A long time ago, a good friend who’s a senior management of a U.S. MNC based in Penang told me that he intends to buy a property when the bubble bursts. However, he does not know at what price would he enter the markets. Well, 2008 mortgage crisis came and left. In 2009 in Penang, every time there were launches, queues would form days before the launch. Needless to say, prices went up too. So, is a property bubble building up then?
Let’s not comment whether the property bubble will burst or even predict when the actual year, month or even day would be. How about we think about what to do to prepare for the property market to crash? When prices suddenly fall 20 percent or more? RM500,000 homes suddenly become RM400,000. RM1,000,000 homes becoming RM800,000? Sounds interesting and attractive? First question is HOW LOW (prices) do you expect it to be? Will you buy when it hits 10 percent? Or 30 percent? Or more? By the way, if it hits 20 percent or more, I do not think people are in the mood to buy a property. Perhaps it’s best to ensure we keep our jobs. So, set a target so that you can buy when it reaches your target.
Secondly, have we identified the area that we want to buy? This is because when the property market crashes, there would be plenty of choices and we may be too spoilt for choice; analysis paralysis. So, it’s important to know the area. Then, we need to identify a few developments that we actually have viewed well in advance before the market crashes. Drive around the area. Do all the necessary due diligence. Remember, even during a crisis, not every unit in the whole development would be up for sale. There are many other ‘vultures’ around who are like us, waiting to snap up underpriced units. If we really want to buy, we must be quick and faster than others.
Third is actually the most basic rule. However, unless we have identified something, we do not have the motivation to do this. Have we started saving feverishly? Frankly, without sufficient downpayment ready with us, who are we kidding that we will buy when the market crashes? If we believe the market will crash in 12 months and we need RM50,000 then it’s saving of RM4,000 per month! If we need RM50,000 and we expect the market to crash in 24 months, then it’s RM2,000 plus per month! So, are we already saving up for this potentially lucrative investment?
Finally, keep reading and finding out all these potential property bubble bursting signs. It is extremely important to keep abreast of the news because things do not suddenly happen. Investment is never about being lucky. Else, it may not be continuous. When we have done all these steps, then we are actually ready to wait for the next property market crisis. Else, please do not say that we are waiting for the best opportunity to buy. Just declare that we are not interested with property investment. When we are truthful, no one will feel offended. However, insisting on something just for the sake of showing people that we are interested is actually wasting our time and opportunity. Happy waiting and at the mean time, preparing.
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