Post-GST and Impact to the Property Investors: What’s next?

Property News/ 22 July 2015

* Article by Freemind Works *

We are coming into the third quarter of the year, and is now in the so called post-GST era. Whilst some argue that it is still too “early” into the GST implementation to really read the property market, some said it’s the best time to start bargain hunting.

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This year we have entered into a very exciting phase of the property cycle. In Penang, we have observed that the number of property transaction has reduced quarter to quarter; however the value of the transacted properties has increased. The cooling down measures introduced (LTV70%, revised RPGT and etc) had had some impact on the market. Despite these measures, however, the property price is still on the uptrend, and I foresee the property price will still go on higher.

The question now, then, is how does this latest development effect you and I as a property investor? Is it time to buy, hold or sell … what are the market sentiments now?

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Well, to give you an idea of the market sentiment in Malaysia and especially in Penang, here are some of the comments I hear from participants who attended my public talks:

• Property price is expensive
• I cannot afford to own my property
• Is there a property bubble?
• Is now a good time to invest into property?
• I prefer to still wait and see how the market will trend

While I do agree that property prices have gone up substantially these past few years, there are still properties that is within our affordability depending on our budget. What an individual meant when he or she commented that “property price is expensive, therefore I cannot afford to own a property”, is essentially saying that new launches by developer is far above his or her affordability range.

However, if we look harder, we will still find property that is within our affordability range, yet at the same time, provide good returns (rental and capital). Let me share with you how you and I can still invest in the current property market especially in the Penang property market regardless of the current sentiment.

Back to Basic – Fundamentals of investing

Historically, properties have always appreciated with time and proven to be good investment vehicle to hedge against inflation. What is important to know is to buy into the right location with the right fundamentals, never on speculation.
A tip for you: many properties from the DIBS era has just completed and ready for occupancy. Good deals is out there as it is the buyers market now; regardless if you are buying for own stay or for investment purposes.

For investment purposes, the reference to note is the rental market. As you will need to either rent it out or sell it. Selling prices are closely related to the rental prices as well, therefore, you always need to ask yourself “Who is my target tenant?” Know the rental returns. With the exception of houses, a good benchmark for all residential investment grade properties is about 6% (or more) rental returns.

In addition, the take-up rate and occupancy rate of the properties in the surrounding areas is also important. Ask this, “How long does it take for me to rent it out? Is there more demand or supply in this area?” Finally, is your target tenant’s population growing or dwindling?

Switch To Secondary Market And Look For Deals

Buying from developers or (primary market) have lost some appeal now that Developers are prohibited from offering DIBS. Secondary or sub-sale market has, somehow been, less sexy than the primary market. However, I have always invested in the secondary market and make profit from there. What’s more, I still have positive cash flow into our pockets monthly.

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Secondary Market: The How To and Where To

When I invest into the secondary market, I am assured of monthly income coming in to offset the installment, what we call the TIBS – Tenant Interest Bearing Scheme.

The key word here is look for properties below market that will generate you good rental return.

Where to buy, you ask? I say everywhere is a good to buy as long as the research is done right.

Stay Tune for my next article on how you can add value to your property to get higher-than-market rental return.

For the past 4 years, FREEMEN has coached 1120 people from Malaysia (Penang, KL and JB) to buy 1139 properties in the secondary market that yielded a minimum of 6.0% return in the past 7 years.

Come and Meet Us

Here, I would like to invite you to come and meet us on the 8th August 2015 at Evergreen Laurel Hotel, Penang where my mentors and Property Experts, Michael Tan a.k.a Millionaire Maker and Adrian Wee a.k.a ID King, will be in town to share with you about property investment strategies. And if time permits, they will help you determine the size of your property portfolio, which is an indication of the type of properties that you can and should focus on.

So, book your seat early as we are expecting a full house. Now, tpeople usually have to pay the retail price of RM197/pax ,

* BUT, I will give this deal to Penang Property Talk reader : You get all these learning for only RM57! And For 1st 47 people who register here NOW! will also get a FREE Penang map from Ho Chin Soon and other bonuses.

So hurry, take action now to register here as seats are limited.

Happy Investing,

Keegan Tan is a Property Investor and Property Coach. He has coached more than 200 Penangites who have bought their property no money down. He is also the Founder of Freemind Works, an organisation that empowers individual to achieve their dreams through continuous education. Keegan has been featured in the News Straits Times and Property Insights. He has also spoken in Property Expo and Property Convention in front of a crowd of more than 300 people.