Property investing strikes me as a strategic game like chess. At this time my partner and I are buying property in the Philippines. There are a number of things that strike me about property:
1. Luck: Some things strike me as too good to be true, but sometimes those opportunities are real. This is reason to seek information rather than walk away because of suspicion. Finding out more is hard because you can't go around asking people why is this property so cheap, as you might find yourself introducing competition to the equation. There are instances when I thought this property is just too cheap, there must be something wrong with it. The owners must be fraudulent. Maybe its something you don't know, maybe it is. You can only watch for evidence and keep learning.
2. Lateral thinking: Buyers are sometimes fortunate that sellers are clueless to the potential of their property. At the moment we are buying property from a farmer who is clueless that the modest property prices in the past is history, than things are going to be more exciting in the future. He seems clueless to the fact that his lot has a spectacular view.
3. Critical thinking: It pays to be critical thinking when you are buying property. There is usually a counter-argument to be made for every assertion you hear about a property. eg. "Its great arable land". Response: 'Yeh, its a pity there is no view and the flatness is fully priced into your offer". That is the thinking you have to take when interpreting other people's statements.
4. Anticipating the future: It is important to understand where the future is going, and what type of evidence there is to support your views. For instance. We know roads are going to improve, travel distances are going to fall. We know large cities are where the money is, we know agricultural land is cheap, we know that people like a scenic view. These are trends or facts we need to consider when buying a property. There is also evidence of trends we can use like - noting that wealthy people are buying properties in the area, resorts are being built, foreigners (generally more astute and worldly buyers) are buying in the area.
5. Understanding people's perceptions: People's perceptions are determined by their experience. We are buying some cheap land from a farmer for $1.50/m2 because he looks at the steep 30 degree slope and says I can't farm there. He does not see a resort on the next headland on similar land. We might ask if this land is so attractive, why isn't a developer already here? Sometimes there is something wrong, eg. No power, poor roads, but sometimes a key block is held by a wealthy person and he refuses to sell for a cheap price. This is why a minnow like us is able to buy a lot where big developers can't get a sizeable position.
1. Luck: Some things strike me as too good to be true, but sometimes those opportunities are real. This is reason to seek information rather than walk away because of suspicion. Finding out more is hard because you can't go around asking people why is this property so cheap, as you might find yourself introducing competition to the equation. There are instances when I thought this property is just too cheap, there must be something wrong with it. The owners must be fraudulent. Maybe its something you don't know, maybe it is. You can only watch for evidence and keep learning.
2. Lateral thinking: Buyers are sometimes fortunate that sellers are clueless to the potential of their property. At the moment we are buying property from a farmer who is clueless that the modest property prices in the past is history, than things are going to be more exciting in the future. He seems clueless to the fact that his lot has a spectacular view.
3. Critical thinking: It pays to be critical thinking when you are buying property. There is usually a counter-argument to be made for every assertion you hear about a property. eg. "Its great arable land". Response: 'Yeh, its a pity there is no view and the flatness is fully priced into your offer". That is the thinking you have to take when interpreting other people's statements.
4. Anticipating the future: It is important to understand where the future is going, and what type of evidence there is to support your views. For instance. We know roads are going to improve, travel distances are going to fall. We know large cities are where the money is, we know agricultural land is cheap, we know that people like a scenic view. These are trends or facts we need to consider when buying a property. There is also evidence of trends we can use like - noting that wealthy people are buying properties in the area, resorts are being built, foreigners (generally more astute and worldly buyers) are buying in the area.
5. Understanding people's perceptions: People's perceptions are determined by their experience. We are buying some cheap land from a farmer for $1.50/m2 because he looks at the steep 30 degree slope and says I can't farm there. He does not see a resort on the next headland on similar land. We might ask if this land is so attractive, why isn't a developer already here? Sometimes there is something wrong, eg. No power, poor roads, but sometimes a key block is held by a wealthy person and he refuses to sell for a cheap price. This is why a minnow like us is able to buy a lot where big developers can't get a sizeable position.
6. Strategy is the art of anticipating problems: Dealing in a partnership is hard when you offer different skills. I am the critical thinker, my partner is the sales/operations executor. So in buying property, I need to anticipate what she is going to say because it might impact on the value proposition. Occasionally we slip up. Sometimes like now there is no opportunity around it. We are close to buying this land. The land is useless without road access. Unfortunately in the process of negotiating access to this land, the owner might stumble across knowledge that would make the land too expensive for us. The neighbour might tell them that 'the buyer is a foreigner, you should ask for more', or he might place a counter offer. Sadly the absent landlord is not open to us, and he's difficult, so it might be better if they make the approach. Just I think we will need to be careful. Buying land is often like that. Knowing which card to play, knowing what your partner might say, and preparing for those encounters.
In 2 days we will know if we have secured the place.
------------------------------------------------In 2 days we will know if we have secured the place.
Andrew Sheldon www.sheldonthinks.com
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1 comment:
I was just out viewing blogs and came across yours.Thanks for sharing those information about property investment..Looking forward to your next post!
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