Property Investments, like all other investments including shares, gold, foreign currencies, commodities, stamps, antiques, bonds or Cash in FD in the bank, carry an element of risk. What then are the specific guidelines to Maximize profits and minimize losses?
IMPORTANT GUIDELINES ARE:
No.1 ) BUY A PROPERTY WITH AT LEAST 20% DISCOUNT
How? You can buy at Bank Auctions. Banks usually sell Foreclosed Properties at discounted prices at auctions. And if the Properties are not sold at first auction, every one to three months later the same property will be offered for auction at a further reduced reserved price until the property is finally sold.
No. 2) RENTAL YIELD TWICE THE BANK FD RATE
Buy a property with a rental yield that is twice the FD Rate of Bank. :Example: The Current Malaysia FD rate is 3%. So invest in a property with a rental yield of at least 6%.
No. 3) 90% OCCUPANCY
See if the surrounding properties are fully occupied or vacant. If occupancy is 90% or more, it is quite safe to buy. It shows that there is demand. Chances of renting out is good. Best if there are no vacant houses. That means demand exceeds supply. You can ask for a higher rental.
No.4) BUY IN THE DIRECTION OF GROWTH
Property Hot Spots are Expensive. Try to get a place near to it while prices are still reasonable. In no time prices will play catch up in the game of rising value.
No. 5) BUY WITHIN ONE HOUR’s DRIVE FROM YOUR HOME
Why? If the property is an investment you will have to find tenants. Unless you have multiple units for economy of scale , only then can you hire an honest local agent to manage them for you. See. if you reside in S’pore and invest in UK or USA you have high expenses. The rental does not cover air ticket cost.
No. 6) WILL YOU STAY IN IT IF YOU CAN’T SELL OR RENT IT?
A house kept empty for a long period might attract thieves or termites.
N0. 7) NOT AT THE TAIL END OF THE PROPERTY BOOM CYCLE
This is quite hard for newbie to understand or those who have not lived through the BOOM & BUST OF THE PROPERTY CYCLE. We will explain “THE REALITY OF PROPERTY CYCLE” in another article. Meanwhile, do tell your friends about this website if you find this information helpful.
The above may not apply fully if you are buying a new property. However, developers do give early bird discounts. Best if you can buy at 1st phase. At Subsequent launches prices will be raised higher and higher.
Following safe criteria will help you to avoid speculation. Remember – Be An Investor Not A Speculator!