Property Still Can Be Goreng-Ed?

Posted by Kris | Monday, June 09, 2014 | , | 0 comments »

There is actually NO much well-kept secret on property investment that you cannot find out by googling or joining some forum/property groups at Facebook for free to learn on how to do property investment.

Here are some of the NOT SO SECRET methods of flipping property investment that people usually employed. I just give a list of summary & keyword , and you can easily go google on it.

1. The property refinancing trick - Cheap capital loans

Easy way to get huge sum of capital with interest rate as low as BLR - xxx. This was the quickest way to buy alot of property at once. Hence, you will heard of stories of where a single person owned like 30++ properties in just a few years.

Assumption of course is rising property prices that will cause the property valuation to go up. This is the way to "unlock" price appreciation to fund future purchases.

Possible checkmate:
However, recently this method has been checkmated drastically with Bank Negara coming in with strict restriction on the amount and tenure of refinancing , making it harder to get higher valuation and better "cash flow" by the speculators.

I will blog more on this once i have more time.

2. The Bulk-buy group - Where buying properties is like buying vegetable.

This sprouted out as a result of high demand of people taking up property investment seminars where they will be automatically initiated into the VIP club where they will have first hand privilege to buy a NOT- yet launch property at "discounted price" from the developer.

Of course with great privilege comes with great price. These memberships are not cheap, it may come with a 5 digit price tag.

Possible checkmate:
I believe recently the government planning to introduce some restrictions that bars anyone buying more than 4 units of the same development in other to counter these property investment groups. However, i think this will not impact the game that these people play as most AVERAGE members will only buy 1-2 units. And with high membership take up rates, even with everyone just buying 1 unit, it can easily sway the developer to give discounted rate on the bulk buy.

3. Auction Flipping - Breaking into your own property

Fancy breaking into your own property with a sledge hammer and a drill? That could happen as with many auctioned-off property, where the previous occupant care-less about where he/she put the keys to the property. 

In most cases, you don't have a chance to view the internal condition of the property, and you will pray that you don't find some abandon smelly fridge!

Auction property can be very lucrative especially if they are selling way way below market value. The reason is simple, each time an auction property did not get sold off on auction date, the auctioned priced drop like 10%-15% (cannot remember at the top of my head now) the next time it goes on bid again. Repeat that for 10 times, some auctioned property bidding price can be dirt cheap. There is a caveat though....

However , with great reward comes with great risk also.

The price you pay for auction eventually depends on at what bidding price you manage to win the property. If you think a property is cheap after countless of discounted pricing on the starting bid, think again. There are bound to be like alot of people also having the same thought and may start a bidding war.

I seen a property where the starting bit was ~RM240K after not being sold out after 4 auction calls. The first time it went to the hammer, it was like ~RM310K and there was no takers for the 1st, 2nd, and 3rd auction. 

However, when the prices get super attractive at the 4th auction, there was alot of bidders and a price war ensued. The bidding when so high and furious that the winning bid surpassed the starting bid that you could won the property at the first time it got auctioned. It was sold like RM340K. 

Hence, there is an element of luck as most people also play the waiting game for the auction price to drop.

Yours truly is one of the losing bidder. The numbers above is just for illustration as i forgetten about the exact numbers already since this was like 2 years ago when i tried to do a joint venture with my friends who are in the auction game on a very nicely priced property.

Nevertheless, this tells me that if I & Co were to get emotional and chase the bidding price, in the end, the auction property which supposedly cheap is NO longer cheap.

Possible checkmate:
Life is a box of chocolate, and auctioned property is also the same. You might get "something more" than you expected. Nevertheless, this game requires alot of time surveying and know well some of the "trade secrets" and modus operandis of the people they called "ulat".

4. The Inside Job

This is the irony of life. Sometimes, when you go to property fairs, you will see & notice some HOT property (still in development) where the stickers is showing that there is only like 2-5 units remaining left, but yet the organizer still wants to go pay rental to set up shop.

Then as you walked away from the booth because the remaining units are not so nice units, the sales person walks to you and whispers to your ears sexily : "I have a unit and if you want, I can sell it to you". 

This happens to me a few time, but unfortunately the sexy whispers always comes from a guy salesperson!!! Damn...

The inside job is really lucrative as one can easily earn 5 digit sums CASH just by indirectly become a middle man between the developer and buyer for a newly launched development.

The inside job even can happen even after the S&P is signed for a few years. Don't ask me how ^_^.

Possible checkmate:
When doing an inside job, just make sure the development is attractive enough. Else, it is very hard to flip the property as in most cases, the employees itself could not afford to buy the property itself but bought it just for flipping purposes. That is why sometimes , an development is already like 40% sold off & all the good location units booked even before launching; and of course before the bulk-buy guys & girls jump into the buying frenzy.

There is all folks. If there is more that comes to my mind, there perhaps is a Part 2. I am not entirely negative on property development with the current bubbling trend, nevertheless, please do your research and comparison diligently.

Be patient in growing wealth and you can always wait for the right opportunity. Patience & discipline is very important. 

If one can wait for a girl/guy for 2-3 years, then making a half-million dollar property purchases (one of the biggest big ticket item in an average joes' life) can also wait until the right one come along.... Hahah. %_^

Thinking and Waiting