As far as "safe investments" are concerned, think about it. Which investments can assure you that your capital won't get burnt? There is none. But look at how the equity markets are doing, you can be rich one day and before you know it not so much anymore. Same for commodities, even gold and forex.

Now look at property investments, if you speak to 10 ppl who have invested in prime areas (keyword is prime), you can see that not only the capital is preserved, you get cashflow if you rent it out, and inflation is usually factored in the market price. This is not a surefire guarantee that this is the best investment, but it sure gives me better sleep at night.

Both, but more towards cashflow. It's refreshing to see that to Phoeni, the capital gain for condo is a plus/bonus, and not an expectation.

I look for new properties at good locations, which USUALLY appreciate upon completion. Location is really key, and there must be some confidence in the potential tenancy. So a factor of no-rent are put in, so when the wheel starts turning (tenancy is in), I get to enjoy both.

I view both types as a cow; capital gain is like the cow growing, but if you slaughter it you get the meat, but it's a one-off gain. My philosophy in property investment should be always for cashflow, unless there is a good opportunity to flip. So as you may have guessed it, cash flow is like milking the cow, and this is what I need in my retirement later.

Tell you another thing, this is just my plan, sometime in the faraway future . I'm planning to get one house for one child I plan to have (I'm not married, so can only plan now). I'm getting good COCR, leave it on more or less autorun, and look for another, so in the future one kid can get one property for their needs (education and healthcare mainly). This will help me, the family, and them in the long run. It's very much easier said than done, but when you have a goal, and the passion to pursue it, I think it's a blessing anyway. In short, one "cow" per child.

Hi Phoeni,

1. That's the risk I'm willing to take on SOME of the developments. What I look at is the present MANAGEMENT of the highrise of the same developers elsewhere. The best way is to talk to property agents of CORPORATES, as they will have pockets of highrise in their list which they recommend to their clients. The rental yield/COCR is compared with the surrounding, with a premium given if the location is better/reputable developers in relative.

2. It's definitely safer, the only downside is that it takes a longer time to grab a good COCR unit , and for similar location, and similar rentals, ppl usually go for the new ones. But again, this warrants a longer discussion, what I said is basically a nutshell. And I have a couple of the completed ones as well, but still could not beat the ones I get UC.

3. The established markets have been "batteredly quoted" (I'm not sure if that's even grammatically correct!) ie the DMTB(Damansara,MontK,TTDI,Bangsar). These are the places if you want STABLE inflation proof property for KEEPS. But for investment I'd look elsewhere, especially new townships in "good" locations. Some are like Sri Hartamas (yes! ), Kota Kemuning, Bukit Jelutong, DPC. These are Tier2 to me; considered upcoming and good potential to boom. But landed are only good for Capital Appreciations, as the COCR usually is rather low, unless for some units which commands too high a rent, and the risks of having them vacant is pretty high as well, so to me not with considering as COWS.

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Added on March 8, 2009, 9:13 amWould you be so kind as to share your investment strategy (and to retire at 35)? If public domain is too intrusive, we can discuss off-line

This post has been edited by meejawa: Mar 8 2009, 09:13 AM

Phoeni, mind explaining what you meant by instant equity?

Got it, exactly one of the reasons I buy UC prop

Newbies are a definite no-no. Reputable ones that I meant, and which I'm into, are the ones in the top 5 of developer's list, and also which are recommended by realestate agents for their MNC tenants, so that takes car of at least some of the buy-and-pray part. Of course, when I was new (and young and reckless), it was an adventure to go with not so reputable but cheap properties. Those were the days which I won't want to go through again, but it was a good learning experience.

Ahhh, this is what's interesting. For some developers (reputable ones too), they manage their own property for a couple years (usually 2-3 years) before handing over to the Joint Management Body by the residents. But usually the residents will re-enagage the developer to continue manage it for them. I may be biased, but so far my experience in this regards has been rather pleasant.

Also when the JMB is in effect (very careful here), usually they are more proactive in maintaining the condos. I have 2 JMBs which are just set up and I'm happy that they are very proactive and transparent in their work. But I'm the guilty party as far as participating in their meetings (work commitments..yaya the usual procrastination )

Did I say management is one of the most important factors to consider for highrise investment? If I did not, "management is one of the most important factors to consider for highrise"!!

