KoKo Naing Transcript

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Koko Naing:
The people were negotiating a compensation amount of $900 – that was the main trigger point for me. I started to think about how to become a landlord and how we couldn’t really buy our house to live in. In December 2012 we bought our own home, which is about 30 km away from Melbourne.

Tyrone Shum:
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

I’m Tyrone Shum and in this episode we’re speaking with IT professional Koko Naing. Sharing his journey from Burma to Australia and how he made the shift from renter to property investor, we will follow his story from a steep compensation amount to an a-ha moment on increasing rental yield!

Also before we delve into this episode, go over to propertyinvestory.com and subscribe to receive your free property investor case studies where you’ll learn how to generate passive income from your properties. Go there now to sign up for free!

Working in IT, Naing is involved in the development of mobile apps.

Koko Naing:
My name is Koko Naing, [00:00:39] I’m actually a developer, so I develop mobile apps on IOS platforms and Android platforms. Basically I’m in the IT industry.

Tyrone Shum:
Great. How long have you been doing that for?

Koko Naing:
It’s been about 14 years already, since I graduated.

Tyrone Shum:
I’m in the IT field as well and I love learning so much about the new developments and so forth. Are you developing mostly on iOS, or are you developing on the Android platform across the board?

Koko Naing:
I mainly focus on IOS, but from time to time I also help out with the Android development in my workplace as well.

Tyrone Shum:
In any given day he makes the commute to the CBD for work, then uses his evening hours at home to look at property.

Koko Naing:
It’s like a typical IT professional. So normally, I wake up you know, get ready for the commute a long way to the city. I live in Melbourne, so it’s like a half an hour commute to the city throughout the day and then on the way, also on the way back is the same.

Basically like right after I arrive back at home, I normally look online for real estate sites, to look through the properties. Especially looking online at the property chats.

Tyrone Shum:
Growing up in Southeast Asia, Naing graduated from a computer science degree in Thailand in 2003 before deciding to move to Australia.

Koko Naing:
I was born in Burma and I spent my uni life in Thailand, I was married to a Thai girl there. So a big part of my life was spent in Thailand and at the end of 2009, we decided to move to Australia.

We have high school up to Grade 10, which is the end of the high school and then from there the next stage of the education is the university life. So I started learning computer science in Thailand. So the previous 14 years of my life was in Burma and the rest was in Thailand and then in 2009 we migrated to Australia.

Tyrone Shum:
Over the six years he remained in Thailand before migrating, he began work as a software developer.

Koko Naing:
I was a software developer back then. You know the thing is, it was web development back then when I first arrived here you know all the IOS and Androids were starting to be in trend at the time. The period of late 2010, there’s a big hit for the iPhone and I jumped right into the mobile development.

Tyrone Shum:
During this time, Naing had very little interest in property investing due to a high awareness of debt.

Koko Naing:
If I had to go back and think about it, I was very, very careful about debt level – I didn’t even take out credit card with a high balance at all. So we did have a credit card, but we were very sensitive to debt so we didn’t even try to look at any homes to buy and live in at all. So we had been renting all the time, just we thought that debt was not good, we were taught in those days that debt is physically a burden for your life.

Tyrone Shum:
The idea to move to Australia with his wife came from working in a company which was undertaking a lot of international projects.

Koko Naing:
Back then, in between 2003 to 2009, I was working for a company who had contact with overseas projects, overseas companies who needed people. So I was sent off to the US at one point for a three month project and I didn’t really enjoy life there; and then for the next project they sent me to Australia to Melbourne and I really enjoyed it. So I liked the way people work here, I like the way people react here. And then when I went back to Thailand, I talked to my wife and said, ‘Why don’t we think about moving to another country and start a new life?’

Tyrone Shum:
After saying to his wife, ‘OK honey, let’s move to Australia!’ Naing started to search for employment in the IT field, which turned out to be quite a challenge.

Koko Naing:
We migrated to Australia at the end of 2009, so in November. As you know, November is not the best time to find a new job, especially for those who have no local experience in Australia at all. I think that I picked up a job which was slightly different to my previous role as a technical writer; so I write software specifications for a software company.

