This is the first article of a 3-part series that aim to help you get their first property who are still in university or just started out at work. The first part is on a case study on how I bought a house in 2 years starting with 11k a month. The second article is on hacks people don’t tell you about the property market in HK. And the third is a technical step-by-step guide that will take you through. So if you are reading this around 20 and start working around 22, then congratulations – you have a very high chance of buying your first house by 25.
First thing first, you don’t HAVE to buy a house if you don’t want to. This series is for those who WANT to buy a house but THINK it’s impossible for them; and for those who didn’t know how it is possible. One of the complaints that I hear from young people these days is that they can’t buy a house because of the government, their job, their company, their school, their major, their teacher, their parents, etc. Personally, I think that is irresponsible BS. So I wanted to provide some perspective here.
#1. Start managing your wealth – start saving and budgeting.
I started saving when I was in primary school. Why? Because I wanted to buy something for a girl. I saved as little as $5 a day and bought a little CD to that girl. Of course, it was the day I learned how not to get a girl and the importance of timing; it’s not what you give but how and when to give it. Anyways, I started saving when I was little. I was even able to lend my brother money a few thousand dollars when I was only 14. Think you are too young or earn too little to start saving? Think again.
#2. Find ways to provide value and make money from what you are good at.
English used to be my weakest subject – I knew no more than 50 vocabularies when I was 14 years old. Because I was a loser who hated my English teacher. After taking a secret magic pill, English has become one of my strengths. So, I tutored high school students English when I was in college. At one point I had 3 students and a small class of 7 students. It was not easy to get these side jobs. But it was worth it. I make around $250 per private coaching and $500 per class, totaling $1,250 ($250 x 3 + $500) per week, $5,000 per month. I saved around $4,000 per month as a Sophomore. With some costs to lessons learned in life, stock market, and relationship, I had around $100,000 left in the bank when I graduated.
#3. Find a job that you like – apply the top 100 graduate programs.
Working at a job that you enjoy will give you the confidence to ignore the market, whether it’s up or down. You will still focus on your job and not get distracted by the market noises. How do you find a job that you like? Try take graduate jobs that offer your opportunities to try different things and a clear career path (see the top 100 graduate programs in Hong Kong). It is more important to figure out what you are good at and what jobs will get you into a state of flow. Look pass the money and build the confidence in your earning power.
#4. Perform at work; money will come.
I turned down the internship offer from Bain and started working at a big 4 consulting firm. My salary was so low that I still remember asking the HR how come my salary was the same as 10 years ago. But then I had the privilege of working closely with a director (now Partner) on a daily basis. It was highly demanding and challenging – on average I had to update my work 5 times a day. I was stressed out all the time. After three months, the partner (now managing partner) told me “I had a big envelope for you”. My eyes go wet as soon as the words come out of his mouth. He laughs and says “I am just kidding. It’s a pay increase.” So, just like that my pay increased almost 50% to $15,000 in 3 months. It’s still pretty damn low, but it’s a good start. In fact, 9 months later, my salary increased again as a result of the annual performance appraisal (i.e. Staff 1 to Staff 2). 6 months later, I was fast-tracked to Senior. I remember how nervous I was when I saw the announcement email from the managing partner. “What if others hate me?” I was worried about my promotion. I wish someone told me this:
Insider Tips: You may be hated by being a success. But you won’t be loved by being a failure.
So, in my first year I saved around = $31,500 ($1,000 x 3 months + $1,500 x 9 months + $15,000 as the 13th month). In my second year I saved around $60,000 (10% * $20,000 x 6 + 10% * $30,000 x 6 + $30,000 as the 13th month). With the 100,000 saved in college, I had $191,500 in the bank after two years at work.
#5. Be mindful of your thoughts – ask why you can not why you can’t.
I am not sure if it was my first year or second year at work, I think it was after re-reading “Think and Grow Rich” or the “Rich Dad, Poor Dad” (see my book list to graduates), I made a plan on a sticker and pasted it on my wardrobe to buy a property every 3 years. If I apply the average dollar costing in property market, by buying smaller flat (below $2M) every 3 years, then I can take advantage of the long term upward trend in property market. And by the time I reached to my third property, I will upgrade to the mid-tier property ($5-7M). Of course, things didn’t go as planned. I bought my mid-tier target as my second property, not my fourth property. Although it’s too early to claim or celebrate success, I do believe thoughts are things. And you will attract what you focus on in life. That’s why I initiated the daily inspiration post on our Facebook to feed your mind with good stuff. Your mind is the average thoughts that you host in the past, so be mindful of the thoughts you allow them in.
#6. Be resourceful. Learn from others. And help others help you.
