WHY you CAN’T SELL your real estate property FAST

WHY you CAN’T SELL your real estate property FAST


hi this is cf Lieu here again and this is
the part two of how to solve your negative or stagnant or decreasing
rental income from property investment now I’ve shown you what I mean by this
diminishing return champion property investor investing diminishing return
meaning that your rental income up to a point where you face external
competition you would not be able to still enjoy the perpetual increase of
rental income in fact you will have a decreasing rental income and when that
happens it’s likely you will still have a mortgage loan to repay to pay and then
with a decreasing rental income that it’s going to even repeat your profit
margin and if you’re already you are just break even in terms of your rental
income versus your loan repayment and that taken to consider the main tenant
as well that might actually show you in a severely negative cash flow kind of
situation and kind of property investing and this has nothing to do with you know
you if you don’t nothing to do you because it’s not because you overlook
anything it’s not because you don’t do your homework it’s not because you are
stupid dumb or not smart enough it’s not because you do not you do not buy a
so-called great err property because you know gurus always always want to say
they say that I only recommend great err property but it’s a great a kind of
property is always a great any kind of property well it’s unlikely because it
doesn’t always stay that way because there are a lot of things that you
cannot control okay the money is made yes the money is made
an agreement is made when you buy but money can be lost also when the when you
sell and due to a lot of external factor that you cannot control and so it circle
back to the point that why I say that even though you have done you have
bought the most perfect property in property in the market at the point of
time of purchase the Guru say is a great air property is still not a hundred
percent guarantee because over time over time your mortgage runs for 20 30 years
okay if you can pay back satury earlier better all right but
there is not a guarantee even if that you would you could have a decreasing
rental income and ironically when you want to sell the property after 10 20
years this is a few things that people overlook and what I want to share with
you today is this right this one I have for you now in this in this chart right
I’m going to share with you like what why is this so you know that in any
property invest in investing what you really want to look at is your ok during
the time when you are still holding the base property whether or not this is a
good investment or not property is always about net rental you so this is
your perspective right now the perspective of the net rental you it has
always been this net rental you the way you look at it is your net rental it
goes to your net rentals in terms of this one in terms of yearly divided by
your purchase price alright so let let’s just assume your your-your-your net
rental is a factor of what it is a factor or CEO of your gross rental which
is more or less also affected by the market rate and you know how will
renovate your unit and all that so your gross rental – did that of what I call
as the loan repayment yes loan repayment okay the only payment also we have to
deduct off the so called maintenance costs okay and the maintenance cost
could be what we call as a regular ly our maintenance fee or it could be
something that is ad hoc maintenance cost right and then you actually take
this entire thing and you actually divide by your
purchase price so how is this investment will get better is in a sense that
because what are the so-called constant over here so your purchase all right
come on so see if I could actually so well you know that your purchase price
actually does not change so if your gross rental over here you are able to
increase that meaning that your net rental would increase so an investment
that give you higher and higher dividend or net rental every year that is good so
your crush want to be a highly depend on that but we have already know that why
your gross rent oh it’s affected by the market and it’s affected by what’s
happening around you your property there is a newer sexier project came up that
kind of new property in ten years time in common are increasing rental yours
will not be able to because Jesus and all property so this is uncertain and if
that happens your net rental actually goes down
instead go up every other thing being the same but the other uncertainty of
course is about interest rate so if you are taking most people taking floating
flexible floating rate of interest on if your long your interest actually goes up
your loan repayment actually goes up so when your loan repayment ball goes up
you reduce your net rental even though the this being the same
okay so there’s also a second level risk that we you cannot control how about
maintenance cost as as you know people taught that at the time of entry all
this stay the same it never stay the same maybe instead it’s in the first two
three years but in ten years a lot of things are going to change for example
if you say that your maintenance cost your regular maintenance cost of
maintenance costs that you maintenance fee that you pay every month it could
likely be increasing as well and how about apartment and actually the one
that you need to fix you know your broken furniture your broken electrical
appliance these are all all constant its and on to
your gross rent oh and when this whole equation actually this whole amount
you’ll know that it goes down your net rental you also goes down and again this
is very likely to happen the ad hoc maintenance cost and your property I
getting all your regular maintenance they’re going to increase their
maintenance expenses right and your loan repayment is something of Course you
