AVOID THREE EXPENSIVE ERRORS IN PROPERTY INVESTMENT

Property investment has been a long and experienced wealth builder. Folks had built fortunes throughout the centuries by owning real estate. If it was true then, it is even more so today.

Yet at the same time, there are far too many people who fall into financial difficulties because they invested in real estate. I personally know of one of my own colleague who is up to his neck with debts because of property investment. When you sit down to think about it, isn’t it odd? The same investment that is making some folks rich is sending others to their doom! Although there are obviously many reasons leading to this situation, one glaring point is that the people who are making money know something that the others don’t. Now, while one do not have to have a PhD in properties to make money from it, it is also obvious that the more you know about it, the more money you will have.
Properties are also straight forward. The more properties you own, the wealthier you will be. As to why this is so, the reason is simple: a person who has financial difficulties will never come to the situation of owning five or more properties; he has enough problems even to own one! For a guy to own five or more properties, he has to know what he is doing and should be a master of his finances already. While there are always exceptions, that is the rule of thumb when it comes to properties.

Now, the three common errors folks make in property investment are (1) buying in the wrong location, (2) buying the wrong type of property, and (3) making decisions based on what happened in recent history. Unfortunately, all three errors are very costly, very expensive and also very demoralizing.

Buying in the wrong location

This is the fatal and yet, the most common error. Folks keep on buying properties in the wrong locatio! ns (for their purpose). The solution to this is simple – if you are buying for your own use and intend to stay there forever (or close to forever), then you can buy a property in a location where you like. This may be in your own kampong, town or orchard. But if you are buying a property for investment purposes, you have to buy where ‘others’ like. And the ‘others’ here have to be in the thousands, not one or ten or twenty individuals. You realize that you may be buying in a place where even you do not personally like. But as ‘personally liking’ is not a criteria for making money here, it should not be in the equation at all.

Buying the wrong type of property

This is the second most common error – buying the wrong type of property. They want rental income but they buy houses. They want capital gain but they buy apartments. In this case, the answer is the opposite. For example, if you are buyin! g for rental purpose, there is only one answer – apartments. If you are buying for capital gain, then the answer is houses. In other words, buy the right property for the right reason of investing.

Making decisions based on what happened in recent years

The third and most common mistake is making decisions based on what happened in recent years. A lot of people think: prices have increased in the last three years so the trend will continue for the next three. This is a very dangerous type of thinking, especially in the rapidly changing environment of this new decade. What happened in the past five, ten or even twenty years may not be repeated in this decade. So, anyone who had based their investment decisions on recent history may soon be licking their wounds. There is a very real threat of prices going down in the near future. Add the very real possibility of interest rates shooting up, and you can see that it is a whole new ball g! ame altogether. These latest challenges call for new and innovative answers.

QUESTION 1:

Dear Mr. Azizi,

Thank you for a providing chance for people like me to get the the latest news on your ‘world’. I really admire your initiative to produce this kind of newsletter which is very brief and simple yet condensed with information; saving many things such as time, money, energy etc. Congratulations!

Ok, back to my ‘case’. I am a primary school teacher whom is now pursuing my degree in TESL and this is my final year. I will be graduating soon; maybe in April or May. I’m also intrested in doing bussiness but I do not know what is the best thing that I could do. Please do not mention about doing tuition as I am tired of standing in front; ‘pretending’ that I am the master of all knowledge. It is not to say that I do not like teaching but I do want to give myself chance of exploring other things especially a new one. What I have in my head is to be a public speaker like you, Dr. Irfan etc or even ! write books.I have tried writing a short story in BM but I have not submit it to any publication yet. What is your advice pertaining my dreams? Hope that you can respond to my question in the next issue. Thank you once again.

ANSWER:

You have already answered your question. You ask – what can you do to pursue your dreams? The answer – follow your dreams. In other words, do what you love to do (and I mean, really, really, really love to do), and then build a business around it.

As an example, I love to read and I love books. That’s why I became a writer and a publisher. All these that I’m doing is not work – I love to do them. In fact, I would pay money to do what I’m doing now. The fact that I make some money from all these just make it a dream.

So, while I’m sure that I can make some money running a restaurant, running a car workshop or even running a boutique, I have no interest in those businesses. It will be hard work because my heart is not into them.

Next point: before starting a business, make sure you are prepared for it. Read at least 30 books about! running a business. Ask for guidance from actual businessmen. Make sure you have enough money to last one year without making a single cent. Remember: it is easy to become a businessman (or businesswoman); it is not so easy to become a SUCCESSFUL businessman (or businesswoman).

Now that you know this – what do you think you should do?