property or money to grow money?

David: The double leverage that you mentioned.

Safety of Singapore Real Estate

Roy: Yes, and if today I’m in another country- I don’t want to mention whatever country, I would not say that it’s safe, because real estate is extremely safe. Put it this way, we are not just talking about residential, we are talking about residential and commercial. Everything is together. You saw how Singapore grew. We started off with manufacturing. But subsequently- Now, in fact, not to say we are not doing manufacturing. We are doing value manufacturing whereby we use a a knowledge base to produce all this rather than-

David: Okay.

Roy: Because we don’t have that manpower. Our manpower cannot compare to a neighbouring country.

David: Right.

Roy: On the other hand, there are other sectors that we are growing. That means the financial

Sector and other. All these financial sectors are attracting a lot of overseas people to come in. In fact, in the early 1980s, Singapore and Hong Kong were really identical.

David: Yeah.

Roy: Both have limited land.

David: Yes.

Roy: And Hong Kong’s population already was so much higher.

David: A lot more higher.

Roy: One day, we may be there as well. Looking at where their per square feet is now, you don’t need to study so many figures. They’re the forward indicator for us.

David: Which is another thing that I may want to share with you and to viewers who are watching this right now. Apart from me being the author of “The Internet Realtor,” coach for real estate agents and a former real estate agent, I’m also a business person who owns a business called Lost SG.

Roy: Yes.

David: Lost SG is actually a business from Hong Kong. We paid them one time, franchised the whole thing over and we built the whole thing in Singapore. What we do is we lock people up. If you don’t know what an escape room is, it is a game place where we lock people up. They pay us money to get locked up.

Do you know that the rental they are paying over there is insane? Let me give you an example. The boss over there, his name is Rick. He knows the building owner over there. Even with the building owner price, it is five times of what we are paying here.

Roy: Yes.

David: And in Causeway Bay, basically there’s this Apple Store. I walked past that store and asked “If your rental is so much already, how much is this guy paying? At that point in time I think they’re telling me per square feet, one month, about 200 Singapore dollars. I calculated, half a million or something. That’s a lot of money, you know?

Roy: Yeah.

David: A lot of money

Roy: It’s always connected because if the country is not well developed, it doesn’t attract foreign investment and it will not help their residentials. In the 1980s or even the 1990s, because Iwas involved in a lot of commercial real estate, I was at Raffles Place almost everyday. And you know in the 80s and 90s for Singapore and Hong Kong, many MNCs (multinational corporations) were deciding, should Hong Kong be their Asia HQ or Singapore?

Slowly you can see that now it’s all slanting towards Singapore because of political stability and easier way of doing business. All of these are connected. Residentials can never grow, without the whole government infrastructure.

David: Right.

Real estate for the Next Generation

Roy: The key thing I really want to urge anyone that’s listening to this podcast- I’ll be sending this message that you’re doing real estate investments not just for yourself. In fact, it should be for your loved ones, especially your next generation. This is because if it’s not well controlled, it may reach a situation like Hong Kong where either you own a property or you never get to own one.

But, it’s very safe in Singapore. You can at least own one because we are so fortunate that we have what we call HDB (Housing & Development Board). Their mission is to help Singaporeans own at least one (property). But, even these HDBs are increasing in price. The medium income group has to catch up. So, I’m saying that private property in the future may be something that either you own or you can never own it, and this situation has already happened in Hong Kong.

David: Actually it’s gradually happening in Singapore too. People just cannot feel and see it.

Roy: The price is increasing, this is where you start to see. But I will say the good thing is this cooling measure is protecting the whole system. Because the government needs to protect this, not just in terms of the property sector. In any case if the property sector crashes, the sector that will be affected is the bank.

David: Oh yeah, you’re right.

Roy: This is because banks have given out billions of loans. If the bank sector is affected, the whole financial sector is affected and it will just propagate to the rest. That’s where this cooling measure gave me more confidence in investment into Singapore.

David: For somebody who is making $7,000 a month right now, or $8,000 a month, is there any criteria that this person has to fulfill before he can keep his HDB and buy another private property?

Roy: I’ll not say $7,000 or $10,000, because it has to go through all the numbers in calculation.

David: Okay, okay.

Roy: What I want to say is property investment is involved, not just- Technically, it’s easy. There are a lot of qualified realtors. But, the key thing is the mindset.

Mindset of a Successful Investor

David: Okay, let’s talk about the mindset then…

Roy: The mindset is, do you believe in it? Do you dare to go in? The first time when I invested in property, I can tell you that night I was scared.