could go up you could go down so in the best case scenario I think it’s just
everything balance on each other this one you’re able to increase and
then this one increase but this one does increase on all that but again the
likelihood I’m more leaning against a likelihood that your net rental you
actually decrease rather than increase in me to long term okay even though
after 10 years or whatnot you’re supposed to own more equity in the
property because you have paid that for some time you’ll clear the principal
then the property is closer to being you belongs to you but you have to contend
with all this right so some people would have say that okay if I have a problem
like this whereby net rental is has been stagnant has been decreasing so I
would actually want to sell this property all right okay and then when I
sell it that daddy’s should be fine right I get a big lump sum kind of
profit all that well let me tell you it is not as straightforward or as simple
as you as most people thought because here’s the thing now this is what you
are seeing right this is you what about a net rental net rental you that is seen
net rental you that is seen from a buyer standpoint
so imagine you want to sell this right there must be a buyer want to buy this
from you so from a buyer standpoint you know form by sample is also what they
look at this rental net rental all right and then they also looked at purchase
price but instead of your purchase price it is the upper change by the price that
you want to purchase from you so for example for example if you have a net
rental let’s say of 60,000 per year okay just just just imagine this okay 60,000
per year and in your property it’s it’s actually a 500k this is what what you
bought the property for 500k or even let’s just lower bodies a bit and see
how much percentage that is going to to be okay I’m going to pull up my
calculator to say 60 you right by find that K which is top percent which is
really not bad but that is really not that possible because even if you’re
ready 2000 you have to pay a load and all that so net rental you I would say
that if even if you can get at 1,000 of positive cash flow per month we are
talking about 12 months and if you bought it and half a million the the net
rental would only be 2.4 percent right 2.4 percent and I have not yet factored
in order maintenance and all that so just assume this is what you have two
point four percent right so to whatever your purchase price which does not
change but but as you know as a as a buyer
your buyer they want to buy a property so in ten years or 15 years time
okay the purchase price if I want to envisage
I want to buy from you your property and you say that this property the per has
increased after ten years and now it costs 1 million okay 1 million and
what’s going to happen is if I were to actually take 1 million loan out of this
property that I want to buy foreign investment so what’s going to happen is
that let’s say we borrow we actually use this something from loan street and we
say home loan calculator over here okay Oh on I’m going to get this this loan
loan calculator and off 1 million and my money finance 90% if I were to say 25
years and the interest rate 10 years 20 years from now is still like that so I
would be expecting to actually buy or even if I’m going to take that the year
let’s say imagine I’m buying this ad you know so my loan money installment is
four thousand five so what’s going to happen is this four thousand five and
four thousand five right four thousand five and imagine I have to – offer four
thousand five which is four thousand five five twelve so my loan installment
per year is already activity 4k so even ignoring the maintenance costs how much
do you think I need to rent this for how much let’s say I could rent it for six
thousand okay six thousand which is equivalent to
72 thousand per year okay send it to two thousand a year and because I need to
pay the installment and all that which cost around four thousand fight on a
yearly basis fifty four thousand so 72 thousand is my cross rental right so how
much is 72-54 so I have like eighteen thousand per year over 1 million so what
you have is 60,000 right you know like see powder or whatnot so but because
this the process already come to 1 million so if I were to invest I would
do PI for you I will have me a calculator to say if I have 18,000 a
year of net net rental divided by 1 million that is only one point eight
percent of you okay yeah and I’m not stupid right and I look
at that and that is one point eight percent it’s probably too low it’s
probably too low even you at 2.4 percent even you had a better better than me
right two point four percent because your purchase price was lower but if you
ten in ten twenty years time so imagine you I could actually ran it out at 6,000
however because I take a higher higher amount of loan so my month my yearly
installment we pay the loan is higher fifty four thousand so I’m just left
with one point eight percent of net rental you per year and if you – of all
the maintenance fees and all that it could be left 1.5 or slightly more than
one percent so to get that one percent every year is it really worth the hair
so so as a buyer as someone want to buy from you
in 10 years 20 years time I will have this I will have this I will be very
hesitant actually do this because again again buyers are not stupid okay
and you know that your property is all property all right and I’ve said in part
one and all property cannot even leave an increase rental and all property
cannot con man cannot easily common and increase rental a market rental rate
compared to a new property that is being built in the future right and nobody can
on command so with that being said when I do this example for you that is
already considered a very lenient you know a very you know already what we
quite a highball kind of example because property value increase or religion