Then I did a course for about 11 months and moved on. Before moving on, I learned about mobile development by myself, so I studied mobile development and after 11 months from the first employment in that company I moved onto another company and started to learn about the mobile development field.

Tyrone Shum:
Fortunate enough to find a stable job in IT development, Naing continued renting up to the point where he was inspired to start looking into property investments and buy his own home.

Koko Naing:
So basically we migrated to Australia with just $10,000 in cash with us and no other assets at all. And we were very sensitive about debt, like I mentioned before, and we were not a fan of any debt at all whether it’s a good debt or bad debt. Later we found out the difference between a good debt and a bad debt. But at the beginning, my wife kept on saying that we should buy a property to live in and one day it would be ours. After renting for about six months, I guess we thought we’d try to get into the property market – without knowing anything about mortgages or property at all!

I remember asking a mortgage broker how much we could borrow based on the income at that moment. And he basically asked how much we had as a deposit and we said, ‘We have $6,000 in our savings.’ He smiled and said, ‘Well, with $6,000 we can’t really do anything about it,’ and told us to save more, to even buy a small house. So we kept on renting until the end of 2012; so after about two to three years we had the trigger point where my wife accidentally placed a hot pan on our kitchen benchtop and then that left a very mild burn mark on the benchtop. We went through back and forth with the property manager back then, talking about the compensation and quotes and all that kind of stuff; it was a big hurdle for both of us, mentally and physically.

And then the people of course were negotiating a compensation amount of $900 – that was the main trigger point for me. Like I started to think about how to become a landlord and how we couldn’t really buy own house to live in. I think that in December 2012, we bought our own home in a suburb which was about 30 km away from Melbourne.

Tyrone Shum:
This event would be the sole influence for his shift in mindset and his ‘why’ which compelled him to invest in property.

Koko Naing:
It’s more about a feeling how a single event can change your mindset about buying a house to live in. And it didn’t stop there, not long after that I self-studied a lot about property from property forums, books, everything, you name it. Back then there was a magazine that had a lot of investor case studies about how they can make money from the property and I read a lot and self learned a lot for about two years. And then we purchased our first investment property in Ballarat, which is a large regional city in Victoria; we bought it in 2015.

Tyrone Shum:
Coming up after the break we will delve into how Naing first got started in property…

Koko Naing:
It was 2015 when we first bought the first property investment.

Tyrone Shum:
The other properties which he subsequently invested in.

Koko Naing:
Three of them are in Ballarat and another three are in Logan, Queensland.

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

Purchasing the first property as his own home in 2012 and then investing in another house in Ballarat, Naing started to spread his risk.

Koko Naing:
Actually we bought a full block house as our own home. So since we were young we have been living in a proper house and land so we have been, even though they come in places like 30 km farther away from the CBD, we thought it was good for our lifestyle.

It was 2015 when we first bought the first property investment. Not long after that, I think three months after, we’d we bought another one in the same city, Ballarat, and I think that was also in 2015. After that we met an awesome broker and awesome mentor and we kept on accumulating up to six. We’ve got six investment properties at the moment.

Tyrone Shum:
Fantastic. And they’re all in the same area, or different areas of Melbourne?

Koko Naing:
Three of them are in Ballarat and another three are in Logan, Queensland.

Tyrone Shum:
So over the three years Naing has been investing in property, what would be considered his worst investing moment?

Koko Naing:
The property in Crestmead where we initially miscalculated the rent to put on. So we thought it would get around $480 per week for that Crestmead property investment. It took about two months, a bit over two months, to get a tenant after gradually decreasing the rent.

Tyrone Shum:
So just tell me a little bit about the behind the stories behind that. How did you find that property. When did you buy the property and then why did you buy that property?

