Funny questions answered with questions

This happened in Penang. My good friend who’s a manager in a real estate firm shared with me about a conversation during a recent property show in Penang. One potential investor asked about a certain development in Penang. My friend Mr. V shared about the development and why the investor should consider buying a unit. The investor replied, ‘I think better not. I still think KL’s property market is a better choice. It’s also less risky.’ Mr. V just smiled and wish him a great day ahead. I laughed and said why not Mr. V asked him back for the reason why he is buying? Is it for investment? If it’s for investment, then what’s the time horizon? Sell when completed or continue to get rental income? Is it for own stay? Where would he buy in KL? Why does he say KL property market is less risky? Actually, when we are faced with funny questions, we should answer them with questions. Seriously, there’s no point in answering someone who did not want to buy in the first place. Of course, answer courteously. Customer service is always important.
A fellow forum panelist in a recent property event, Ms. Prudence Wong shared this important question to ask before we buy.   Ask this first: Who is your target market?  As an investor, whether we buy in Penang or KL, do we know what’s the reason to buy? If it’s for rental income, immediately refer to the rental for the particular area in property sites. Can the rental income cover the mortgage? If NO, should we still proceed? If yes, is this the target market we want? If we intend to rent out to students, could they afford? Are there many other cheaper choices around?  If it’s for capital appreciation, do we already have a target for it? How did we derive the target? What’s the timeline for this to happen? WHY do we believe so? I always believe an investor should already have many of these questions answered. Else, I wish them best of luck because if we do not know anything, then it’s a waste of time listening to real estate agents or even developers. There’s no way we could compare objectively.
I told my friend Mr.V that many times, people do not listen to what we say. They just want to believe what they believe. If that’s the case, ask many more questions before we even start giving answers. Many times, the potential buyer may find the answer when you ask them questions. For example, ‘May I understand why you say Penang is a riskier buy than KL?’ Is the purpose for buying Penang the same as that of KL? Penang is an island which cannot grow too much, thus land size is LIMITED. KL is growing into Greater KL and urbanisation continues to happen, thus the potential growth is there. As both the property markets are different, there’s no such thing as which is riskier. The riskiest is definitely buying the wrong property, regardless of whether it’s Penang or KL. Do you agree? Buy where we love, after we have evaluated it.
Please LIKE kopiandproperty.my FB page or Sign Up for free to get daily updates about the property market.
written on 21 Feb 2017
Next suggested article:   Is it good value? Good question, how to answer?