Buying a property is a big decision, I dare say its one of the biggest and most important decisions each of us will make in our lives. And if you make the wrong call,....you could be losing in thousands!
I have come up with a strategy that has systematically helped my clients grow their wealth! And today, I will be sharing with you part of this strategy; How I first identify undervalued properties in the market. What you might not realize is that you and me are lucky enough to live in the era where anyone has a chance to tap into this. This Investment strategy used to be exclusively for the rich, now are available to you too.
The Strategy focuses on 4 main factors: 1) Entry Price 2) Capital Appreciation 3) Rentability 4) Exit Strategy
Disclaimer I have to be honest and say that no one can be 100% in pinpointing a property that will make money. This is simply because no one can predict the future. Even for myself – I am in no position to claim I know best. However by constantly being on the ground, I can see first-hand what is going on. I transact properties and interact daily with owners, buyers, landlords and tenants. – This gives me a good sense of what the current market direction is heading.
“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert
Your first step is critical. The property market moves in cycles, there are ups and downs. But the general direction is always up. In an ideal scenario, we would want to buy at the lowest point, and sell at the highest peak price.....But, no one can predict or time the market.
So how can we tell?....
What we want to look out for are tell-tale signs of a "Turning Point".
A proper and in depth explanation of how to read and identify tell-tale signs would take an hour or more, so for the sake of this post, I shall briefly touch on them. These signs are things like market trends, transaction volume, government policies..etc
Also, do note that the correct entry price is relative to the time period. This is a critical area that most buyers get trapped into.
More than just buying a property that is cheap, is to buy one that will grow! Other than entry price, you have to also consider the upside potential of your property, some indicators are, eg. Future developments, land sales, zone transformations...etc
And it is important to remember the future cannot be seen, thus the present will look very different from it.
Do you know where this place is?
This is the same location after transformation.
Following the transformation, prices in Districts 1 and 2 soared 205%.
It is important to identify key areas for TRUE growth and strategically pick out properties from those areas.
Tip: Remember to select with data and facts, not with your eyes.
This is an important factor, especially for investors. Most investors focus on rental yield, but forget to consider if their property can be rented out easily. No point having good yield, but no tenant, because your yield would NOT be actualised.
Even for buyers of own-stay, a property with good rentability allows you some safety measure even during bad times. During times of need, you will still be able to rent out part of your home for extra income.
Let us examine the case study below.
Two Condominiums, both situated with 5 minutes walk from Tanah Merah MRT. Urban Vista and The Glades. Both might seem like equal in terms of their profile at a glance, but let's look at the facts and figures....
We can see that though their rental yield might be similar, Urban Vista has a rental volume 143% more than The Glades.
When considering rentability, think of questions like... - Who will be my tenants? - What are my tenants needs and preferences? - Is my property better than the competition? - Is it convenient? - ...etc
This last factor for my strategy of selecting good properties in the market is the final piece to complete the puzzle. A good exit strategy allows you to easily sell your property when you need to.
This last factor is split into two steps: During the shortlisting of the property and during the selection/ viewing of the unit.
Shortlisting of the property One of the things you need to look at are the historical sale transactions. A low transaction volume indicates poor demand of the property, which also means it will be difficult to sell your property next time. Other things include development size, future development, accessibility...etc
Selection/ viewing of the unit
This step is the final step, but it requires experience to identify areas that might hinder the future sale of your property. This is where a good real estate agent is able to help you identify areas that would make the unit better or worse than others.
Even with all these 4 factors in mind, it still takes a keen eye and experience to identify a good property with accuracy. That is something that my clients like and value in me.
Moreover, it is highly essential and recommended that you go through a detailed financial assessment to ensure that you know what options are open to you.
At the same time, I find it crucial that you do consider the needs and goals of your family – especially if you intend to purchase a property for your own stay. If you have questions, please feel free to arrange a no-obligation appointment to discuss further.
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