Koko Naing:
We bought our first two properties in Ballarat and it’s sort of like neutral to positive gear at that time. We had kept with our mortgage broker and he said it would be good to balance out our portfolio into a little bit more positive, to try to be more balanced within our portfolio. So we looked at the Logan area, which has very high yielding returns at the moment. So we jumped into the Logan area and tried to find places to buy. We picked up a place in Crestmead which has a pretty good ratio of owner occupiers there. So we picked up in the Crestmead area in 2016. We bought that property just mainly for the high yielding return.

Tyrone Shum:
Where did it all go wrong? It was the impression that two families could occupy the house.

Koko Naing:
Our initial impression was that the property was good for dual living, so two families can live in the same property and share the rent. So we bumped up our rent higher; at the time there were other investors coming into the market as well, so a little bit higher than average they can see at that moment and we miscalculated the rent. It is very important that you’ve got to have a really good lease consultant to really know the market and get a reasonable rent level.

Tyrone Shum:
Naing has continued using a property manager’s services ever since, having learned that you need to follow the experts’ advice on rent levels and the importance of getting to know the rental market.

Koko Naing:
I have to admit that it’s also from our old mistake that we wanted a little bit higher than what they recommended. So as a landlord, there should be a reasonable rent level we should expect as well.

Tyrone Shum:
More recently, he had an a-ha moment where he recognised a way to add value to his properties and increase the rental yield.

Koko Naing:
Last year in 2017, at the beginning of last year, we bought another property in Crestmead as well based on a theory. We learned so many things from the first property in Crestmead that we really need to have a good place for people to rent. So we bought another property, which had a very solid foundation for renovating from the downstairs area. We renovated that area for about $15,000, we bought the property for $315,000 back then and then we put in another $15,000 for the renovations and now it’s getting rented at $480, so it is a pretty good investment for us so far.

Tyrone Shum:
Naing found this Crestmead property through researching the market and consulting with a property manager, who was able to recommend the property to him.

Koko Naing:
Now you’ll see that we are trying to balance out our portfolio, so we were highly highly positive geared at that moment and then we bought another property in Ballarat, which has a little bit more negative gear but it is a huge land, 1,000 square metres in Ballarat. So now our portfolio is very balanced.

The key here in the property investment that many would agree is the land content; so land is king. It’s really the case that the more land you have, the better position you will be in in the future.

PART 2

Koko Naing:
My target areas are those that have a modest growth, also a neutral to positive cash flow one. So basically I don’t really want to pay out of my pocket, you know a better way is if the renter can cover it and I can still have money in my pocket, that’s the best thing.

Tyrone Shum:
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

I’m Tyrone Shum and in this episode we’re keeping the conversation going with mobile app developer and property investor, Ko Ko Naing. He will discuss the nuts and bolts of the strategy behind his $2.8 million positive geared portfolio and divulge his secret to increasing the rental yield on his properties!

Apprehensive about taking on debt when initially considering entering into property investing, Naing was motivated to get started when there was a need that needed to be met with action.

Koko Naing:
It would be when my wife burnt the kitchen benchtop that we wanted to see how it would be like as a landlord. Basically the mindset of when you are stuck in a corner, you try to push it back as much as you can to get into a position you are comfortable with.

Tyrone Shum:
A combination of elements aided Naing to get to where he is now with his portfolio, such as spending time on property forums and having a mentor to guide him.

Koko Naing:
Self education is one thing, there’s another thing which is like having a good mentor behind me. When buying property, it’s also about how you set your mind when you’ve got rejected, or when you’ve bought a property without that much thought and you later start to have buyer’s remorse when things aren’t faring well. So it is more about the mindset as well.

Tyrone Shum:
It was his mentor who also helped him overcome his case of buyer’s remorse, at a time when he was the only bidder for a property.

Koko Naing:
The best example for my case was that the last property that I bought in Ballarat in a big area, over 1,000 square metres, it was a quite interesting situation there. It was just two days before Christmas and there was an auction; no one turned up at the auction and I paid, I put in my bid for $280,000 for the property and the auction was passed in, which was what the vendor was expecting at that moment. We had a private negotiation afterwards and after that, we put down $320,000 for that particular property. Then after I signed the documents for the contract sale and then came back home I thought, ‘Did I pay too much for that?’ because there was no other bidders at all.

