'The secret to property investment is always location, location, location,' he said, adding that it was always better to buy the cheapest property in the best area than the most expensive property in a bad neighbourhood.

'Buy cheap houses in good areas. My property on the Peak is relatively cheap and it's more than 50 years old but it is okay because it is on the Peak. The prices can only rise in the long term,' he said.

'Don't be lured by the decoration or style of a property in lower-priced areas. The land price largely decides the price of a property, and the land price is solely dependent on the location.'

His move to the Hong Lok Yuen estate in Tai Po in 1988 was based on that principle. At that time, few people wanted to move far from the city centre, especially with the heavy traffic as Tate's Cairn Tunnel had not opened. 'I was sure that the house [price] would appreciate considerably after the tunnel was opened,' Cheng said.

He was right. Three years later he sold his Hong Lok Yuen house for a profit of HK$4million and moved back to Hong Kong Island.

He said, however, that he was willing to do what others were not - move to Hong Lok Yuen - because he worked in Tai Po at the time.

'Transport is vital. If you live in a remote area and have to pay a lot in transport fees you might as well put that money into the property,' Cheng said.

Cheng goes to great lengths to ensure that the money he invests in property is put into the location rather than extraneous features. He never buys new apartments that are lavishly decorated and include fancy clubhouses. 'I never use the clubhouse but I still have to pay a high management fee, which means I am paying for other people's facilities. I don't do such stupid things,' he said in his trademark blunt manner.

'Even if you don't have money left for furnishing you can always sleep in a sleeping bag in the beginning, and then buy the furniture piece by piece when you have the money.'

To further drive the point home, he recalled the tale of a friend who obviously did not listen to his advice and bought a penthouse apartment in Tseung Kwan O in 2001 for

HK$20 million as an investment. The problem was when he tried to sell the property.

'He lost a whole lot of money because no one wanted to buy it,' Cheng said. He said The Peak, Mid-Levels, the Southern district of Hong Kong Island and Kowloon Tong were good locations. These traditionally 'high-end' areas had a limited supply of property and steady demand from people wanting to live there. Cheng warned against short-term speculation but believed that long-term investment in property was relatively low-risk.

'Everyone needs a place to live. It does not matter if you earn a lot from [selling], you still own the property. It is totally different from the stock market, where you might lose everything you invest. And through upgrading your property you live in a better environment.'

He advises fledgling investors to bone up on their knowledge of the property market to find the right opportunities. Investors should find out the name and history of the developer, read books about property investment and look at which areas are due for redevelopment.

If, after that, potential investors cannot stretch their finances enough to afford the cheapest flat in Southern district or Kowloon Tong, just have faith in his system.

'If you follow my rules, the more expensive a property, the more potential it has. When I bought my first flat, I borrowed from my parents in Canada. I had a humble start but I know how to invest. So money came rolling in.'