20181108 (Thu)
What property will be most affected when there is a downturn? Part 3.
Two major pitfalls of property investment are:
1. Buying expensive property with emotion
2. Bought expensive property but never use
This is quite simple. You have RM and this RM can be saved for earning some interest. You can invest in some financial instruments or real estate (property).
During a downturn, your excess money can work for you in some good picks. These good picks must not be expensive and can be used to generate some income. Or else, better do nothing!
During downturn, most people will not buy. Instead people will rent. So, you might be able to buy a good property and rent it out. This means you buy within the affordability window and use it to earn some extra income. In fact, this is an irrefutable strategy for many successful investors. There is no rocket science in this. In a lifetime, you will sure live through a few downturns. Only thing is, did you make any smart investment during this time?
To those properties most affected in a downturn, you should stay away. Do NOT buy into commercial properties during this time unless it is very strategic. Or, it is really your long term plan to own a commercial property. So, that leaves you with the residential properties. Choose base on your budget. Keep as much cash as possible. Do NOT deplete your cash as it might just come handy when there is a property below market value of a lifetime.