AN author and property seminar speaker who declined to be named says property investment clubs thrive in a rising property market. They have been rather quiet this year compared to the flurry of activities the last two to three years because developer's cost is going up, which results in prices going up too, but not as steeply as before.
“It could also be the general election but I can say there is a pent-up demand building up the last three months. Even foreigners will be coming into the market when things get clearer (after the general election),” he says.
He does not call his following a club but a group of people coming together to exchange information based on a common interest, which is property investment.
He has been giving talks for many years and is an investor himself, which is why he is able to impart information from his experiences.
“If I come across a good project, I will share this information. I will tell them the good and bad points about it and they make their own decisions,” he says.
There are five to 10 active clubs today.
He says people participate in property talks because they want to make profitable investments.
When they pay to attend these talks, they automatically become members which pave the way for them to enter into bulk purchases that come with a discount.
He says he sometimes get a commission from developers for introducing students to a project 3% for a landed unit and 1.5% for a condominium from the developer. There are different business models and his comes from the impartation of information. The commission is a bonus.
Some market the seminar cheap in order to get as many participants as possible to collect data.
Another is the pooling of financial resources in order to buy into a project, exit together when the price goes up and split the profits.
Essentially, clubs are popular because bulk buying allow members to get a better deal. They are able to get information first hand.
“Negotiations are done before the property is launched. Clubs approach developers to take up multiple units, sometimes up to a third of the project. It makes sense to developers who want to sell their units as fast as possible.”
Because property investment involves a huge outlay and risks, participants want these risks minimised and they view coming together as an advantage. Risks come in many forms developer, product type (residential, shoplot, serviced apartments) and design type, location and the ability to get bank loan.
While there may be advantages coming together, there are also downside to bulk buying.
There was a case where 200 units of apartments, with prices averaging RM300,000, entered the market. The units were sold to members at RM350,000 a unit, and they were told that they would get a 10% discount, at RM315,000. But the RM15,000 went to the person who introduced the members.
He says there are many gullible people out there and after the first or two profitable investments, they buy the subsequent ones based on trust.
“Although research has been done for them, they need to do their own homework,” he says. - The Star
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