We know our prob is not like US', ie the subprime thingy is not that prominent here. So we see manufacturing, and finance maybe having some problems here and there. If I were to ask the question : So whay do you think we will be in deep shit? Then surely I'll get the same very intelligent answers, ie we are exporting country la, we don't have the critical mass to use domestic consumption to push up the economy la, China la, India la, Europe la, whatever la....

The let me ask you, who are the ones who get retrenched? Are they holding lot of properties in good locations? Will they eventually become motivated sellers to a point their holdings will look attractive? Menangguk di air keruh? Sadly that's life.

The again, if the mid class employed are kept employed, what will trigger the drop in prices? The biggest drop in Klang Valley is in KLCC, and that's around 20-30%, and mostly due to FOREIGN players exiting. Most still have the holding power. Want to check out TTDI, Bangsar Dheights and hope for a bargain? Not happening. You counter and say Not happening YET". So I'm curious, what will trigger a meltdown in prop prices?

Dreamer,

Fair enough. But I'm questioning why I keep reading that a property uncertainty/meltdown/crash is expected...

1) How many actually spend the increase on properties? Having RCECap in place already almost guarantee their existing monthly mortgage paid.

Yes, printing money should cause one's currency to devalue, although depending on how you look at it, the reverse holds true for USD. When companies with high foreign debt (presumely largely in USD), one of 2 things will happen:

1) USD/RM remain high, causing what you described, but then again, who will be the target group offered VSS/get retrenched, and how will this translate into property prices come crashing? I'm curious specifically for property market, not economy in general. We know how the latter will be impacted, I just want to know how does that translate into other sector, ie prop.

2. USD crashes, as it should have been long time ago. So in this case, forex will not be on top of the concerns list, alhough the rest of the factor (absolute debt, demand outlook etc) will still be in play.

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Added on March 23, 2009, 9:39 amsee? so where's the peleburbawahan?

if 20% drop is meltdown, then you win, we are already there in KLCC This as you know is subjective (just like wen a country's growth is -ve for 2Q it's recession..)

Maybe a good indicator will be a shard increase in NPL for prop, and in auction listings? Figuratively, also maybe 2Q of similar trends? I'm just shooting in the dark..to me as long as prices in good locations drop to maybe less than 20% increase of the developer's price, then it's good news to me.

This post has been edited by meejawa: Mar 23 2009, 09:39 AM

Prop in good locations, would have given or still giving good returns, and let's lump this into the total costs, you'd have in total paid less for a certain property. If you noticed, in some cases some of the properties are still doing well even when times are bad. Just take a look at TTDI (not the ShahAlam one k!), or even DHeights. Of course there are still many good examples.

Now what determine the property price? Supply and demand, just as i any other investment. You may think it's market sentiment, companies' fundamentals etc. but at the end of the day it boilds down to how many ppl are chasing the same thing, and how motivated the sellers or buyers are.

When everyone is panic now, remember every dog has its day, and some days are better or worse than others. But in properties, you can get a smaller downswing before it swings back up, compared to the rollercoaster stock markets.

So if I may advice, when you buy is important, but for sure not the most important thing. Look at the return, look at the potential, look at your risk profile, look at what you want out of investment. You can get good stuff in EVERY market condition. Prop investment is for the long haul (flip if you want of cours), so don't treat this like the equity market where you monitor every day the performance. Heart attack arr...the same reason why I'm not suited for stock market...

Dreamer,

Read my points and make a better conclusion. What I've been saying is this:

1. US economy - caused by subprime => affects everyone there as jobs are axed everywhere, and housing is a need
2. In Malaysia, we get the coupling effect (but in foreign debt, manufacturing, financial not even close to US' level)
3. So in Malaysia, those who get retrenched first will be in these or closely related sectors.
4. For those who get retrenched, what is their equity profile? Some in cash, some in stocks, some in properties.
5. For those in properties (as in own stay), what category of props are affected, ie sudden spike of supply like you mentioned?
6. Are these the target group for property investors? For me, NO. Even for others who are, then wouldn't it be a golden opportunity to buy?
7. The demand and supply usually not come from the same group of ppl. Eg, I would buy a 500k prop to be rented out if the return is good, but I'd never stay in it. Just like I'd buy a 100k apt to be rented out to student.

