-by Azizi Ali
For thousands of years, properties has been the foundation of wealth creation. All millionaires own a significant portion of their wealth in properties. And if you want to become a millionaire, doesn’t it make sense for you to do what the rich are doing? Of course it does.
At the same time, the rules for property investment in this new decade has changed. Why? Because the investing environment and the world as a whole have changed. The US is in deep trouble. The same applies to China, Japan, Dubai and even European countries (Greece is the first of many to fall).
The Euro is shaky, the price of gold is hovering at the $1,100 mark, the price of oil have climbed back up to $80 while the derivatives market is just waiting to explode. Now while these events are happening outside our shores (at the moment), it will affect us sooner or later. For example, the imminent crash of the US dollar will affect the whole world, perhaps in ways that is beyond our imagination even. One of the likely scenario is that the markets – stocks, properties and derivatives – will crash while the interest rate shoots up, perhaps to even double figures!
Scary as it is, these are very real threats in this new decade.
These new threats and challenges call for new answers.
Those who cling to the basic formula of buying a string of properties by taking on monster mortgages (or in other words, minimum downpayment and maximum loans) will soon be licking their wounds. They will be seriously hammered when prices turn down and interest rates rises. When their monthly repayments shoot up, a lot of people will not be able to pay off their loans. Life could turn real nasty because they may face a negative equity situation – where the value of the loans exceed the value of the properties (which is already happening to a lot of car owners). They could lose all their money and also their properties when the banks start foreclosure process by repossessing and then auctioning off the properties. This will mean that a lot of people will be out on the streets – no house, no money and worse, monster loans to be repaid!
But of course, wherever there is danger, there is also opportunities.
The opportunity to make serious money from properties are still there. All you need to do is to know what to do in the face of the rapidly changing environment and then of course, to take the necessary actions.
“Guessing is cheap, guessing wrong is expensive.”
A billboard I saw in Melbourne
At the same time, I also know the questions ringing in your head:
What are the critical success factors of property investment?
Why have the price rose so much in recent months?
What are the future prospect of properties?
What should I do bearing in mind of the possible downturn?
What are the choices that I have in property investment?
Which loans would be the best bet for me?
What are the risks involved?
What do I need to do to invest in properties?
How much capital do I need?
How much of my investable assets should be in properties?
How can I tell the good from the bad, the good from the ordinary?
How do I avoid costly mistakes because I cannot afford to lose any more money?
And perhaps, the main question is – Why are you the only one saying the market is very high now?