When I was buying I was happy, but later on,- “Am I too impulsive?” What happens if this-, what happens if that? But why? This is because I may not have seen the full clarity. We are looking at 10 years, 20 years; you will sleep peacefully.

David: Right. So mindset-wise, what must one person who is a general consumer, anybody who is looking to buy a house, what kind of mindset must we adopt when we go into investing into a property in Singapore?

Roy: The first key thing is they must see it as long term.

David: Long term, okay.

Roy: At least 10 years, I will say. Two, they have to do their homework. Three, of course I’m a very careful person. We always have to do risk analysis.

David: Risk analysis.

Roy: When I say risk analysis it’s in the terms of- What happened- When I was- For my commercial investors, I always tell them, “Okay, can you afford one year without rental?”

But, this is not for commercial property. Why? Because even if I cannot rent out for one year, it’s still okay. Why? Because I’m still paying the installments. When we pay installments, we are paying the principal and the interest, and the interest is low. Ultimately if you think about that, even if you cannot rent out for a year, the installments- One day when you sell (the property) whatever you pay the principal will still go back. You just lose the interest for that one year, but subsequently once it is rented out, it’s there. So, they must have at least a certain amount of cash flow.

David: You see, the way I look at it is the risk is really low in many ways. Firstly, it is very low because you are leveraging on money from the bank. You take a loan from the bank, which has a very low interest rate.

Roy: Yes.

David: Secondly, we have all the ABSD, that is protecting us in this-

Roy: TDSR

David: TDSR and ABSD and also all the other cooling measures as well to prevent the price from really dropping. Because all along, people have been paying ABSD and taking TDSR as well. And there’s the mortgage servicing ratio, MSR. All this used to be something in 90% and now it is down to 75%. All this means is that in order for somebody to buy property, you have to come up with more cash. That will also mean that if the price does correct eventually, there is a bigger room to play with.

I also did a bit of study as well, and this is my own study. In terms of property pricing, after introducing all these 25% and whatsoever, we realised that even if the price drops by 25%, it’s just going to go back to the prices for 2012, something like that. So, the 25%,- the 15%,- At that point in time it’s already 80%, so it’s just 5%, but the price has gone up by quite a fair bit. I do realise that this trend is kind of going upwards regardless of the situation around the world. Even until recently, pricing hasn’t softened yet. I’m just wondering what’s your take on that? Do you see prices softening a bit or?

Roy: I will not expect the price. The price will still slowly go up because of how the developers work. The second is the psychological view. A lot of people will say, “How come people still keep buying now?’

You must also understand for the- Of course, the cash, the liquid in our market, that means the liquid overall is still very high. That means a lot of Singaporeans have a lot of cash in their bank, but they are just waiting for the right moment. At least if they go in, it’s okay. I’ve seen clients, after six years they’re still being overly careful.

Overly careful is another big sin in investment, because there is no perfect investment, no perfect property. On the other hand, there is also a psychological reason why people still buy. This is because they are afraid that if they don’t buy now, they may not get it in the future.

David: It’s the same situation.

(laughing)

Roy: They are also afraid- It’s built up now. Although it keeps increasing, if there’s suddenly a big increase, what is going to happen? Another cooling measure may come up.

David: Oh yeah, you’re right.

Roy: So, some of the consumer psychology is “I better buy now before the next measure comes out.” Then keep going in. I think in the past many years, we’ve all had corrections in the market. I mean, all these rulings the government came out with really made Singapore a great place. Two, it’s very obvious that the rest of the world are also coming in-

David: For Singapore

Roy: -to Singapore.

Possibility of changes in the Singapore market

David: Yeah. One point to add on, I’m not a real estate expert, by the way, but I just want to share. I think what happens is that with all this amount of cooling measures in the market introduced by the government, should there be one day that the price starts to soften, the sort of correction goes down? I think removal of these cooling measures, hypothetically speaking, may help to agitate the market, right? I mean, there’s a lot of…

Roy: I don’t see any- If they relax, it may be a little relaxed. But, I don’t think the government will relax or even remove everything because that is dangerous. That’s really dangerous because, the objective or this is to make the real estate price increase gradually,

David: Gradually.

Roy: Gradually, that is slow as,- if it shoots up too fast, that’s called speculations. But, the government will never have any intention to crash the market because that will kill the whole country.

David: Yes, I totally agree.

