Going for the great deals and making money in property investment

Article by Michael Tan

It astounds me these days how people are going around buying properties. Its as though money is like water. Whenever an agent or developer tells them that it’s the best or cheapest buy in town, they buy it, hook line and sinker.

More and more reports are coming out these days on the ballooning prices of properties in the market. It still amazes me that investors tend to turn a blind eye or a deaf ear to these warnings.

“So, what should we do then?” one anxious new investor once ask me.

Well, the answer is simple, should you need to keep buying, go for the great deals in the market.

“Where can we find such deals?” they asked.

Everywhere.

Its true, great deals are everywhere, you’ll just have to keep looking, doing your research, digging for the facts and figures, and eventually, a potentially good find might come up.

Then, you’ve got to negotiate it down to get a great deal.

How do you suppose great deals come along? Even though a seller may be motivated, they will most certainly post it at market price first. It is up to you to peel away the layers and find out how great a deal you can obtain. I’ve attached some excerpts from my up coming book, First be free, then be rich, on negotiating deals as a reference to what I’m mentioning. I hope it helps!

“Let’s sit and talk” was what I proposed to the agent.

It is a great find. It was a 3 storey commercial shop lot that is situated right across a main road. Visibility is good, accessibility is good and the valuation came back at RM1.1M to RM1.2M. The owner is a busy businessman who has not seen his own property for the past 2 years. All the 3 floors were tenanted and upon renewal, all have agreed to increase the rental by another 15%, making the total rental returns of 7.7%.

This is it. I was sitting facing the agent. We’ve viewed and assessed the property and it is in fair condition. It was now time to negotiate a deal with the agent. I started with a little bit of small chat, asking the agent of his background, moving on to find out more about the history of the property and also the story behind the owner. Finally, it was time to ask the question.

“So, how much is the owner willing to let this property go at?” I asked.

The agent replied “Well, the owner is pricing it at about RM970K negotiable, what’s your budget?”

The moment I heard the price, I knew it was a good buy!

As much as I wanted the deal, I kept to my rules and started negotiating the deal with the agent. We got into the details of the property, worked out the maths of the rental, viewed the unit and checked out the tenants. All the while, I kept mums about my intentions to buy and didn’t show my excitement on the deal.

It was 30 minutes into the negotiations. We eventually lead ourselves to a local coffee shop nearby. The agent, anxious to close the deal, was either on the phone with the owner or talking to us with regards to the property and the deal. Occasionally, he would walk away from the table while on the phone.

We concluded the deal on that day, but not before knocking the price down a further RM100K, placing terms of purchase onto the booking form in my favor as well as doing the proper due diligence with the necessary documentation.

I finally shook hands with the agent after 5 calls being transacted to and fro the seller with a couple of harrowing near call-offs, both on my side as well as the seller, for various reasons. This all took place under an hour. As we shook hands and departed, there was a sigh of relief, and satisfaction, for a job well done.

END

If you would like to know how to understand the current market more, and also learn how to negotiate deals, I’ll be having an afternoon session in Penang, this coming May 14th, 2011 in Vistana Hotel, Bayan Baru. I would like to take this time to share how the current market is like, and how investors should approach it. I will also share on buying properties with no money down. Yes, its possible, even in times like these.

If you truly want to invest and make money in great times like these, please make the effort to come.

http://www.nmd.aboutpropertyinvestment.com

Looking forward to seeing you there.

Till then, happy investing.

Michael