Once you have identified your target blue-chip project, what are the next most important criteria that you should be seeking, evaluating & reviewing?
Well, when your goal is purely & strictly investment goal, you will agree that having more readily spare cash in your account is always better. We want to be able to invest as & when it is possible. Therefore, it is best to always keep some cash for unexpected bad or good days.
In our investing experience, having ready cash always allow us the option to spot good property investments. We are always ready & on the look out. Therefore, the goal is always to keep as much cash as possible. In all investments, we give out as little cash as possible so that we have more funds readily available. Just in case, another great investment comes up in the future, we have ready cash to invest. In other words, we don’t keep all our eggs in one basket. Furthermore, we think it makes more sense to be investing in two (2) units of property of RM500k, rather than investing in just one unit of RM1,000,000. Spread the risk & grow your assets.
Another advantage of investing in properties around RM500k is that a large percentage (30%-60%) of all market transactions occurs within that bracket which offers you the biggest pool of buyers & also attracts a bigger pool of tenants.
Therefore, selecting a rare high growth project, deciding on lower buying price with lower entry cost, identifying good quality pool of tenants & investing in high equity stake should be some of our key consideration when comes to investing.
Unlike investing & buying our dream home, the decision to buy dream home is always more subjective. As its not about earning or generating positive cash-flow! Its more about the look, design, security, good neighbors, good air quality, quality lifestyle, availability of amenities in the surrounding areas for example, shopping malls, private & government hospitals, dry & wet markets etc. You will see that most developers are promoting ‘live-work-play’ as one of their key selling points.
With the Part 1: Potential for Upside & Part 2: What Entry Price and Quantity of this series of tips, we are certain that quality investment do require us to do proper homework & we are required to put in some investigative works. No free lunch anyway but we do believe that conscious effort to follow the suggested criteria to invest & to rent will surely help us fast track our wealth creation.