- Nixon Paul
- Articles
Property Investments in Uncertain Times
There are many stories where property investment gurus have shared how they invested during times when the property market was facing challenges and many were taking a Wait and See approach. Then when the market turned around, they would either sell the property off for a profit or keep it to leverage for financing purposes or rental income.
In challenging times, the decision to invest or not is a difficult one, fear and caution rule your heart and as such most of us tend to adopt a Wait and See approach.
However, for those who are willing to go against the tide, in times when the Ringgit is heading south and the global economic growth looks uncertain there are a few issues that must be considered.
- Don’t speculate – take a safe and conservative approach. Ideally, one should invest in a property that is already generating rental income. This will help with the repayments towards your loan and cushion the blow should you lose your job etc.
- Keep the margin of finance at a safe level. 60 to 70% financing is best. Over gearing has always led investors to have to dispose of their properties in difficult times. This usually ends up with losses being incurred.
- Avoid properties that are plentiful in supply. The basic rule of supply and demand must prevail. Avoid newly completed schemes. This is where supply is plentiful and most investors get taken. This specifically applies to residential properties. One has to be objective and cannot let your heart rule your head. Remember Old is Gold. Established locations, where the infrastructure is good and local amenities close by are the best way forward.
- Depending on your budget, commercial properties are always best for rental purposes. Maintenance is minimal, unlike residential properties. Further to this, most (not all) commercial tenants tend to rent for longer periods of time.
- Taking a realistic approach – many a time it’s the heart that rules and decisions are made in haste. It’s important to understand your own investment objectives first and then decide on the type, price, and location of the desired property investment. Location and type will have a huge consideration on your budget and as such an honest self-evaluation of your financial matters need to be given careful consideration before decisions are made.
