26 CRITERIA’S I AND FAR CAPITAL SDN BHD LOOK AT BEFORE BUYING ANY PROPERTIES.
At the beginning of my investment journey, cashflow was all that matters and it as the game. As I get wiser and older, I begin to realize that capital appreciation if done right, can literally change one’s fate. In the last few years, I begin my search to find the perfect property that could give me both cashflow and capital gains. This took me 13 years of investing, bought over 50 properties personally, and over RM200Mil worth of properties for FAR Capital clients to arrive at these 26 criteria’s.
If you can master and understand all these 26 criteria’s, and you’ll be able to spot the safest and high growth properties irrespective of market conditions. These criteria’s explains why Mutiara Damansara and Desa PArk City becomes the best performing property areas in the last 10 years, and why Bangsar South ( formerly known as Kerinchi) has outperformed original Bangsar area from both rental and capital appreciation :
1. Area growth – Are we swimming against the tide ( Why we buy in Klang Valley and avoid Penang? Why Mont Kiara does better than Ampang? )
2. Time factor – Are we using the right holding strategy ( Why my strategy will give you over 50% returns annually )
3. Income and racial profile – Why you need to be have the RIGHT racism before buying into an area and asses income of your neighbours? ( Why Bangsar does better than TTDI? Why Desa Park does better than Kepong / Sg Buloh although they are nearby? )
4. Booster – How many boosters does the property have coming in the next 5 years ( Why Bangsar South performed better than the original Bangsar?
5. 5 years of pain – Whats the cost / How much do we need to bleed? ( Why some investors stuck after 3-4 properties trying while some investors able to buy 20 properties despite having lower income and savings?
6. Risk – Taking risk VS being risky ( Why buying 1 property can be a death sentence VS buying 5 properties)
7. Game-play, pro’s and con’s – Undercon VS subsales VS auction ( Why undercon can be extremely profitable and allows greater leverage )
8. Leverage – Are we using the right leveraging strategy and how much leverage? ( Why some investors get lesser returns and pay more taxes due to wrong leverage strategy? )
9. Quality or quantity – Is this a quantity or quality play? (Why buying safe, low value properties can put you into a huge disadvantage? )
10. Usage – Does this property has the right usage mix? Who’s buying? (Why Zest in Bandar Kinrara outperformed Midfields and Setia Walk and made more money for their owners? )
11. Demographic – Does this property has the right demographic?
12. Dragon analogy – Is this property a head, body or tail of the dragon? Why buying tails always a winning strategy. Why did Hartamas Regency did better than Lumina Kiara?
13. Moats – Does this property have enough moats to make sure it’ll win? ( How do I know why certain property will never loose money and how did I predict the owners of Icon PJ/MK/Melawati Bungalows wont be making much or make a lost on their properties years in advance?
14. Price – Are we paying under market values, fair or over value? ( How do I know certain properties will go up in value by 50%-100% a few years in advance like Titiwangsa Sentral, Palazio and Axis Ampang? )
15. Upgrade’s wave – How appealing the property is to upgraders? ( Why Desa Park City outperform most landed properties in Malaysia? )
16. Yields – Can the property get sufficient yields and will it go up? ( How I know certain property is never going to loose money and using yields to cut short your research time by 80% )
17. COCR – Your ultimate ROI – Knowing the returns your are gonna get. Below, fair or above average?
18. USP – Which unit has got the best prospects and unique in that development? Why certain units in the same development will make 30%-50% gain while some unit in the same development, will loose money?
19. Plan C – Does this property posses plan A, plan B and plan C? The best property has all 3! My secret of finding the perfect property!
20. Exit plan – Do we have minimum 2 exit strategy for the property? Why I never took more than 3 months to sell any property.
21. New VS Old – Are we buying this property at a fair value when comparing to old and new property in the same area. How do I continue to buy good properties in 2017-2018 despite everyone complaining property prices are expensive.
22. Maturity point – How long does this property need to reach maturity point? Knowing when to exit before prices dip.
23. Property segment – Targeting new entrée, upgrader or destination property? Why we love entree and upgrader properties and avoid destination properties .
24. Area’s tier – Is this tier 1, tier 2 or tier 3 area? The reason why many people who bought properties in 2014-2017 wont make money because they paid tier-1 prices for a tier-3 properties! Thats suicide.
25. Value – What is the value of the property VS its bank and market values? There’s bank values, there’s market values, and there’s real value. Once you understand these, you can spot undervalued properties anytime. This is why properties like Park Residence and Titiwangsa Sentral outperformed its peers and did better in capital appreciation.
26. Defensive or offensive – Is the property you bought, a defensive or offensive play? Or both? Why I like to buy properties that can give both!