increase that is already given that is quite sure but but the fact is the fact
is the old all property cannot come under kind of higher rental so in that
sense even if you were to want to sell your property at the price of desire in
10 years 15 years 20 years time it slightly you would not be able to sell
that at the price that you want okay now imagine if there is not your concern you
just want to let go of that property maybe you sell maybe you want to only
sell that a hundred thousand okay and undercut all other sellers in the market
just imagine that okay you don’t mind you just want to let go of this property
and you don’t mind actually earning $200,000
even though the asking price for a similar unit 1 million ten twenty
fifteen years from now so what happened is even if you buy it at eight hundred
million eight hundred thousand and you know that a property they always have
this kind of what we call as a target market and because let’s say in in the
future of a property of one of your own property right which if most of the case
compared to a newer property it would be you know probably not as not as big not
as sexy and it’s all property and then you say that probably I can actually
sell it to a market not people who really want a high-end property I sell
it become a priority go from this also you want to sell it to people who just
maybe start at work right and we’ve not so much of can
afford a higher a higher price property so maybe people who start working want
to look for more affordable property and people without kids and all that they
went to society to people who are actually relatedly you know younger or
the at a point of time now this is all this what you think is seems to be valid
but at this point of time what we have really the real cases I have clients
that have properties right I kinda had property a relative property that had
been for ten years and he bought it she he bought that and maybe hundred over
thousand less than two hundred thousand right so maybe I want to draw this for
you and you see so probably bought that and say in 2008 right 2008 and now it’s
a 2019 just ten years right and they say body a two hundred thousand which is
quite expensive at this point of time but here it will be let’s say five
thousand right so he asking price so he can case said that this but the police
property at this point of time this property is only for example a hundred
square feet right and it is a ten years old property you have to understand the
ten years or property ten years or property so who can actually afford who
are looking for this now I imagine this is not something that you want to sell
for a family of established family because they probably are looking less
established family want to upgrade they are probably looking for say media and
whatnot that cost 1 million or so because earning power so people as of
2019 the one that can afford this kind of property is probably graduates okay
fresh working professional working professionals so this is the one because
it my properties mass market property I can sell it I talked about this up cell
but what I can tell you the way a lot of people think the people
who are older so some are kind who are who buy this property so they are you
know they are like 40 50 plus they thought this is of course a prudent way
to go so if you are fresh great 20 years or you don’t want to REM you want to buy
your first property you know let’s settle down or as soon as possible you
should buy a lower price property right but the thinking for what we call as a
gen no you called Gen Y or gender is different they would rather not buy this
property because Y if they cannot afford it these two things they would do if
they cannot afford a 1 million property they would not even buy a 500,000 kind
of property why because it is all property and is too small 800 square
feet and it’s already ten years old it does not have that kind of status
imagine you’re buying all property and it’s not something that you are very
proud to to actually tell your friends and all that right although is a
financially prudent thing to do but the new generation I’m talking about Gen Y Z
or even whatever generation mill you know what that if they really find it
hard to afford this they would actually not even buy that and stretch to live
with her parents that’s number one and if their parents have the financial
ability to support them they will actually ask the panel to support them
to buy 1 million property and all that right they were actually asked that
right with their financial that’s why you see a lot of people who are in just
meal they are working for two three years technically they cannot afford a 1
million house and to get married but you know that they can afford because there
would be so-called a fama support right you know what I mean fama
father-mother support so they will go to that half well if they do not have
fama support financial support they would rather use the money and actually
you know you know do business or even you know at this point of time it’s very
you know do like loan compression if you are not familiar with that meaning that
you cash out and do some fancy tactic donnell to actually you know
this apply of love from the same same at the same time apply love loan from bank
do this a cash rebate no money down and cash out cash rebate hundred thousand
and then grow that in so that because they want it to be fast they want to get
rich quick and not saying that is a good thing to do I’m just saying the reality
is people who have financial support from their father and mother they will
actually buy a 1 million property with your financial support if they really
can afford it on their own for you know for the target market if
you really are targeting this market because your properties oh and it’s
relatively low is really really affordable know that your target market
do not 1 they need what you have but they just do not wonder because they
