Profit in slowing down property market

Many novice property investors have limited strategy to gain profit in property investment. Most of them enter the market when the market is hot. This means the property prices increase very fast every quarter. The basic strategy they used were to buy during launch and sell upon completion. Thus, the only capital they need are the 10% down payment, lawyer, duty stamp and monthly interest. The capital investment is quickly recoup once the property is sold at 30% to 40% at the original purchase price. They are actually not property investors but property speculators.

Since the various measure taken by the government, a lot of these property speculators are out of the market. In fact, the number of people who have more than two residential property loans has drop drastically. This is actually a good news because the government actions has successfully purge those property speculators. However, I believe some of this type of investors are real investors. However, most of them were trapped when suddenly the property market slows down. To make it worst, they forgot to strategize their investment for a long term return as well during the purchase.

For a savvy property investors, all government measures give benefits to them because now:
1. They have more time to choose the best quality property based on their own criteria.
2. They have more time to analyze and strategize the purchase and return of investment
3. Rental definitely will go up as long as the current economy growth remains the same.
4. They can be more choosy when selecting the potential tenants.
5. They have more time to accumulate the capital leisurely.
6. Those already bought properties, the properties' value will keep increasing due to increase in rental value.
7. Their creativity will differentiate themselves from the novice property investors.

How much is the rental market will go up? It all depends on specific location. Although the basic property worth is almost the same, it is an art to know the actual and future potential. For example, two years ago, around Skudai, a single story terrace house with three bedrooms and two restrooms can be rented for RM400 to RM500 per month. Today, the same type of house can only be rented for RM700 and only if you can find one! In some townships around Skudai, the same type of house can go as high as RM1,000! You can use your imagination to calculate how much is the profit for the property owner.

And do remember, every month, there are people getting married and need a house to rent.

How is about commercial property market? One of my tenants who pay me for RM700/month moved out at the end of April this year. After advertising in May and selecting my preferred tenant, the new tenant pay me for RM1,000 starting from June this year! A two months payment from the new tenant is sufficient to cover my one month vacant possession.