Back to the story, I knew I wanted an asset. So I told my agent friend to keep an eye on it. I kept her posted about my salary and expected salary after I started working. We knew the price range of the properties that we could buy. I would sometimes go with my agent to check out the flats around my target area to understand the market sentiment. The agent would also connect me with another mortgage consultant so I learned the importance of keeping a good record and not to have too many credit cards. I also learned strategies to leverage the 10% policy for the first residential building, ways to find a good tenants, and the importance of having a good law firm. The key in helping others to help you is that you have to know what you want. And will be willing to learn from others. Till these days, I would still buy books, attend seminars, pay to learn a skill that I wonder if only idiots will pay for, e.g. how to crack case-interviews, how to build rapport, how to be more charismatic, what affects the property prices ($3,600 – yes, this is stupid.), how to generate passive income with stocks, bond-funds, etc.
#7. Don’t focus on the market; focus on yourself.
So I had a team of people who I can rely on and consult with. I bought the house in 2012, at a time when smart people sold their houses to wait for the drop (kind of like today: 24 Apr 2016). I was lucky enough to focus not so much on the market. Whether it’s rising or falling, it doesn’t bother me. Smart people like to time the market. I like to time myself. They like to buy things at the bottom and sell at the top. I will admit I am not and will never try to be that smart. You will hear people say this in a bullish market: the price is too high now, I will wait. Or, in a bearish market, they will say: it’s still dropping, I will wait after it bottomed. Before you know it, they are saying “Oh, I missed the best buying time. I will wait for the next opportunity.”
#8. Manage your risk – but take action.
That stupid flat would cost my entire fortune and some more. It was my first property and the property is below 4 million so the downpayment is 10% of $1.78M = $178k, which was my lifetime’s saving. Plus, I still had to borrow around $30,000 from my friends and family to cover the admin fee, e.g. lawyer, renovation, commission. Risky? May be. But here are two things that I focus on. One, I knew I would only be making more money, so if interest increases next year, so will my earning power. Two, I think it makes more sense to fail when I was young. Perhaps I was naive. But I really don’t know how bad it would be if I go broke. Can’t I work ? Can’t I teach English? Can’t I do something?
Yes, life will hit you in ways you can’t imagine. I don’t pretend it won’t. But I chose to focus on what I can control – what I can do instead of what could happen. You can imagine ghost all you want, but how would that help you?
#9. Live a simple life. Be happy with what you have and handle it well.
One of the downsides of being a professional is that you have to LOOK professional. I know lots of professionals, lawyers, doctors, bankers, consultants who are broke. Why? They have a high maintenance cost – they need a car, a bag, a dog, or a cat. As a greedy person, I tend to think both. (This is the same idea in the Built to Last, “how to avoid the tyranny of either or”). How do I get the good stuff in life without spending like a fool? Well, I can give you a list of 100 ideas. But, for short, be happy with what you have and handle it well. When I made as little as 11k, I still kept track of my expense and budget. God will only give you as much as you can handle; you just need to prove that you can handle more.
“Insider Tips: You may think it’s easier to save when you make more money. Truth is it won’t. Money doesn’t make you who you are; it reveals it.”
#10. Be strategic about buying your DREAM house – take baby steps.
I often say it’s easier to buy your next house once you have the first one. Just like it’s easier to get a job when you have a first job. I will explain this in the “Hacks on buying your first property”. I will also show the scenarios how you can win in both bullish and bearish market. Whether you just want a 500 square feet or 1,000+ square feet dream house, you can do it by taking baby steps.
You know what’s funny? People understand getting their dream jobs require them to build their CV from experience to experience. Why not apply the same thinking in buying your dream house?
Be responsible. Own your life. Have fun.
It’s OKAY to drift in life – have no goal, no sense of direction, and just enjoy what life presents to you. It’s okay to do that. But be a man; own your actions. Don’t blame your parents, school, friends, company, the government, or the property market or anybody for what you have or don’t have in life. Circumstances does not make you who you are – they reveal it. I once saw a news on TV that talked about how even a lawyer and doctor in Hong Kong can’t buy a house that they want because the property money is too expensive. They urged the the government to do something. While they are right about the fact that government could be doing more, their intentions were to lay blame to anybody but themselves. For a lawyer and doctor, I thought their arguments would be a bit more substantial. But I couldn’t hear anything that was constructive other than complaining.
Insider Tips: It’s awesome to live yourself to the full – prefer experience over things in life. Be resourceful. Not resentful. Problem solving is fun. Finger pointing is not. You want to be a leader? Good. Then think and talk about the solutions. Let the world benefit from your creativity not your complaints.
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