But on the other hand, I thought it was just because of the Christmas period that the market is also quiet. Then I had a chat to my mentor and he said, ‘It’s the land content that really matters. This last property among or all six properties that you have, this particular property might be the best performing property in your journey.’ So that’s the mindset I had to put in to really know that what I have done is not to be remorsed.

Tyrone Shum:
Since then he has come to learn that once you hold a property for one or two cycles, you can really see the effect of compound interest on your investment. And compared with similar properties on the market, he believes he has chosen well.

Koko Naing:
So not long after, about a week later, I browsed around the sold section of the realestate.com website and saw that for a 1,000 square metre property they were selling it for like $500,000 for a 1,000 square metre land, which was a very similar condition, like mine. So, I was pretty happy with that.

Tyrone Shum:
In addition to his mentor, he found a good mortgage broker on the Property Chat forum who guided him through some of the most vital aspects of property investing.

Koko Naing:
I learnt a lot about how loan structure is important and you know, mindset and attitude to the property market in the area that I am interested in. And also get to know the market really well, so that’s something that a mentor can really help you out with.

Tyrone Shum:
In terms of books Naing would recommend to aspiring property investors who are looking to condition their mindset, he names those written by authors like Florence Littauer and David Schwartz.

Koko Naing:
I would say Your Property Success from Jane Slack Smith and Personality Plus [00:06:50] and The Magic of Thinking Big, just to name a few.

Tyrone Shum:
And what has been the best advice he has ever received?

Koko Naing:
I would say he had one point that there are plenty of fish in the sea, so there will always be properties in the market that you can buy. So if you miss out on one and if you think it is not a good deal for you to pay, then there will still be many more in the market.

Tyrone Shum:
Naing’s initial strategy when locating a property is to research areas with good growth and educate himself as much as he can on those markets.

Koko Naing:
Before we looked at different suburbs around Melbourne to buy, we just looked at you know we just tried to see what places in our suburb were good in growth, or if it is good for family and stuff. So I researched a lot about individual suburbs as well and then later on, it was more like self educating on the property markets.

Tyrone Shum:
In terms of criteria that he considers when purchasing a property, he looks at the land size and the potential to add value.

Koko Naing:
Really what I mentioned previously, it’s land that matters the most. So you see landlords getting stuff everyday, like you know when you see the amount, the city growing outward because there’s not much land available in the inner city. So what I do and my strategy is looking for properties with a very good land size, so at least 600 square metres if possible.

For me personally, I also like renovating property. Based on the books that I read before, I really look at the potential to add value with renovation. So potential to add value to the property is another criteria that I look at as well.

I really look at the cosmetic renovation structure – you need to put in a bit more effort to do the structural ones. So what I really do is just the cosmetic renovations at the moment, try to paint, try to change the carpet, upgrade the kitchen. So that way you can always bring up the rent a little bit higher as well.

Tyrone Shum:
Areas Naing targets are regional locations which provide him with a positive to neutral cash flow.

Koko Naing:
My target areas are those that have a modest growth, also a neutral to positive cash flow one. So basically I don’t really want to pay out of my pocket, you know a better way is if the renter can cover it and I can still have money in my pocket, that’s the best thing. That should also eliminate the aspect of the growth as well, so I look at those areas like Geelong, Ballarat or Bendigo, regional area you know. Logan is also modest in its growth.

Tyrone Shum:
Coming up after the break we will delve into the nuts and bolts of Naing’s property investing strategy…

Koko Naing:
The other Crestmead one for $315,000 and I put in another $15,000 for renovations and that’s currently renting for $480, which is a big cash flow property at the moment for me.

Tyrone Shum:
How he has expanded his portfolio over time.

Koko Naing:
If I include my own home as well, it will be $2.8 million.

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

Now with six properties working for him, his portfolio is generally quite positive geared.

Koko Naing:
The first one we bought in Ballarat, it costed $235,000, currently renting for $280, so that’s obviously positive geared right now. And the second one, also in Ballarat was for $250,000 and is currently renting for $280; that’s a bit neutral at the moment, so not too bad. And the third one in Woodwich in the Logan area was for $335,000 and are currently renting for $390, so that’s also positive geared at the moment.

