Going Forward 2019 in Properties

We’ve just had New Year celebrations to usher in 2019. While some of us may still be stuck with 2018 resolutions, some of us already have new ones to achieve. Well, as for me this I am having new resolutions for this  brand new year.

 Before we proceed, let’s look back at 2018. What happened to the property industry? We’ve read many articles that mention a serious oversupply of property. As at the first quarter of 2018, we are having an overhang of 29,227 residential properties. This overhang has remained unsold for 9 months. This figure will be even higher if we were to include service apartments and SOHO.   As we are well aware, this figure has been increasing over the past years. The golden question now is:  should we buy or invest moving forward? What do you think?

 

Overhang Data 1Q2018

 

 

 

 

 

Source: KeydataLPPH2018

Some say good time to buy , some say not to invest and others think that its better to wait for the economy to recover.

Ok ok, here’s what I think and this is solely my point of view:  We can still buy or invest in properties but the strategies are different now as compared to a couple of years back. In the property market,  there is always a cycle from boom to bust but I’ve noticed that after every time the property market takes a dip, it definitely  goes up higher when it recovers.

 

10 years ago, it was so easy to make money from property. Many investors just bought and flipped property. Ya the industry churned out many property millionaires. Are you one of those? Well do you think today, this strategy is still applicable? Buying a property today or in the future, will in my opinion be a mid to long term strategy. By Mid Term I mean keeping a piece of property for at least 5 years. Unless you are very lucky, you won’t be able to get your hands on a below market rate property and flip it for a handsome profit. This type of property are hard to come buy unless you manage to find owners under financial strain.

 

As for me I will not buy a property if I do not have at least 12 months instalments in my pocket. Why you may ask? I want to hedge my property. I know that once completed or if I were to buy a sub sale property I will not be able to find tenants so quickly. What’s more? Certain properties may need to have renovations done. That’s one to two months already gone. You may hear some people saying that it is so easy to buy properties. Get it from me, it is not easy if you do not have experience. Even now, there are areas in which I am still learning. It is an experience and you have to be committed especially if you want to become a property investor. Heed my advice as I have been in the property industry for the past 21 years. Learn and do proper research first.

Here are 7 areas I recommend to research before buying a property:

  1. Location
  2. Population
  3. Infrastructure
  4. Demand
  5. Future plan
  6. Background of the developer
  7. Package

To top it all off, get your objective right.

What is you objective in buying this property? Retirement, children’s education etc. You have also to decide whether to do long term or short term rental if you are investing. By short term I mean home stay style. Ya, it has been gaining momentum over the years. Doing long term rentals may be more difficult to cover your bank instalments but if you were to do  short term or homestay you might be able to cover your instalments and maybe also get a profit. Take note that homestays also have its share of risks but for me any investment will have risk involved. (Stay tuned for my talk on doing  short term rentals). It’s up to you what level of risk you want to take from low, middle to high. Personally I would recommend only to take calculated risks. Risks that I can afford to lose if something were to happen.

I hope that this Information is enough to get you started in 2019.

 

From the Desk of

Miichael Yeoh

MIEA 2019

 

 

 

 

 

 

 

 

 

 

Call 04-2288 333 or visit www.miea.com.my if interested

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