Roy: So it’s a gradual (increase), but would there be a cycle? Yes, but I do not foresee a big change. The only thing that may just bring it down temporarily may be any external crisis. But with Singapore going through all these crises, they are also very smart, you know? Because during SARS, there was not a lot of investment going around at that time. During that period, if you go by statistics, most Singaporeans own one property. So for that time, in fact SARS period- I went through that period. That period, even condominium investments are not a lot. It’s not common. So, the next key thing was then subprime, it was the most interesting part.

David: ‘08 right?

Roy: Yes, ‘08. And it dropped straight-

David: Straight down.

Roy: But interestingly, the V shape was also very fast. But why the V shape? It’s frankly during the subprime, the infrastructure and the stability of Singapore was there.

David: Already there.

Roy: Instead, it dropped because of fear.

David: Right. It could be also be some people who started needing the money because they invested-

Roy: It’s because the measure wasn’t in yet at the time. And the drop, most of them that threw out their property to sell were speculators because they could not hold. But now, the best example is the consumers are well educated as well as because of the holding power,- Look at Covid-19, we don’t see panic selling. We don’t see that at all.

David: Don’t have.

Roy: Yeah, don’t have.

David: Don’t have at all.

Roy: In fact, it was the reverse. Why reverse? During the subprime, all these people fear, they wanted to throw out. But, now we see people- “Wow! Finally after so many years, there’s an opportunity, let’s see whether I can buy good things or not.” Unfortunately, this group of people are disappointed because the majority of property owners have holding power. So you can see that it’s very robust.

David: So all these, we’re talking about residential houses?

Roy: Yes.

Advice for property agents

David: Basically residential houses. There are viewers who are watching this right now, who could be property agents as well. I’m just thinking about,- What do you think about agents? What should we be focusing on?

Roy: The first thing for property agents, I feel they should put the business aside. They should look at property investment themselves. They should look at their current portfolio and do it. Why? We are real estate professionals; we must know how to do it. If we can invest or upgrade but we are not doing that, you will never see- because you must really believe in what you are doing.

David: Yeah.

Roy: Also, it’s something good. Because it’s something good, then you can have that (murmur) to be able to share with your consumer.

David: So it is based on your own experience, then you-

Roy: Just like how you’re an expert in internet marketing. You know that you’re really helping people.

David: Yes.

Roy: That’s why you wrote the book to help more realtors out there.

David: Yeah, that’s correct.

Roy: It’s exactly the same thing.That’s why I feel that for real estate agents, the first key thing is they have to look into investment.

David: Practise before you preach.

Roy: Yeah, if they can afford it.

David: Practise before you preach, I think that’s the thing.

Roy: If they cannot afford it because of whatever financial (reasons), then they should pick up your book and learn about internet marketing. Help more consumers so they can help themselves, and then they can do upgrading.

David:That makes a lot of sense. So, about the book, “The Internet Realtor,”- There’s a few copies over there. You can take it-

Roy: I finished reading your book within two days

David: So, we shall ask you what you think about it later. All right.

I think the book is really about helping people to find clients who could be interested in upgrading or buying property. However, most importantly for consumers who are being reached out to using the methods that I laid out inside the book, they’re already very well informed.

Therefore, they are mostly able to make very sound decisions, when it comes to buying property. I think everything comes with risk,- also comes with returns as well. I mean, I think risk will have returns. For real estate, the risk to me seems to be a lot less than cryptocurrency, for example. You know what I’m talking about?

Which is a hyper volatility over there, but it’s also liquid. Furthered by the fact that if real estate is a little less liquid, then it will also mean that is harder to sell. Therefore, it is harder for the price to drop. As long as the transaction hasn’t been done, the price is not considered to have dropped.

Roy: Yes, I agree.

David:Agreed, right?

Roy: Yes.

David:So that means if it is less liquid by a little bit, actually it’s a good one in certain areas.

Roy: Is it? I really love one of the sayings my CEO always tells us. It is difficult to lose money in real estate as long as you can hold it during downtimes.

David:Yeah, I fully agree.

Roy: Some of them may sell at a loss, but you have to understand the reasoning behind it. It could be something due to unforeseen circumstances. Some of them sell at a loss in a smart way. Why am I saying in a smart way? In property investment, one of the concepts is, you never have emotions. The moment your property reaches a certain level whereby you see that there’s limited upside-

David: The profit?

Roy: Yes. It’s time to offload it. Even if you see that it is stagnant. Even at a loss of 50k-100k, drop it. Unlock those funds and go into another property with much higher upsides.

David: Okay. I just want to jump back into something that we,- I found out about you-

Roy: What did you find about me?

(laughing)

David: I think two weeks, three weeks back, when you shared with me that- or one of the meals that we had. You shared with me that you invest in a lot of factories, a lot of different kinds of factories.

