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HOW TO MAKE SURE THAT YOU DONT LOSE MONEY BUYING PROPERTY
It’s important to note that every investment has risks, and these 7 criteria may not cover every possible pitfall.
However, we’re confident that understanding these criteria will help you mitigate risks and make informed investment decisions. So, let’s dive into each criterion one by one.
Lets dive in!
#01 Median
The median price is the middle price range people are willing to pay for properties in a given area. By mastering this criterion, you have a “cheat code” to predict the property’s future value in the next 5 to 7 years.
This mistake can trap investors – if they try to sell the property after a few years, they will lose money, and if they rent it out, they might not receive any positive cash flow. Avoiding this scenario is crucial in real estate investment.
Summary : The price of property you want to buy must be at median price or below
#02 New Vs Old
You might wonder, “But a new property is more expensive and is not yet 100% complete. Why should I choose it?” If you can buy it at the right price, you might get a capital gain that’s twice the purchase price. Additionally, people prefer new homes over old ones if they plan to use the property for investment purposes.
So, when should you choose a new property over an old one? Typically, there’s at least a 30% price difference between old and new homes. But if you can find a new property with a premium of 30% or less, don’t hesitate to choose it.
Summary : Buy new property at 20% below discounts without much capital
#03 Tier
Our goal in using the tier system is to prevent mistakenly purchasing a property with a higher tier value. For instance, if someone buys a house in a Tier 2 area but pays a Tier 1 price, they may face a loss if they ever want to sell it back to earn capital gains.
Summary : Dont overpaid the price of property at your respective tier
#04 Booster
Boosters can increase the value of a property, making it a better investment for the buyer. There are three main types of property boosters: infrastructure boosters, commercial boosters, and population boosters.
Infrastructure boosters refer to the property’s proximity to public transportation, such as highways, MRT/LRT stations, and bus stops.
Summary : The property you want must have multiple boosters
#05 Supply
Before investing in a property, assessing the supply and demand in that area is essential. The supply should be able to match the usage and job creation to avoid an oversupply that could result in fluctuating rental prices.
Summary : Make sure that the property you want to have a lot of supply
#06 Maturity Point
Investing in property is similar to raising a child. Just like a child needs time and resources to grow and develop, a property also needs time to mature and provide worthwhile returns.
Prioritize properties with a shorter maturity period (usually less than 5 years, at least) to achieve breakeven or positive cash flow sooner.
Summary : Make sure that the property you want to buy can mature less than 5 years.
#01 Multiple Rental Option
Firstly, if the property you buy has more than one rental strategy that can be used, it’s a risky investment, and you may face losses.
Secondly, only buy a property covering at least 70% of the monthly installment payment with the standard rental method.
In addition to the standard rental method, there are many other rental strategies that you can use, such as multiple tenant segments, per room, per head, Airbnb, co-living, and more.
Summary: Make sure that the property you want to buy have planned a,b,c,d,e in the rental strategy
Does the property you are about to buy today meet all the 7 Criteria above?
Get a full-access video explaining 7 Criteria so you would not lose money in property.