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Property Investment In A Pandemic “ In Crisis Lies Opportunities”

WHY YOU SHOULD BUY YOUR HOMES AND INVEST IN REAL ESTATE NOW?

The midst of a pandemic might not seem like the best time to invest…BUT…

A once in a lifetime crisis now brings us opportunities that may not come again. COVID will go away but do not let the opportunities slip away.

A Hedge Against Inflation

Real Estate is REAL & TANGIBLE. A scare resource that is without a doubt a hedge against inflation. Inflation erodes currency values due to Quantitative Easing (printing money). As money supply increases, property values will rise (as with all scare commodities and assets). This is further supported by present very low interest rates, in fact current rates are the lowest ever in history.

Buyers’ Market & Property Cycle

At the present moment, we have a buyers’ market which means buyers are in a stronger position. Purchasers are able to select and negotiate better deals as sellers (including developers) are willing to lower their expectations. This scenario will not last forever as the market moves in cycles. Now is winter but spring will come and so will summer. When will that be? Maybe in 2022 but most likely in 2023/2024. But you have to book your ticket to smell the flowers and enjoy the burst of sunshine.

Leveraging For Better Returns

Property yields are presently around 4% to 5% and Fixed Deposits Rates average between 2% to 2.5%. With inflation averaging about 3%, this is a good time for property investors to leverage and benefit from positive cashflows and long-term capital appreciation. Leverage means taking a loan with your property as collateral. If your asset is free from loan or has a low loan to asset ratio (meaning you have high equity), cash out equity for other investment purposes. Equity is money locked up in your property. Do not let it idle. Make it work for you. So now is the time to take equity out by leveraging and gearing up for the many opportunities that abound.

Rental Income, Positive Cashflow

For income producing assets, when your rental income exceeds the monthly loan instalments, it means positive cashflow. Therefore, seek out such opportunities as it will provide good passive income in addition to allowing higher loan eligibility for future property purchases. Over the past decade, property has appreciated at an average of about 6% per annum. If rental income is added this return will be much higher and, remember, property is an inflation hedge.

So now is the best time to invest!

Buy Low, Sell High

Warren Buffet (the greatest investor ever) said,
“Be fearful when the market is greedy. Be greedy when the market is fearful”.

If you understand this saying and you understand your emotions now is the time to look for bargains. Buy low and when the sun shines again, you should sell and redeploy your initial capital and gains into other investments.

Of course, risks such as rental defaults and interest rates may surge, but even during good times surely such risks are present.

The art is seeking out the opportunities in a crisis. We have experienced and knowledgeable personnel to assist you in your property investments. Seek advice and do not overpay.

“Price is what you pay, Value is what you Get”

SR. WONG CHAW KOK, MRICS, MRISM, ACIArb.


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