want what they want is a new property get fine father mother support to get
that if they can’t they’re going to find ways so that they can grow their money
as fast as possible rather than settle for something which is only like 800
square feet or even you know a ten years or property because that is not most
what people will do so how does that help that relate to you as seller if you
you know the I mean I’m just talking about the reality I think over now but
the same thing but maybe it’s going to happen ten years down the road when you
are the one they own and all property of ten years or so and you want to sell it
all right if you want to sell to a very experienced property investor they are
going to do this calculation and it slightly this calculation is not going
to make sense because the return in terms of the new is too long on a per
annum basis so you will find it hard to sell however if you say that all maybe I
just want to sell to people reading it a property after all my property as a
property is a mass-market property there should be you know a working
professional who are new in the workforce or fresh graduate that is just
working who want to buy my property because this is something that can have
thought I’m saying that you have Overlord some other thing I just talked
about on how this new generation of young people think and act
and do okay and this is going to be the same in the future so with that being
said with that being said I hope that gives you a very good perspective okay
on how how do we how was the readability over here if you have seen so many cases
already so back to my initial the lesson of this how to resolve your negative you
know your negative or Stedman or decreasing rental income property
investment now obviously if you have been a property investor for quite some
years and you feel yes this your problem and you already have a property
portfolio some of them pay absurdum not pay up the way to actually still can
sustain this cashflow game what I mean is let me write this down so I want to
emphasize this it doesn’t really matter what is the value of the property and I
see a lot of property guru say they have like mountain no property well what is a
property value worth if it does not generate enough cash flow to sustain
your expenses it means nothing so cash flow Trump’s all matter so if you
already have a Buffalo a property you already have a good you know good
capital gain of your property but the cash flow from your rental income is
decreasing or stagnant that is where you want to actually is time for you you
have reached a stage that where property investing and marathon is no longer your
game you should shift its like us and we go to align every at every different age
and life stages we have different needs and we care about different things we
see what’s important and all that and the market also changes so you cannot
let this property portfolio of you dragging you down if that’s what you
feel because you cannot want to add with you know it’s not rational to adapt to
your property portfolio your property your investment portfolio should adapt
to you and you on the other hand should adapt to what the market around the
world is moving I could go on more on why you know people will be less and
less I know that a new generation will be less and less in contracted by
new property buy a more expensive property and all that because that just
tie them down and a lot of people don’t like this feeling but I digress
let’s talk about this cash flow so this cash flow if your property is already
not generating sufficient or good cash flow for you that is rare very simply
okay you don’t have this problem you can actually skip this lesson right now but
if you are watching and you write here I highly suggest that you actually go to
what is shown over here in the below REITMethod.com – REITMethod that is
where that is your only way out if you exactly have this problem that i just
said about the damage the diminishing return chart just share with you and you
want to solve your negative statement and decreasing rental income from
investment property this the reed method nagar and conducting you know every week
and adding value to people who are in the same kind of situation whereby i
have them actually restructure okay we structure meaning that you already have
a good capital gain from your property portfolio your rental is decreasing or
stagnant that is the time you know that it’s the trivial point to actually
structured and you know cut that into you know restarted that into still a
properly exposed investing portfolio but it will give you more consistent and if
you give you more stable and even increase in cash flow over time coming
from now because reid is property yes but is commercial property and this is
different entire different ballgame which i can only share with you in in
the upcoming webcast already not that i thought that almost every week so you
want to go in the description below or whatever click on the link there and go
to rei t– method ok go to our e.com or click on the link below and just
register yourself or you know an upcoming webcast whereby how this could
actually help you and we have a lot of testimonials or clients already achieve
that so if you really are so you know you are you’re still stubborn and you
think this is the not the one for me I mean that is fine
and I hope you know with holidays this valley has a lovely to you but ok this
is the relative without without you participating this is what other people
are already way ahead of you alright so it’s not about me thinking
it’s right right or wrong for you but this is the relative and you don’t want
to be the last one to actually walk up and say that whoa I’m too late
so that being said I’m safely on staff channel you know if you’re looking at
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I’ll see you in the next lesson and you have a good week ahead

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