US tycoon Donald Trump’s “How To Think Like a Billionaire,” “Why We Want You To Be Rich,” and “Trump Strategies for Real Estate” are a few of the titles on Siev Sophal’s reading list.
After studying these and more by Trump, the US’ best-known real estate mogul, television personality and relentless self-promoter, Siev Sophal finally found his way last year to Trump’s online university.
In September, the 32-year-old entrepreneur living in Phnom Penh enrolled in the university’s real estate investor training program, a six-month course that set him back a couple of thousand dollars.
But for Siev Sophal, it was money well spent.
Just last week—Siev Sophal claims—he earned $24,000 on a property sale in Kandal province’s Takhmau district after spending roughly $8,000 on the property and selling it two months later. Since he began investing in real estate in 2000, Siev Sophal says that the value of property to his name has increased to nearly $1 million.
“Trump’s philosophy got into my mind,” Siev Sophal said in an interview Monday.
Siev Sophal is now sharing his philosophy with Cambodia, and last weekend he presented his how-to-be-a-property-tycoon plan to 750 seminar participants at the Hotel InterContinental.
“Most people in Cambodia… don’t think about using OPM—other people’s money—because they don’t have financial education and they don’t go to banks,” he said.
Using “other people’s money to make you more money” requires certain steps, he told the audience.
First: Cash flow, which means the money you have left over from your salary each month once expenses are paid, is used to pay off a bank loan to buy real estate.
The second step is renting your property to tenants whose rent will cover your loan payments and other expenses.
And lastly, there is appreciation: Your property increases in value over time and can ultimately be sold for more than it initially cost, which will allow the process to begin all over again.
But rather than taking a loan from a bank with its legal fees and requirements, Siev Sophal told his audience that they should purchase land from his lot in Takhmau—4,000 units at 600 square meters each—and take a loan out from his company to buy one.
In two years, he claimed, the plots will be worth 40 percent more than they are today.
He had sold 1,000 units before the seminar, and a day after the talk, four officials with the customs department bought 50 units each.
Dubbed Kang Meng City after one of the biggest investors, Siev Sophal said that eventually he hopes to issue a credit card for use within Kang Meng City limits. Next, will be Kang Meng City No 2, located in Prek Leap on Route 6A on the way to Siem Reap, he added.
Originally from Siem Reap province, Siev Sophal previously worked as a finance officer at the Cambodian Mine Action Center, an accounting clerk at the US Embassy, and more recently as a peddler of VigRX, a herbal remedy with promises of penis enlargement and an end to impotence.
Nowadays he’s much more aroused by Cambodia’s hot property market.
“Property is a good investment because you can control it,” he said. “While you are sleeping or on vacation, property appreciation continues to work for you.”
While stories of small fortunes made almost overnight from even the smallest of land deals are common conversation points in Phnom Penh and the provinces, the reality of land speculation is that it’s more dangerous and difficult than Siev Sophal describes.
Reaping fortunes from land dealing assumes “that the trading of property is going on in a free and unfettered market,” said Tim Smyth, managing director of Indochina Research.
That belief “is a big assumption to be making in this country,” he said.
Smyth also noted that to get a loan, borrowers need to already have capital or collateral.
“Most banks will want collateral,” usually in the form of property to guarantee a loan, Smyth said.
In fact, it’s only a small group of people who are able to freewheel their property in Cambodia, he added.
Kang Chandararot, director of the Cambodian Institute for Development Study, said that rushed investment in real estate distorts the overall economy of Cambodia, by disproportionately increasing the value of land so that no other market can compete.
After pouring their money into property speculation, people will lack the financial resources for other investments, which would be necessary for the economic health of the country, he said.
The real estate market is like a bubble that could burst, Kang Chandararot said.
“Cambodia needs economic development first, and unless that occurs, investment in real estate is a risky business,” he added.
“If economic development doesn’t reach the expected level, then investment in real estate now is a nonsense activity.”
But many who packed into the InterContinental conference hall on Sunday were happy to think otherwise.
Sithen Pharann, 24, who earns $500 a month working in public relations for a construction company, said that he was looking to real estate to make big bucks.
“The real estate business is much better than other businesses in Cambodia,” he said. “It’s booming.”
Sothea Saphun, a 27-year-old caterer, said that he makes $200 a month and attended the seminar in order to learn how to better invest his money.
In real estate, he said, “there is great potential.”