The next one, the fourth one, is in Crestmead and I bought it for $326,000 and is currently renting for $410 per week. The fifth one which I mentioned as the a-ha moment is the other Crestmead one for $315,000 and I put in another $15,000 for renovations and that’s currently renting for $480, which is a big cash flow property at the moment for me. And the last one we bought in Reedan, which is also in the Ballarat area, 1,000 square metre one that was bought for $320,000 currently renting for $300 per week. So basically very balanced and positive geared.

Tyrone Shum:
And what’s the total value of your portfolio worth now?

Koko Naing:
If I include my own home as well, it will be $2.8 million. The good thing is that I can easily think of the growth as a bonus, even though the growth will be something that can expand the portfolio in the future.

Tyrone Shum:
Naing’s ultimate goal for his portfolio is to provide for his retirement.

Koko Naing:
My primary goal is to retire properly, not just on the pension. So that’s my goal. A lot of average Australians retire on pensions and they can barely meet their daily, or monthly expenses. So I don’t want to be in that situation, so what I do basically is try to put in a nest egg and then hopefully it will hatch into a very good chicken, or hen, in the end.

Tyrone Shum:
Having built a portfolio worth $2.8 million so far, he still has a long way to go before he reaches his ultimate goal.

Koko Naing:
My target is to reach 30 properties. [00:19:57] I was talking with my mentor, we tried to work out the amount of properties needed for me in terms of to live a comfortable retirement life. So there was a number – 30 investment properties, around $300,000 level of property each.

Tyrone Shum:
A personal habit which Naing attributes to his success in property is being certain of the criteria he is looking for.

Koko Naing:
I would say self discipline, like trying to get things done properly and very effectively – when I try to look at the real estate portal, I need to know what my criteria is, otherwise you’ll be browsing through hundreds of hundreds of properties and you’ll get lost. So I would say really know the criteria that you’re looking at.

Tyrone Shum:
If he were to meet himself from 10 years ago, what would he say?

Koko Naing:
I would say don’t neglect the aspect of good debt and if you are only thinking about debt without realising that there is good debt and bad debt at all, you won’t go any further. So that would be my message to him. And I would say that you know, leveraging is another aspect that you need to learn – give the banks money to leverage your wealth further.

Tyrone Shum:
For the next five years, Naing is excited to put the knowledge he has gleaned so far throughout his property journey to good use.

Koko Naing:
For the next five years, I would say I learned a lot about property investing over the past three years and with proper tools and knowledge with me at the moment, spending time buying will be a lot more of an exciting process. And a way to overcome the buyer’s remorse is another aspect.

Tyrone Shum:
He is also excited to be continuing on with his full time job in software development while also setting up his own mortgage broking business.

Koko Naing:
I’m setting up my mortgage broking business at the moment as a part time career, so I’m not totally getting rid of my full time job. You know at the end, you want to do what you like most. So I’m currently working as a full time job, not because I have to but I’m currently living off part of my monthly expenses with the rent as well, so I would say I’m currently working full time because I want to.

Tyrone Shum:
If you would like to connect with Naing and find out more about his strategy, you can do so via email. Alternatively, you can message him through Property Chat.

Koko Naing:
That would through email, that’s kokonaing@gmail.com. So you can shoot out any questions, or any tips and tricks that you would like to know, I’m happy to share.

Tyrone Shum:
Thank you to Koko Naing, our guest on this episode of Property Investory.

If you want to hear more about his journey, then visit our website at www.propertyinvestory.com. Simply type in the search bar Koko Naing and select that episode to learn more about his story.

Also, if you haven’t subscribed to receive your free property case studies that I only send out exclusively via email, you can text me your email address to 0499 88 10 40 to subscribe.

These real case studies are from experienced property investors where they share specific numbers of their portfolio, the strategies and much more.

Simply text me your email address to 0499 88 10 40 to get your free case studies. Thanks for listening!

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