• Gerald Tay

Property Buyers are Buying Property Wrongly!

Here's a quote from Warren Buffet's teacher: 'If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market. "– Benjamin Graham

It’s not possible to accurately predict market movements, whether it is in stocks or in the property market.

Making buy or sell decisions by predicting market or price movements is a strategy called ‘Market timing’. It’s one of the most controversial topics in the stock and property markets. The viability of the strategy is something that’s debated for years now.

Whether the experts are wrong or right in their predictions of the future is just another a case left for a debate, rather the more worrying problem we should be concerned is ordinary investors are simply taking those predictions right off the book and simply invest based on what the experts (or other people) say.

So if an expert say the property market will rise and reached certain levels this year, unwitting investors will just jump the gun and rush to property show-flats - without any further research, proper investment skills, personal investment objectives, competence/understanding in the particular investment, etc.

Look at actual Property Financial Numbers and NOT Per Square Foot!

No two investors are alike. Risk bearing capacity, expected returns, investment horizon, investment objectives etc. are different for every investor. What’s good for one may not be good for another. So there’s no meaning in those calls ‘to buy’, ‘to sell’ or a property should only be bought at a certain p.s.f. value which is not based on individual preferences.

The difference between an investor and a 'speculator' is that when an investor looks at a property to ascertain its buying potential, he'll look at its 'actual financial numbers', and NEVER 'market value'. (p.s.f.) Market value is sentiment, emotions, euphoria and even fear.

Actual numbers tell an investor what the property is really worth today. Money in your pocket today is more valuable than money that may or may not come in tomorrow.

A true blue investor has a personal detailed investment system, investment criteria, written objectives/goals, own thinking and investment philosophy (rather than blindly follow the market), etc.

If the property financial numbers does not match any of his investment objectives set up, he will not invest at all, regardless of where the market or price is going.

Experts, researchers, analysts based their opinion on historic data and future prospects. Nothing wrong with this. It's their profession and their jobs to provide 'comments' for the market.

Whether that particular property is suitable for the investor to invest is something the investor has to evaluate based on his/her investment objectives and nobody else's.

There may be big investment houses or big investors out there who have systems and experience to predict the market and make a killing. If they have, well, they are not going to disclose that to anyone. (Honest that includes me) Even Mr. Warren buffet has never written a book on how he makes investment decisions.

You invest based on facts today, not opinions of tomorrow.

In my private coaching programs, I've always warned property buyers and investors; never try to predict what the future will hold or where the market is going. Because no one can!

Property buyers should know basic number crunching skills at the very least. For example, rather than trying to predict if a property's p.s.f. is going to rise higher or lower, instead, buyers should take a hard look at the financial statement of a property, understand its Cash-On-Cash Returns (C.O.C.R..) as well as its Internal Rate of Return (I.R.R.) to make and measure the potential of any investment before making a decision.

Over the last 18 years, I've never make investment decisions based on trying to predict where prices will go or seek other people's opinions. Opinions are free and they can be fatal.

Here's what you as a buyer should do before buying:

You invest based on facts today, not opinions of tomorrow.

You invest because you can make money when you buy, not when you sell.

You invest because it meets all your personal investment criteria, objectives, investment numbers, etc.

You invest based on your own opinions and investment philosophy, and never someone else's.

What can be a good investment for you may not be a good investment for another. And vice versa.

I don't profess myself to be a property 'expert' or a 'guru'. And neither do I need or want to prove to anyone about ‘prediction accuracy'. (There's no such a thing) There's no 100% certain, not to even mention I might just be completely wrong on the future.

I'm just another 'Average Joe' who've not lost money (yet) investing in properties in the past 18 years simply because I don't care what the market say, where the market will go or where prices are now or going to be.

Up or down, I still make money. And this should be the key to all successful investments and I sincerely hope all property buyers will abide by this timeless wealth creation strategy.

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