My Hit and Miss when It Comes to Property Investing in Sabah

aerial shot of houses

Growing up, Hollywood sensationalized the old adage of “location, location, location”. In my head, it means something like, if the location is good, the property appreciates. Pretty basic but vague nonetheless on property investing.

So what exactly does a good location entail?

A corner lot in a busy neighborhood? That Starbucks where everyone commutes daily? I’ve been running a small hospitality outlet for almost a year now, and here are 3 things I think about when I visit a place

  • Existing and future infrastructure
  • Supply chain maturity
  • Natural or community-based driven attraction

Existing and future infrastructure

In my 1 year of operating The Hill Kinabalu. We grew close to the community. We participate in local biking events, go to the gym & of course celebrate the festive seasons with everyone.

This kind of close-knitted activity often brings about real estate opportunities. Just like the curious cat, I can’t resist checking out these opportunities as soon as they’re mentioned.

My First Impression

Sadly, the road conditions to most of these places are atrocious. Along the way, you’ll see roads that could barely fit 1 vehicle, roads that are on the verge of sliding off, roads that are extremely steep, or just roads that are just too long. Basically, roads that make it hard for customers to get to you. Or roads that make it hard to bring goods over.

So there it is, with terrible road conditions. Your cost to transport, cost to build, and cost to maintain will be astronomical. Just thinking about the earthwork, the drainage, and the power lines. You’d run out of passion before you’d run out of money.

So before committing to a property. Put yourself in your customer’s shoes. Then put yourself in a truck driver’s shoes.

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my first impression of a hotel in Sabah
A seemingly abandoned hotel in Sabah. This place has all the qualities of a hotel but it’s just too far.

Supply chain maturity

Secondly. What you want to observe before purchasing/renting a piece of property is how good is the supply chain in the area. How easy & cheap is it to procure specific goods?

This is particularly true with hardware. If you’re building rooms & hotels. You’d notice that even the slightest missing equipment can be a showstopper. Ran out of grinding disc? That metal ain’t gonna cut itself. Out of screws? The cement board won’t stick with glue. Basically, if you have a fried connector or a broken fuse. You don’t wanna be Frodo walking all the way to Mount Doom.

From my personal experience, you’d get a lot of opportunities to listen to podcasts though. So maybe there is a silver lining.

the supply chain maturity
Some things are cheaper to procure in the city. To save cost we transport it ourselves.

Natural or community-based attractions

Lastly, if I was looking for another plot of land. I would put a lot of emphasis on the natural attractions around the area. There are things that nature bestows that just connect to our primal selves. Somehow, men feel more at home in nature. It could be a beach, a riverside, a high altitude, or a vast view of the horizon.

If you’re going to be in this industry, you will be competing with the big boys. They are going to have all the resources to build the best buildings, the most beautiful structures, the most expensive beds, etc. But if it’s one thing they can’t replicate. It’ll be your proximity to nature. Nature can be your best ally. More importantly, this is a very cheap competitive advantage. Take full advantage of it whenever possible.

Natural or community-based attractions
A view of the horizon & rainbow from one of our rooms

To summarise:

  • Find yourself a place with good roads & put yourself in your customer’s shoes when you go to the place.
  • Make sure there’s at least a KFC or a Mr. DIY nearby.
  • Don’t build your own waterfall. It’ll be twice as expensive & half as good.

Now of course this is a gross oversimplification. Everything makes sense until you factor in the price & opportunity cost. To navigate this, I like what Warren Buffets has to say about buying businesses. For Buffet, he’d rather buy a great business at a fair price than a fair business at a great price.

Lessons To Learn

I’d say it’s the same for real estate. I’d rather buy/rent a place with a fantastic location at a fair price than the other way around. An old chinaman once told me, “kalau untuk business, mahal sikit pun ok”. This directly translates to, if it’s for business, a little expensive is never a problem.

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