Roy: That’s the early days, early days.

David: Are you still heavily invested in factories?

Roy: No.

David: So, residential now?

Roy: Yeah.

David: Okay. Fantastic.

Roy: I do invest in industrial trust especially in data centre industrial trust. But that is out of topic. I just have to diversify my investments.

David: Right. Because it seems to me that your investments are very diversified in multiple different areas. Based on what you shared with me earlier about a salaried person, making about $7000 or even $10000, surely (they) have to have some kind of investment and be a bit diversified as well. I felt that you were kind of walking the talk, right?

Roy: It’s because we are fortunate that we are blessed in Singapore.

David: Yeah.

Roy: Limited land, ever increasing population with great economic infrastructure.

David: I’m very sure the government doesn’t limit the amount of talents coming in and the amount of investments coming in in certain manner. I mean, they are trying to,- that’s my opinion. I feel they have done a great job. If they hadn’t done it I think the price would have been- Hong Kong at least.

(Roy laughing)

Roy: Yeah, correct.

David: Per square feet- A one bedroom apartment, 1.5 million SGD.

Roy: Really small.

David: Very bad.

(laughing)

Roy: That’s why the people there are very frustrated now. No matter how hard they work, they may never even be able to own a roof. A lot of them are still renting. So, why is it that, now we have, even now you cannot. Set that as a goal. You need not have to buy a super big property but at least own something. Not just for yourself, but for your loved ones.

David: I think that’s the future of Singapore, and that’s what is gonna happen in the future.

Roy: Yeah.

“The Internet Realtor”

David: Anyway, let’s talk about the book there. Roy is somebody who is very active in real estate as an executive, as a thought leader, a leader itself and also a realtor who is on the ground selling properties. What do we think about the book that I have written? Honestly, speaking, what do you think about the book that I have written?

Roy: The first key thing is…

David: I feel a bit guilty, you know, because you read my book and I haven’t read yours.

Roy: No, it’s okay. I wrote a book before, so when I read your book, I can see the amount of effort you went through. I think especially on the day before you send (the book) for printing, I don’t know how many times you’ve read through your own book.

(David sighing)

David: Wow.

Roy: You know, right? Because when I published my book, I had to read so many times just in case there’s anything that may send the wrong message, because it’s not about what we say, it’s about how we say it. That’s important. Of course, I feel that this book is definitely written by someone that is on ground and has gone through that, because it’s more than just internet marketing.

It’s even deeper than the ground, because internet marketing is a process of prospecting, but that’s not the end. It also has to connect to how we speak to consumers so that we can help them. So, I felt that it’s integrated. The only thing is it’s not very elderly-friendly because I need to wear my reading glasses. The words are very small. But, if you increase the font it will be even thicker and that will be less handy. I think it’s just nice.

David: Yes, nice. So would you encourage anybody that you know to get a copy of this?

Roy: I put it on Facebook to recommend to realtors, but the key thing is the message is reading the book. I feel that is the first step.

David: First step. Right.

Roy: But, it is more important that you have to put that into action.

David: Correct.

Roy: There is no perfect action plan. There’s only action review, action review, action review.

David: Action review, action review, fantastic. Thanks a lot, Roy, for all at a time. I think most people who watched this video would learn a lot more about investment than attending certain seminars.

Also, what you said a lot about- The one thing I like about today’s discussion is that- you actually mentioned you can leverage on the bank. It’s kind of a dual leverage kind of situation. You leverage on the bank and you also leverage on the tenant. The one that gets the benefit is you. There is little downside, because even if you do buy property for half a down pay, if it drops back down to half after 20 years, like 20%, you’re still going to profit because of the tenant. And that’s an unlikely situation. It is quite amazing, the things that I have learned over here, because it’s definitely actionable. Like you said, implement the action then review.

Roy: Yeah.

David: Unfortunately, I cannot implement right now.

(laughing)

Roy: Besides just talking about investment, the beautiful part that we have in Singapore is even if you are not an investor, you must own your property as early as possible. The beautiful part is assuming your first property is a private or EC (executive condominium), you bought it at 1 million.

David: Yeah.

Roy: Again, a worst case scenario after 10 years.

David: Yeah.

Roy: Still 1 million. Of course you lose that 10 years of interest because you lived inside.

David: Yeah, yeah.

Roy: But the interesting part is you should know how cheap it is that you are renting it.

David: Yeah, you’re right, man.

Roy: But the interesting part is if you own it, you bought it at 1 million. After 10 years, you sell at 1.3. The most interesting part is you gain a property. It’s so disgusting. You live there for free for 10 years and still make money. So I felt that is the best part about our Singapore system.

