A place where investor can buy and sell the transaction for profit margin is call a market. In property investment, are you understand where is the market and how it function? It is important to understand clearly how is the market before we start to invest into it.
Here, I summary the market of property investment into 3 types as below:-
1). Primary Market
2). Secondary Market
3). Auction Market
1). Primary Market
First type of property market is called primary market. This primary market is where investor can buy a property from developer when new launched project. The property that buy from this primary market is totally new unit and normally it will only complete to build within 2-3 years. Investor need to make 10% down payment and DIBS when buy the unit.
After investor bought the property at primary market, investor can’t sell it at the same primary market. However, when investor like to sell the property, it will sell at secondary market. It is same when investor like to rent out the property that investor bought from primary market/ developer. Investor can’t rent it at primary market but have to rent the property at secondary market.
2). Secondary Market
The second type of market in property is secondary market or known as Sub-sale. This is the market where investor can buy, sell and rent. The property that investor bought in this market is from the owner of the property and majority it was used property. However, the property appreciation value in this type of market may be lesser than primary market. Anyway, if you are smart investor, you will get the opportunity to find the GEM in this market. There are still have a lot of below market value (GEM) in this Sub-sale market!
This Sub-sale market is a very important market because it allow all activity for buy, sell and rent. In the last post sharing about “Only 2 Strategy In Property Investment”, when investor choose to keep, then they will rent it in this Sub-sale market for sustain the monthly loan installment. Or, if investor choose to sell, they can sell it directly in this market as well.
3). Auction Market
Another interesting property market is called auction market. In this market, a third party will play to sell a property as middle man where the owner have bankruptcy or difficulty to pay the loan installment to bank that caused them force to sell off the property. Therefore, the listing value of the property is always below market value.
With the attractive below market value of listing price, investor can buy in a cheap and “Lelong” property. Majority of the property is below market value however, it can be happen that a investor buy it at the above of market value when competition in bidding at this auction market. We need to be extra careful and there is a skill to learn before you enter this auction market!
As we go through all the market type in property, which market is a fundamental market where it allow to buy, sell and rent? The answer is secondary market or Subsale market. This is the market controlling the property, don’t you agree? If we like to be success in property investment, I feel we need to master it in this market first before we enter in other of primary or auction market especially for newbie or virgin property investor. As a smart investor, we need to plan a good exit plan when you buy a property either in primary, secondary or auction, and the only market can plan for a good exit plan is secondary/ Sub-sale market, this is the reason why it call as market controlling in property!
What do you think? Do comment and share with us your opinion/ property investment experience about the property market at below!
