Wednesday, May 2, 2012

Short Term Flipping Criteria No 2 - Paper Gain

My very own definition of short term flipping is when you buy a new property from a developer with the aim of selling it for a quick gain, from the moment of MOT is executed till latest, one year upon the VP date. Again I have to stress here that this is only applicable at least on me, for a new development, not for a sub-sale transaction. It appears to be very aggressive right? Trust me that this can be achieved, think on a positive and open mindset. It has worked for me and I believe it will work for all property investor.

I have mentioned earlier for not disclosing my first criteria in writing or in this blog, but you can ask verbally when you see and call me one fine day later. So happen that I have read a forum created by a writer “23 properties by 30” and this issue has been mentioned many times and I feel so thwarted when thinking about it.

So back to my criteria No 2, it’s all about PAPER GAIN (PG) or some people called it PAPER PROFIT. I have got this definition that PG is a gain on an investment that has not yet been realized. In Property Investment context, it’s the increased market value of a property compared with its cost of acquisition.

Am I dreaming? No real money as if like I had got it already. Negative mindset will think this way and cynical people will tell you that you’re daydreaming! I read and analyze them all, good and mostly bad in the property forums. Why PG is so vital? Virtually, it will give clear indicator of the property market value. It may not be real or the actual transacted price is lower, but it will provide the first indicator for bank valuation.

The main question here, how to achieve high PG? It’s so easy sometimes like what I observed based on my previous purchases below.
a) After analyzing the location location location and actual site, always set in your mindset to buy the earlier or middle phases. For landed property I will only go for FREEHOLD. One example I bought 1st Phase Anjung Sari Setia Alam at RM498k, end of year 2010. During that time the SA mentioned that there will be an increment of 60k for the 2nd phase (with additional build-up 100sqt only). At that moment I knew already PG already increased by 60k. When developer launch the 3rd phase at 750k (different design but build up is about the same). Nah you got it, on paper the PG increased by 250k. And now in, theye're mostly advertised at 800k and from the forecast, it can reach to 1mil mark by mid of next year. I am the type of conservative, thinking that it can only be sold at the maximum 750k. With this selling price, easily I can obtain a gross profit of 250k.
b) What happen if I didn’t manage to sell the house? I still have an option to refinance at 750k (conservative market value) and get cash 250k. And yes, I have to manage effectively my commitment as well.

* In this circumstance (a & b) for short term flipping, in my opinion Seri Jati/ Baiduri Setia Alam is a better bet than Seri Melur Bangi.

c) If you know something big is going to happen, that’s a good sign already. One example for Alam Impian township, you can compare the property price before and after the opening of LKSA highway. I did try to buy one (Canting at 370K) but did not manage to get a unit after queuing for soooo long. I feel so regret to see the Canting price now at min ~RM550k

What happen if it’s a boutique development? like Nadayu 92? In this situation you have to do more detail study. What is going to happen in the future (on the VP date)? like is there a new highway? at the MRT links? New College/University? Shopping Complex? or you anticipate shortage of houses?

I think it become a long winded in my writing now and better for me to stop, or else it’s going to be a tedious length, like writing a book….


powercube said...

Wow.. Aku yg 1st comment :).
Suka aku baca your personal experience on flipping. 1st thread yg share comprehensive attitude on flipping. Keep up sharing!

aBu said...

tuan dzirhans,

may i get your hp number or email?

i would like to ask several urgent questions.


Anonymous said...

thanks dzirhans for your posting..
God info.. :)

ctfarazila said...

Salam bro, dah boleh buat seminar ni :)

Keep it up!

Halif Mohamad said...

Itula, bro dzirfan memang dah layak jadi pensyarah pelaburan hartanah. Keep on sharing

dzirhans said...

Halif u know kat mana nak buat course PHD in property investment?