Buying Off-Plan = New Sale / New Launch, Developer Sale
Buying an investment property from showroom sucks.
It’s one of those things that really grinds my gears. They show a world that’s too pretty, too good to be true, and too much like a fairy tale’s world.
Buying a property from a new launch sale can be your worst and silliest investment.
1. Buying off-plan properties is much more of a gamble as their decision is based on brochures, plans, models and a visit to the developer’s marketing suite.
2. Investors for such properties will be competing for tenants with themselves when the properties reach the rental market, driving their own rents and yields downward.
3. The main risks are that investors would never really know exactly what they are going to get until the day of completion.
4. Investors and home-buyers pay a premium for new-build properties, in large part due to the massive marketing hype which surrounds these new developments.
5. It's a BIG MARKETING LIE buying new sale property will always guarantee a profit! It's having a GAMBLE and a LOTTERY mentality.
6. Property investing is not about how beautiful the property is, but rather how much the investor’s return on investment. ‘Only women are beautiful. What are the numbers?’
7. People who drink so-called specialty coffee might insist that it tastes better than the cheap traditional Nanyang ‘kopi-o’, but they’re kidding themselves if they don’t admit that the cachet of being sophisticated enough to be able to tell the difference isn’t part of the equation.
8. Property showrooms are exclusively designed for pure entertainment. Property developers know it. They know showrooms are for fat lazy buyers who don’t want to sweat walking miles under the hot sun to hunt for real quality properties.
Guess who really pays for all these glamour, aircon, nicely done-up suites (see how fake they are) and the 7% property agent commissions?
9. Most of the math is missing in showroom investments. Poor Internal Rate of Return and zero Cash-on-Cash Return until T.O.P. - ZERO CASHFLOW.
10. The showroom is like ‘skinny mirrors’ in women’s changing room. It gives users the instant visual gratification of a ‘slimmer you’ while educating that how you choose to feel about your body has nothing to do with your actual shape, size or weight.
11. Investing in New Sales - The chief value of propaganda lies in the fact that one lives in a world in which is overestimated.
Investors often make mistakes, thinking they are buying into something exclusive, only to realise far too late that there are in fact thousands of other similar flats being developed in the immediate surrounding area.
12. The main risks are that investors would never really know exactly what they are going to get until the day of completion.
The rewards are that if they get into a scheme early enough and secure a good discount, potentially they may have made some profit by the time the development comes to completion, but this isn’t always the case, and often buyers pay a premium to buy into a new build.
13. Profitable real estate investors always buy ‘ugly’ — not dress-ups, staged sales pitch with misleading math numbers and fake interior decors that clearly do not represent the real thing.
14. Show rooms can make buyers poor and trick you into spending more money.
15. Developers want to make the showroom as sellable as possible, so that bald rich guys with big beer bellies can write empty cheques. So, if you are not one, stay away from showrooms for your next investment.
It's all Show Business
Imagine when a prospective beginner real estate investor starts to believe that what he sees from make-believe plastic models with little holes will be converted into something that looks like the average Disney castle in a couple of years — all for comfort and maybe great profits in short-time and, of course, delivered with champagne and first-class treatment. I’m sure you get my drift.
So, the next time you visit a showroom and decide to make your investment purchase from one, I suggest that you replace those rose-tinted glasses with real ones and consider the above points I've make.
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