Tough Times Ahead for Malaysia Property Market – the 18-year Property Cycle Forecasted It.

Are you ready to tap into the below-market properties?

It has been noted from past data that during the down cycle. The levels of mortgage delinquency are the highest. Should you or could you profit from those struggling with high mortgage stress or financial stress?

If a purchaser is experiencing difficulty paying their mortgage for one reason or another – generally retrenchment, emergency funds needed to settle medical bills, divorce; the list goes on, there’s a better than even chance that they’ll accept a low-ball price simply they can walk away from the stress and start afresh.

This type of scenario happens all the time at all times but particularly higher during the downturn which could create an opportunity for investors who are equipped and ready to bag an under-market property deal, and these transactions in greater numbers during the bottom cycle.

“I’m not one for making money from others’ misfortune, but the reality is that often someone who is in trouble needs assistance, and finding a person to purchase their property – albeit at a reduced price – could free them from the worry of having their home repossessed and declared a bankrupt,” says John Lee co- founder of Wealth Dragons UK..

“In fact, it could just create a win-win for all involved.”

A few property investors have shared with me that they have struggled for some months now and felt that the said properties may remain unsold in the near future, albeit the poor economic crisis that the country if facing.

We strongly suggests that property buyers who are considering investing in any properties currently should do extensive research in order to make sure the location and investment opportunities stack up on multiple levels or better still time the market using the 18-year property cycle (read more about the 18 year property cycle here) to maximize returns.

However, investing in areas of high mortgagee delinquency does not fit into the low-risk property investing strategies we advocate, which is to buy below the market; add equity by creating value through renovating, ensuring that the rental yield stacks up or developing; and buy in a predicted growth area to begin with.

By so doing, you have numerous ways of making money with your investments, so if you get one wrong you still have others to fall back on.

You may be wondering why people are running into mortgage arrears.

The answer is complex. It could be related to the fact that some homebuyers grew overconfident and borrowed heavily during the boom times, ending up with a level of debt that was more than they could handle.

Or it could be a case of some people transition from renting to home ownership without recognising that when they buy a house there are lots of extra costs and outgoings, like maintenance and council rates and rising interest rates when downturn arises.

And it could also be a case of people buying using guts feel or herd mentality without being aware of the need to set aside funds during emergency times.

More likely that not when the economy turns bad, businesses fail, retrenchments cases rises and homebuyers with no income and struggling to meet end needs with rising costs of living may have to sell their property to stay afloat.

Can investors benefit from pending rising mortgage delinquency cases?
Regardless of why delinquency rates are rising, investors need to do more research and learn the lease option strategies before blindly diving into these areas to chase under-market deals. You can learn more about lease option here.

Looking ahead in the next year or two, it’s very likely that interest rates are going to rise when the economy is down as during the Asian Financial Crisis coupled with Malaysian currency getting lower and commodities prices falling, and higher cost of living, homeowners who are currently having trouble paying their mortgage already, that’s only going to add more pressure.

Investors should also be aware that there could be cheap properties to buy, but that doesn’t make them good investments, especially if those areas have generally underperformed in the past, as they are likely to continue to underperform in the future.

The obvious benefits of buying one of these properties are that you are buying a cheap property, but the assumption here is that cheap means it is undervalued. However, In many cases you have to also take note the driving demand, the socio economic household income of the area – is it historically slow moving capital growth, needs extensive renovation to name a few and

These cheap deals may potentially do not have the opportunity to grow in value, at least in the short term when the market recovers
On the other hand the benefits of these types of investments are, first and foremost, the lower price points.

Properties can be bought well below market value, with a 20 to 25% discount achievable. This provides a more affordable option to enter the property market,

They may be properties that require only minor renovations, such as painting, and landscaping, to get them up to scratch, and they often provide a higher rental yield, due to lower purchase price. All of this can give you leverage for future investments.

By learning the various strategies, evaluation and varying the terms used to meet each particular situations in the Lease Option one can minimized such risks to reap the rewards from the below market deals.

There are huge profits to be unlocked when buying under-market deals, but you must be prepared to roll up your sleeves and learned the rope.

By | 2017-02-22T17:03:48+00:00 August 12th, 2015|Blog & Article, Property Cycle|7 Comments

About the Author:

Stephy Lim,co-founder of Rapid Property Connect, graduated from Monash University Australia in 2009 under Dean’s commendation list.

She has been actively involved in the real estate and property development industry since 2012 because of her passion for it. Stephy’s work experience spans all areas in property business, from feasibility studies, market research, sales administration, marketing and project marketing both locally and overseas. Stephy started investing in property at the age of 25, inspired by her partners. Together with her partners and under the mentor-ship of John Lee of Wealth Dragons UK, she decided to quit her corporate job and worked full-time on her online property investment consultancy business. Rapid Property Connect core business is to provide education and property investment consultancy by giving values through continuous education.

7 Comments

  1. Moses lee 12/08/2015 at 2:18 pm - Reply

    Please let me know if u have seminal coming up. My cell 0175****25. Thk u

    • Stephy Lim 12/08/2015 at 3:20 pm - Reply

      Dear Moses,

      Good day! Noted, will surely let you know if there is any upcoming seminars in future : )

      Regards,
      Stephy

  2. jeff teoh 02/09/2015 at 3:39 pm - Reply

    kindly update the upcoming seminar for us.
    you can email to me [email protected]

    • Stephy Lim 07/09/2015 at 1:14 pm - Reply

      Hi Jeff, no problem, will keep you posted if there is any upcoming seminars in the near future 🙂 Thank you!

  3. Albert 16/09/2015 at 10:55 pm - Reply

    Enjoy yr above article. Finished reading PMSC & agreed our Msia property is facing tough times. Interested in this 18 years cycle & to learn more of it.

    • Stephy Lim 17/09/2015 at 2:35 pm - Reply

      Hi Albert, thank you! Hope you have benefited from it. Yes, you are right, transaction volumes have dropped significantly. We will be having some free webinar session on the 18 years cycle soon which is open to our subscribers, do join us for further learning 🙂 Will send out the link to register once we firmed on the dates, have a great day!

  4. Kenny Ng 19/08/2016 at 10:09 am - Reply

    Dear Stephy,
    Please notify me when you have a webinar session to discuss on the topic of Malaysia Property Market 18-year Property Cycle or a seminar event in Penang. Thank you…

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