Using The Right Strategy To Meet The Right Objectives
There are a lot of objectives when it comes to real estate investing. Some people buy a freehold asset and hold it for the next generation. Others buy when the development is under construction and sell it later for a tidy profit. Then some prefer to collect rental yields for a passive income over a long time.
Whatever it is, it is crucial to plan your final objectives before you start looking for a property. That way, you will be very focused on what you intend to do and not miss out on any opportunities during your search.
Waiting for Correct Entry Price Strategy. Does It Work?
One of the strategies employed by some investors is the entry price strategy. These investors will only enter the market when the price is right and resell the property later when the market goes up. To them, price trends are significant, and they monitor world events closely to understand how these impact prices. Things like trade wars, higher interest rates will spook them and prevent them from entering the market. These investors will adopt a wait and see attitude to see where things are going first.
In my opinion, having a plan is always better than having none. At least you have an idea of where you are going and how to get there. However, because sometimes we are so focused on a strategy, we can miss out on other opportunities along the way that will fulfil our goals as well. To give you a better picture, I will illustrate an example for you.
Sometimes, There Are Better Strategies Instead of Waiting for Prices To Drop
Back in 2017, there was a condo launch in the core central region. Here are some attributes which the entry price investors will never consider.
- This condo is leasehold compared with its freehold neighbours.
- This condo had the highest psf in the region. Even higher than their freehold neighbours!
- Only 20% of the entire development was sold on the initial launch day
- Total supply of 35,022 uncompleted private residential units in the pipeline. Will there be an oversupply issue?
Just by looking at these attributes, I believe that most people will wait for the price to drop for this development. In their mind, they think that the demand is so weak, the developer will have no choice but to adjust prices downwards later. So, they adopt a “wait for the price to drop” strategy.
Did The Price Drop?
However, let’s look at the recent transactions versus what was sold back in 2017.
Just recently, there was a unit sold in September at the price of $3.694mil. The unit transacted was a 1421 sqft unit on the 7th floor. Back in 2017, the same 1421 sqft unit on the 11th floor was only going at $2.989mil. In these two years, the 11th-floor owner made a $705,000 paper gain or a whopping 23.58% of the initial property price. Not only did the price never came down, but it also went up significantly.
How You Do Spot Properties Like This?
If you contacted me back in 2017, I’m very sure I have forwarded you (via WhatsApp) a condo list with some recommendations. If you look carefully at the recommendation list, there are only three condos inside. This condo was one of them. If I had the opportunity to meet up with you, you would understand the mechanics of how certain factors affect prices and why I chose these condos. Those who followed my analysis and placed their faith in me, congratulations on your paper gains.
Are there still opportunities available in today’s market? Are there any more condo list in my recommendations? Don’t miss out on any opportunities you never knew existed. Whatever your final objectives are, book your free consultation with us first before you start looking for a property.
Article contributed by Jerry Wong
Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home or make that capital upside in just a matter of months. Buy Jerry a coffee, and he will meet up with you on a 1 to 1 session to share the following
- How certain factors affect real estate prices. (Using historical transactions as references)
- Applying lessons from history to determine if a condo has the potential for upside or not. These condos can be those under construction, resale or the very one you are staying in right now.
- Or just prepare the toughest question you have on your mind! If it is interesting enough, the answer will be in a blog post and shared with everyone!
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