PROPCAFE Guide : PROPCAFE Property Investment Strategies in Year 2017. Whack, Keep, or Cut?

It is now year end and time to chill and at the same time think about what to do in the coming year based on what we have gone through in 2016 and the condition of economy now and future.

Again, PROPCAFE founders’ whatapp group does not stop, it works 24/7. In fact, higher “intensity” was observed after few founders added more “stocks” in the end of this year while everyone is screaming on bad property market, dropping of rental, and worrying on property gluts. What is the logic? When  inflation and higher cost is creeping in like no tomorrow and weak ringgit continues, which investment works more effectively as best hedge? Well, nothing is so simple as wrong properties and buy without considering your affordability may create disaster too!

All PROPCAFE founders are ready for year 2017 and happy to share what are in our mind but, please, don’t “bulat-bulat” quote or apply it as every investment need to be assessed carefully with both internal (“your capability and affordability”) and external (“economy environment”) factors.

What would you do in Year 2017, Mr. PROPCAFE?

Soy Cappuccino:

“Property market in 2017 is still expected to remain conundrum and it is most likely to be dragged until 2018. From 2014 to 2016, Malaysia property market had been volatile with lot of uncontrollable factors like government unclear policies, financial institutions strict credit controls, and unpredictable aggressiveness of developers taking own initiative to dip their legs into the creative financing packages.

For me, the strategy to be adopted in 2017 will take account of what is going to happen or will happen in the property marker from 2018-2022. It is noticeable that the mass market products ranges from 350k to 650k with smaller sizes are really flooding the market and not to mention that Government keeps on pushing and introducing affordable homes in almost everywhere. Market will definitely be distorted in this product category in next few years. It is definitely a good news for those are genuinely looking for their first home but unfortunately the financial institution doesn’t really blend into the policy to be in line with the affordable home after statistics showed that one of the highest loans reject ratio for housing loan is coming from the low end 180k to 450k products. You got the affordable house built but you don’t get the facilities to buy, the equation just doesn’t jive together. I am trying to avoid this segment for now at least.

In Year 2017, I am looking more details in premium mid to high end ranged property in matured market for longer term horizon and preparing myself with more cash for longer holding (12-24 months) and emergency “special edition good” buy that fit into my own financial status. I see 2017-2018 is the good time to buy provided you are already prepared with your cash flow for this time back then and ready for the ‘time’. However, I will be very selective by giving more priority on location, liquidity, overall masterplan and also the longer investment horizon.

I think we hear a lot from many Property Guru or read a lot from books which saying that when the market is bad, it is not a good time to sell but to buy. Honestly, I don’t quite think the same about “selling” part during the winter time is any bad. A lot of people has misconception that during the bad time, it is at best interest to keep their investment until the good time is back and then only to put it into the market. I personally think this is a very risky to do that. For me, now is the best time to put all my investments on the market to see, test and gather which property is worth to keep and which is not worth to keep. At the same time, it is one of the best times to test whether your investment is a good or bad one and how much you really know about property investment. No better time to learn now. The good one will be liquid and in demand even during this bad timing, need not to say it will be better during the peak time. For those which take longer time or rather no taker even you plunge down the price at loss, then you should able to separate the bad apples from your basket. It is not necessary I am asking you to sell all, but merely to put it on the market to test it out. At the end, you make the judgment and it is your call to keep or to cut. 😊

Oh ya, I almost forgot to mention about about the government policy. If you noticed today the government is bringing in the Chinese resources, Hello 👋 Ni Hao Ma! And you will never know what they will bring tomorrow. Maybe the Konnichiwa or KamsanHamidan.. You get what I mean? So are you prepared for the China 🇨🇳 mari punya market? 😝 Happy New Year and let’s embrace the year of 2017 together. 😬”

Flat White:

“Avoid buying anything between 400k to 600k in 2017. Believe this segment is oversaturated for the next 10 years.

If finances are able, pick good value new launches above 700k and if holding power permits, go for high end. Believe this segment will make a come back in due course. Otherwise eye on subsale value buy. There are gems hidden here and there.

As for your truly, will sell one and buy one (or two).😅”

Black Coffee:

“Buy within affordability and allow buffer for at least 12-18 months (exclude capex commitment) for emergency.

Buy in area with catalyst such as MRT2. IMHO, shopping mall no longer a catalyst as Greater Klang Valley is too saturated with malls and success rate is questionable with long gestation period even after completion.”

Kopi O Peng:

“Investors are experiencing the external challenges that out of their control such as banks’ credit control, falling property prices and rent. Bank tightening policy depicting challenges to get financing, not only impact the primary property market but also the secondary property market. Sellers or investors can only close the deal if their subsales purchasers able to secure a loan. The best Investment strategy in 2017 is apparently, buy to hold, or buy to rent. Ideally, one can find 40% below market deals, with rental yield of at least 5%, there are aplenty of such deals in the market now. Indisputably, properties in matured area are more liquid and promising.”

Caffe Correto:

“Year 2017 is probably the trough (or near to) of property cycle. Therefore, it would be the best time to buy for future (2021-2022)! Always remember that you are buying now and harvest in future, not now to sell! So, why care about the economy NOW? Whatever come down will go up (cycle), that’s the Economic 101.

Plenty of great locations and easy entry package from developers with much reasonable price (those with Net price still at or below market price, not inflated price of course) are expected to come! So, get ready your cash! How? Sell your good apple in current bad time? To me, it is more on how much cash you want to prepare. If one property can give you back the cash that meet your 2017 property strategy, then go for it whether it is your good or bad property 🙂 By selling one and make you ready for 4 properties purchase in this exciting cycle (easy entry with good value buy, high potential properties), then why not? The key is what do you do next on the cash! Dump into one best value buy but high cash outflow (i.e. high value property) is not in my thinking as diversification is absolute important in this junction. Therefore, use it efficiently to accummulate more value buys to build bigger portfolio for future capital appreciation and rental income flows. Throw all your cash into just one may not be the wise thing to do.

Remember 2006-07? Good package, great incentive, developers were desperate, cloudy economy, low interest rate and every said property was expensive. Look similar isn’t it. Missed it last time? Now, choice is yours!”

Café Latte:

“FY17 is the best year to hold your properties. Let the supply tide subside. It is the best time to take stocks, cash out or dispose non performing inventories, and hold on to cash cows.”

Affogato:

“2017 is the best time to be a new property investor. The whole market is getting cold feet, but developers are throwing a lot of incentives and so called “newbie investors” who have recently try got keys, are going to be cash stretched – “market is nowhere like where it was 3 years ago.” There will be ample of opportunities be it secondary market or newly launched projects. MRT part 1 will finally go live. The game play has changed from 5 years ago. Throw away all the guru’s advice. It’s winter season in the property cycle now. Be discerning, be diligent and do a lot of home work for new investors. Existing investors, stress test time. How deep is your liquidity, how wrong were your selections (nobody really cares about how right they were, because given the cycles uptrend, it’s hard to go wrong). So what went wrong. Time to bite the bullet, learn and move on. Make sure don’t make same mistake again. Rental market will continue to be depressed, so projected cash flow will all be on the worst case scenario. Exciting times indeed.”

That’s all for now. No long winded stories to take up your precious festive time. Lol. Use it for your homework and FAMILY of course. “ From Love, Hate, Passion to Buy, Sell, Rent – Home is my Family”.

Happy Property Hunting and Happy New Year!

Photo Source: Credit to Mr. Khong WC and William

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