I read an interesting piece of news today in NST. Taiwan has mistakenly fired a ‘carrier killer’ missile towards China. Fortunately, this missile flew only 75km and dropped into the sea off Penghu which is still within Taiwan’s waters. As per reported, it was a human error. Unless we believe machines are about to gain artificial intelligence, I think it will still be human error for a very long time. I think it will take some time for Taiwan to explain this incident to China. Fortunately it did not reach anything Chinese. Full article here.
I think this kind of error always happen to property investors too. Many times, that first property that we bought may have set us back many years as we struggle to get back on our feet. Let me share 4 mistakes that will be costly to make.
Follow ‘them’: An ex colleague swore that he would never ever buy any more property because he lost over RM300,000 in his first purchase which went totally wrong. It was never completed in full. His reason for buying? All other friends were buying, so he thought nothing could go wrong. Always note that when you ask them, they will tell you the same thing. They were buying because they were following YOU!
Background check: Unless the developer happens to be our father, a further check is always necessary. First time developer is definitely okay but be very careful when we feel that the developer was trying to hide something from us. If we do not feel confident, go buy something else. Seriously, there are lots of new developments as well as secondary choices. Why give up the forest simply for one tree? Of course, to manage this better, ask them about their past projects and do visit their past projects as well. We are about to buy the most expensive thing in our lives, due diligence is needed!
Extremely good offer. I believe in paying a slight premium for good quality. When a developer is giving discounts / rebates and offers which is OUT OF THIS WORLD, then it’s time to be think OUT OF THE BOX. Was it because the launching price was simply too high? Was it because after trying to sell for the past 24 months, the developer is now desperate? Buyers today are by far savvier and more knowledgeable than buyers of yesterday. When the majority chose not to buy, perhaps they have some good reasons….
I don’t like it. We can laugh all we want because this is the exact reason that a few friends told me. I asked, “Would you stay there?” Their answer is NO. They were buying to sell to others. Great reason right? One man’s poison is another’s meat. Haha. To manage our risks, buy one which if we could not sell, at least we could stay. In that case, we do not lose everything. By the way, if you do not like it for whatever reason, why would others like it?
Well, anything and everything could happen in the property investment journey. Sometimes, we may get a good deal and sometimes we get lemons. I am still learning more new stories and just this afternoon a lady CEO who is a finance expert told me that property investment is not a must for everyone. It’s too illiquid. Everyone should just diversify. I told her that I agree. However, having one fully paid home by the time we retire is a plus. At that time, we could sell it and rent instead. Happy investing.
written on 1 July 2016
Next suggested article: The more cafes in the neighbourhood, the higher the property price?
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