David: Are you learning anything from him? Invest in real estate.

Roy: It’s really a free thing.

Never too young for you to invest

David: So, I think it is something that has to be done as fast and as soon as possible, as young as possible. How young is your first client?

Roy: I start to see there’s even 25 year olds, even before they get married, they start to look into that.

David: 25 and with the help of parents, or?

Roy: Yes, with the help of parents. In fact, I’m also seeing many parents are encouraging their children to start early.

David: Yes. But not all parents can help. (inaudible) Regarding this, do you help your son to-

Roy: Maybe we’ll put that offline.

(both laughing)

David: Please help your son as well. Thanks a lot Roy for all of your time today. For anybody who is now watching this video and wants to make a sound decision, calculated with risk assessments and so on and so forth, and want to look for you, how do they look for you?

Roy: They can always go Google.

David: Roy Chong.

Roy: Yes.

David: I think there’s only one Roy Chong.

Roy: Yeah.

David: But there’s a lot of David Chong. There’s a lawyer called David Chong.

(laughing)

Master plan for investment

Roy: I think be it looking for me or looking for any realtors, the most important thing is before you make the investment, you must have full clarity. I’m saying how much cash, how much CPF and do future forecasting for 10 years later.

One of the key things is, always tell buyers be it for your own living or investment, is not about what you buy now. It’s important, but it is more important for you to help your exit strategy first. The moment you have your exit strategy that means,- I’m purchasing this.

Let’s say the MRT is upcoming in six years time, that’s when I plan to sell it out. And the moment I know that 10 years later there’s a good reason why it should be appreciated, that is my exit strategy. So the moment when you buy something with a crystal clear exit strategy, I can tell you that you can live peacefully and you are very clear of what you’re doing.

David: It is the beginning of the end in mind.

Roy: Yeah, but a lot of people just buy without thinking of what their exit strategy is. This is something very important when it comes to investment.

David: Do you do that for every one of your investments?

Roy: Yes.

David: Okay, wow, cool. I mean-

Roy: Because this is a psychological (thing). I need to know. I have to have full clarity. If not, that’s gambling.

David: Wow, yeah. I don’t want to take up any more of your time because time is super precious. But how do you then understand what is the end? That means you really have to sit down and plan it out, right? I mean, all the way.

Roy: Singapore is one of the- Another beautiful thing about Singapore is you can see the future. The future is what we call the URA master plan.

David: Right.

Roy: What they say, they will implement. That is the beautiful part whereby you can read the future.

David: Right. So, sit down, look at the master plan, see what’s gonna happen in the future, whether there’s potential upsides. If there are potential upsides, look at that is available in the market now and go into it.

Roy: If you read all real estate investment books, the key things they are talking about: location, location, location. But in Singapore, all locations are good because it’s so small and there’s MRT. I foresee in 20 years time, I think there will be MRT or LRT in every spot. The key things to look at is location, the future growth with a master plan and our concept plans as well as the pricing, as well as the timing. In fact, for timing, there is always no good timing. You can never catch a bottom or high, but as long as you are looking into long term, all timings are good.

David: That’s what Marcus Chu, our COO (chief operating officer)- I was from ERA, so by nature, I’ll say our COO and all that.

(both laughing)

David: So Marcus Chu, ERA COO mentioned this thing called- instead of timing the market, it’s the time in the market. So enter whenever you can, and then you should be okay.

Roy: No, I would say that location, location growth and pricing is the most important. The timing is double-edged. Why? It’s sabotaging people. Sabotage in a way where people keep waiting for timing until they miss the cycle.

David: Right. Thanks a lot, Roy Chong. We have come to the end. If you want to reach Roy, all you have to do is to go to Google. I think his name is Roy Chong. Just search Roy Chong, you’ll see his book, face, contact number- you can contact him directly as well.

Roy: I don’t just do analysis for commercial, I do both analysis for commercial and residential together. They’re connected.

David: If you get to him, do say hi and mention my name and perhaps, he’ll pay a little bit more attention to you.

(David laughing)

David: Thanks again Roy for your time. This is the last time they’ll say goodbye to you. I hope that you can come back here again and can have a discussion again. Not so much about the investments and timing the market and all those kinds of things anymore, but something else, okay?

Roy: Yeah, sure.

David: Thanks a lot Roy for your time. Once again, thanks.

Roy: Thank you, David.

David: Hey, it’s David here. If you like my video, you can click here to subscribe to my channel or click here to view more of my videos. Take care.