On the diversification thingy, the same goes for dollar cost averaging, to be is total bunk. Yes I too CHOOSE to not diversify in the way you do. I don't have the numbers that you're holding, but I'd think if one's fall is helped by other's rise (US fall "compensated" by Asia's rise or vice versa), at the end of the day you get more or less the same return, albeit capital has a higher chance of getting preserved. And this is in good times. When times are bad like now, the whole portfolio may trend downwards for a while.

I now compare what's happening to property investment in ONE country, ie our beloved Keris-C4-Malaysia. If I were to compare what I get in stock market, or to look at return in commodities/equities worldwide, I'm still way ahead. They say if the market lose 50% and you lose only 40%, you're actually beating themarket by 10%. Sure, if that makes you feel better. But I want ABSOLUTE return, ie better than FD, better than inflation, better than MOST equity markets. So far, well..what can I say, so the very not shabby at all good! Sure, all the eggs are in one basket, but mind you, even within the basket you can diversify

You are actually also putting all your money in ONE basket, ie equity and spread it across regions/industries etc. I am putting all my money in ONE basket too, ie properties and spread it across diff target market, diff property types etc. If you agree with the last statement, then I'd say you're doing nothing different than I.

peace out-meejawa

bro dreamer,

1. If hell breaks loose, which investment option is sheltered?

2. My answer is no one is saying it will not get worse before it gets better. Glass half full way of looking at it, it will get better eventually if one has plan to weather the downturn. Like I said, at the situation now, things are still ok, and I'm with you that things will get worse than now. But if and when it does, refer to 1.

Also, if things get worse, do ppl not need a place to stay (I'm not talking abt US level subprime where ppl need to stay in tents in parks). Students will stop their studies? Ppl will move further to get cheaper rent and/or place to stay? Sure (with big chunks of salt), but I don't foresee ppl camping in KLCC park here. Again, diversifying in target market is what I do. And when the hay is made during sunshine, now is the best time to use the buffer to hold and wait out the storm.

Your strategy is different from others who are in the wealth accumulation phase. Is your point here to GROW the wealth, diversification is key? So you not concur this can be achieved in one investment basket in one country? And looking at the global situation now, how is one's wealth preserved?

If you look closer, when you invest in stocks, you're giving your money to the company to invest and hopefully get a decent return. When you invest in mutual funds/unit trust/bond, you give your money to someone who gives the money to the company to invest, hence the money gets "further" away from you. This may be trivial or irrelevant to some, but to me I want to be able to control how and where my money goes, hence the money goes to me who invests it.

meejawa

This post has been edited by meejawa: Mar 25 2009, 11:11 AM

err..i thought Uncle Sam is already in hell since many months liao?? People camping, Wall street bankers pose for Penthouse..remember?

nitpicking aside, I don't have much experience in stock investing, maybe you can help to explain something to me. What will happen if the investment house/brokers go bust? I'm always curious, just like here in Malaysia, what will happen if OSK/AmInvest etc go bust, or Vanguard in US (not even sure if they are in the same grouping)? They are the guardian of your money, you pay them loading to help you buy the stocks. Who created the ETFs? What's the worst case scenario?

thanks,meejawa

Keep this thread long enough and the question will not be valid anymore

REIT to me is no different than any other stock. I may be ignorant to think so as I do not have much knowledge in the stock market. I look at it from the point of view of the characteristics of REIT as a stock, period.

Another reason I don't trade REIT is because of leveraging, or the lack of it. True, both REIT and self investment are putting money into properties, and both may give similar yield, but leveraging can double the capital outlay almost everytime. I don't think REIT's price appreciation can achieve that? And for self investment the technique can be repeated again and again, for REIT, once you buy you hold and "milk the cow" without fattening it..if that makes sense..

New launches are almost always snapped up, while secondary market is stagnant. What does this tell us?

KLCC prices have dropped 30%, same goes for rental. This I see will continue until after CNY 2010.

MK's prices have slowly going up, but not for the high ends. Look at MK10, only appreciated 10-15% from the developers price.

IS this a good time to buy? There is always good properties to buy regardless of market conditions or sentiments.