Category: Swhengtee Article Published: Thursday, 08 November 2018 14:55
HOW TO BE A PROPERTY MILLIONAIRE?
1. Plan your basic funding strategy
The two essential foundations of property investment are to create the basic money and build the ability to borrow. There are many ways to obtain the basic funding—you don’t necessarily need to have cash in hand to purchase.
One of the ways is to look for a property that is selling below market value and to purchase it with a partner that has the credit eligibility to obtain a loan. That way, you don’t have to worry about trying to shell out the downpayment.
The other way is to form a company (Sdn Bhd) or partnership, and purchase through your company. Remember, you have to establish your credit. Banks are only comfortable lending to people with the ability to repay.
2. Learn how to identify a good property
In order to identify the right property, you have to know how to identify the following:
(2.) location and
The best properties can be found in any country, at any time and in any situation so it’s not a question of whether we should buy during a boom or a bust.
Timing is the most important factor although it is usually harder to identify; location on the other hand is easier to identify. But both of these factors are not absolute — any best location may not give you the best return and no one place stays a good investment forever.
Another thing to consider is the type of property you’re purchasing. As our living habit or preference changes, the commercial value of a product will also change. And when the demand for a certain type of property shifts (too much supply or too little demand), it loses the ability appreciate. Changes in business model, lifestyle or infrastructure will always create a demand for certain types of property.
Therefore, your portfolio should be diversified. Then you need to be able to read the market and predict the impending changes in order catch hold of the opportunity at the perfect timing—the point where the product and its location are at the highest point of appreciation. That’s how you get the highest return.
3. Avoid making mistakes
Property Investment does not guarantee that you’ll make money. Many in fact suffer losses in property investment. Given inflation, interest rates hike and opportunity costs, many people have in some ways suffered losses. In fact, very few people make good money in property while many make mistakes.
Hence, a smart investor needs to know the market very well and not follow the herd. They are smart enough to know mistakes are made by the majority which open up opportunities for them. Most importantly, always do the right things because one mistake made can cost a five-year delay in your journey to becoming a property millionaire.
4. Build a solid portfolio
Having a diverse portfolio is important because then you can acquire and dispose at different timing, thus reducing risk substantially. You should treat property as a financial product—this will involve cost, risk and revenue.
Different types of properties at a different location and different timing will have different up and down cycles. So, with a diversified portfolio, we can sell when the demand is high to maximise profit; we can hold when the price is low but rental is high; and lastly we acquire when the price is low and is expected to improve in a period of time that can be anticipated.
A good example would be the area within KLCC. It was oversupplied back in 2000—we knew the location was good but the price was low and no one was investing. In 2009, the property prices there were performing poorly, but it was the perfect time to buy. At that time, Tee predicted that prices were at their lowest and that there would be a boom within three years which was exactly what happened.
5. Treat property investment as a professional job or business
It is important to administer well your property portfolio. Treat it like a business—to run a business you have to have good knowledge and resources to conduct research in order to manage your portfolio well. The knowledge of property management is vital to enhance the value of your property.
6. You need to know ‘how to be a good landlord’
The final leg of the race before considering yourself an investor is knowing how to rent out your property. Once you treat property investment as a business, rental will form a major part of your income.
For that reason, ‘landlording’ is very important—a property’s value can only be enhanced if there is demand for rental or for the space, therefore you have to have tenants. To profit from your property investment, you basically need to be a smart landlord.