As property investors, when is the best time to take more action if it is not during a buyers’ market? 2019 continues to be in buyers’ favour due to the supply glut.
Property owners are unable to sell their properties quickly. Therefore, they have to be more flexible on price and terms. Coupled with the influx of unsold units by developers, buyers are spoilt with choices now.
The situation presents an excellent opportunity to seek seller financing. For example, as a property buyer, ask these questions to the related parties:
- Can I pay the down payment in instalment?
- Can you include the furniture and appliances?
- Can you repair every defect including a new coat of paint?
And the list goes on. You get the idea!
Although you have plenty of choices, choosing an investment-grade real estate is crucial to let you hold on to the property. And you want to churn out a handsome capital gain and cash flow.
For a sustained profit, you want to buy property type with scarcity. When there is strong demand by owner-occupiers, it will help to push up the value. For example, landed properties are scarce in Penang especially two-storey and single-storey houses. I sold a single-storey house in Bayan Baru, but I still received calls many years later from agents asking if the property is still in the market.
Then to have healthy cash flow, you need tenants to subsidise your mortgage. Hunt for properties at locations with high rental demand. Generally, residential properties near high-grade employers, hospitals, universities and schools continue to fetch good rents.
For instance, the student market in Subang area seems to do well for many years. You also need to understand your target tenants so that you can get the right type of properties, and put in the right amount of renovation and types of furniture.
Now, you can also build up a team of professionals who can assist you to complete a transaction. During a slow market, many inexperienced real estate negotiators (RENs) and mortgage bankers have quit. So it is more likely for you to get some established lawyers, bankers, brokers, contractors on your side.
Although riskier, you can also look into buying at auction. Generally, there is less competition nowadays. So, you will have fewer people bidding. At the same time, you get more selection. A word of caution, there is a lot of due diligence before going on a bidding war. Make sure you have learnt adequate knowledge, and seek professional guidance who can lead you all the way.
If you are going to get a new home, or trading up for an upgrade, or investing for good cash flow, why not take advantage of the soft market sentiment?
KC Lau is a financial educator. He had published six books and co-created a dozen online financial courses. After conducting more than 392 hours of free webinar and 2,000 articles online, he gives away his popular Money Tips e-book volumes absolutely free at his website: https://KCLau.com.