Property Thoughts - Jual Beli Rumah - Is it a good investment strategy?

Lebih kurang empat lima bulan lepas.. datangla sorang mamat ni jumpa gua seeking for advice on property investment. Gua pun pelik.. why me?? WHY ME!! Gua bukan terer pun... takat ada sebiji dua rumah does not qualified me to be a property investment consultant.. takat Sultan of Con tu mungkin la... hahahah.. Tapi atas dasar hubungan kronism tahap gaban gua pun sudi mendengar... lagipun daripada gua layan citer pasal EPL yg bebudak sebelah tu sembang.. baik gua layan mamat ni..

According to mamat ni.. strategy dia is to buy during the launching or development stage and sell it upon completion.. Mamat ni beria-ia memberi contoh kawan-kawan dia yg makes thousands of $$$ from this strategy... bersemangat betul dia bercerita macam baru dapat tackle awek umur 18 tahun. Gua rasa sudah tentu dlm hati dia dah set that this is the best strategy.. Problem dia katanya camna nak raised the deposit.. so he was thinking of either taking a personal loan or refinance his existing house to get things started...

Gua termenung seketika... kerana gua tau persoalan ini berat.. kerana commitmentnya mungkin sama taraf dgn commitment org kahwin.. sampai akhir hayat dowlll..

Setelah habis air liur dia bercerita.. dia pun bertanya kat gua..

Mamat: So apa pendapat lu? Strategy gua OK tak?

Gua: First of all.. you need to check.. what is your investment objective? Kalau lu nak create your own skim cepat kaya.. this may be your best game but to tell you the truth.. this is not my game.. gua bukan flippers.. 

Mamat: Flippers? Flippers tu apa?

Gua: Flippers tu refer to those who buy & sell property for capital gain.. I am not that person.. Gua buy property for positive cash flow.. any capital gain is a bonus..Gua dont buy properties under construction because I like to see, touch and fell what I am buying.. gua nak tau sapa neighbor gua.. sapa pak imam surau gua.. anak dara ada berapa org kat taman tu.. gua Islamic skit maaa... perrghhh. Lagipun bagi gua.. investment is all about knowledge, control and leverage which may not exist in purchasing and selling off of new property for capital gains.

Mamat: Pesal lu cakap macam tu.. the surrounding project can give indicative on the "value" of the new property.. that's a valuable knowledge!

Gua: People may "think" they have the market knowledge.. but in my humble opinion.. whatever information gather prior to completion of any project is consider an "opinion" e.g, Puncak Alam is going to be the next Shah Alam because of the new UiTM build there or Putra Heights is going to be another Subang Jaya coz of the jazz and vibrant location.. Gombak is going to be like Bangi etc.. it may happen.. it may not.. Further.. just because the 1st phase sell like goreng pisang panas does not mean that the 2nd phase will be selling like durian during out of season..  "VALUE" of property is just a matter of opinion.. you may think its worth XYZ whereas I may say its worth ABC.. it is only become real once it is realise.. but until then.. it remain as an opinion.

Gua sambung.. though you may have leverage in this type of investment as you need to fork out only 10% and the remaining 90% will be provided by the bank.. but the most disturbing inherent risk here is that you dont have control over the perceived investment.. A new development may take an average 3 years to complete.. during this period can you guarantee that there will be no change of circumstances? What if the developer go kaput? The property may enter the statistic of another abandon project and yet you still have to serve the loan. Are you willing to risk your life time commitment? Tu gua tak citer lagi kalau market make a U-turn to South instead of North.. or if property bubble knock on our door.. haru beb...

Mamat: Abis tu buying for rental also based on "opinion" that you can easily get tenant.. and how can you "control" that you be getting the desired rental fees?

Gua: You're not wrong.. However, such "opinion" can be easily supported by facts.. before buying.. look around.. is there any  empty unit? If YES.. how many.. if too many.. then you should walk off and consider other places.. as for the desired rental fees... re-visit the place especially during night time.. look at the car park in the area.. that will give you a basis of average income group staying in the area... thus would give you some basic idea of the average rental fees in the area. This may not be 100% correct but because the property is in existence it will be easier to collate information and form a basis of "trending" about the property.. and in investment.. "trend is your friend".. To demonstrate the use of knowledge, control and leverage in property investment for cash flow is this - you only purchase the property when you have done your research on the area - location, average rental, amenities, accessibility - Once you're happy with the finding, you then look at how best you can use your leverage to make this investment happen i.e., if the rental is around RM500/month.. what would be your monthly payment to the bank.. if the rental yield suggested around 8%.. its worth to have a look at the property.. as your rental normally below your payment to the bank. If 10%.. normally its a grab.. subject to location.. This is how you control your investment against your leverage because at the end of the day its the positive cash flow that counts no matter how small you make it is still an additional income to you. Another control on your rent that you can adopt is by making some improvement on the property e.g., furnish it or done up some renovation.. that would normally gives you an edge over other landlord!!

Kawan gua terdiam dgn hujah-hujah gua.. tapi gua tau tiada riak kepuasan di mukanya... and gua yakin dia akan teruskan niat dia.. Gua harap he'll do enough study before taking on the big leap.. and hope that all the talks by his friends of big fat $$$ through this strategy is not just another marketing talk by some cereal producer  who claim that the product is LESS IN FAT but did not inform the audience that it has FULL LOAD OF SUGAR. The audience will be attracted to the claim that it is less in fat but subconsciously fail to realized that SUGAR is also bad for health... lets us all make a prudent judgment before making any investment... as I once mentioned in my FB.. the best investment is in KNOWLEDGE...