Dec 6, 2010
by Michael Tan
How do you look for properties that are BMV (below market value)? Firstly, join my course! But seriously, that’s the reason why I designed it in the first place. The programme was meant to ensure that you are able to find bargain properties over and over again ? safely, consistently and profitably.
For a better understanding, I would like to share the way we go about it. It’s called looking for MINES. Investment in properties is like mining. Most people go around trying to invest in properties as though they are walking on the beach; staring at the sand and hoping to find a shiny stone that might turn out to be a GEM. Can you find one? Probably, if you look hard and long enough. What about finding 2 or more gems? It gets harder when the numbers get bigger, doesn’t it?
“Mining” for properties
How do miners determine where to mine? Do they comb the beach or do they focus on an area with high density of gems? The answer is obvious. So before you start to look for that one bargain property, ask yourself, “How many properties are you looking for?” If you are serious, then it’s time to put on a hard hat, get your hands dirty, and start digging. If you want to be a property tycoon, then you must become a miner!
Firstly, you need to establish were the mines are. Not all areas give you gems and not all gems are the same. Different mines offer different types of gems. There are some fundamentals when establishing your mining areas.
Step 1: Types
Determine the type of gems that you’re looking for. Is it going to be apartments, condominiums, houses, offices or shop lots? Also determine your affordability level.
Step 2: Location
Look into great accessibility and good amenities. Check out your local market. I would advise against going beyond 5km radius from where you stay. It’s about what you know, the network and the people in the area. The more well-informed you are, the better your chances of getting a good deal.
Step 3: Target
Determine your target market. If you are planning to buy to flip (buy-to-sell), determine who will buy your property. If you are planning to rent out, determine who will rent. Then research the area to find out if your target market resides in that area. The bigger your reach, the higher the possibility of getting better returns.
Looking for “gems”
Once you’ve done these three steps, it’s now time to look for the gems. Next question is, “Do you know what a gem looks like?” If you are looking for diamonds, will it be gleaming, glittering and shiny with a perfect cut? Of course not! It probably looks like any other rock. You’ll have to be a professional miner to differentiate between the rocks and the diamonds. It’s the same for properties. Once you have determined the good mines (areas), you’ll have to start looking for signs of good properties.
Here are a couple of examples of properties that are gems ? undervalued properties, well renovated, tenanted with high rental returns and owners who are motivated to sell.
Look for the signs. There’s no short cut to becoming a professional investor. Just like a good miner, the more you get on your hands and knees into the thick of dirt, the better you become and the more gems you will find. In this day and age, where almost the whole town is busy combing the beach in hopes of finding great gems (properties), I suggest that you learn to be a great miner. It’s crucial that you learn to find the gems these days, especially when everything looks shiny, glittery and priceless. The worst thing is to end up with a dud.
Educate yourself, use the right tools and network and take your time. With diligence and perseverance, you will find your mines and eventually your gems ? over and over again.
Wishing all happy investing!