ONLY BUY after property bubble burst

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I have a friend who earns very high salary. In fact amongst all my friends, I think he is ranked second highest. He knows that I love properties and he told me confidently that he is now keeping his money in FD so that when the bubble bursts, he will enter the market and buy. I said, great, so at what price would you enter? He paused and said ‘when market is low enough’. I asked, when he said low, does he mean 10% down? 20% down? 50% down? He said, ‘of course as low as possible lar’.

I really hope when the bubble bursts this friend would really cancel his FD and enter the market because buying during crisis meant that your profit would be very high once the market recovers. From history, we have learnt that in terms of properties, except if the property is in the middle of the desert, most of the time, it will continue to go up again even if slowly. However, he has yet to make a decision as to when he would really enter the market. He is not even a member of PLTM (Property Talk & Lifestyle Malaysia). I feel any investor should be a member of PLTM. Get to know, before you actually buy.

This friend of mine is already very rich and in fact will probably be very rich even if he does not enter the property market. The only thing I would like to reiterate is this, he could have been much richer if he has property investment. The expectations must also be set right, just like if you enter the share market, never say I want to buy when it’s low. You must specify and adhere to what you term as low. If you intend to sell when you have profit, you must also adhere and have an actual target of what’s the price to sell. You cannot say, I will sell when the price is up to my expectations. Perhaps I may be wrong but I think in any investment that we do, we must go in with both our eyes open and our brain ready with some risk calculations / acceptance.

written on 17th dec 2013.

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