Updated: 6 hours ago
There are many courses out there teaching people how to invest in properties with zero money down, own multiple properties with minimum cash outlay and all.
In recent years, many of my friends and agents have come across social media ads promising the above and are concerned that they are "left out" of such crucial knowledge.
Yes, in theory you can learn about all these things. But the fact is in the past few years, most of these "good deals" were concentrated in the industrial property space and it has been tough finding great deals in the residential market.
But in light of the current market, it is opportune now to visit this topic about how you too can find fire sale residential properties with built-in profits.
Let me share with you these mechanics over a series of posts that I've planned.
So How Exactly Do You Find And Invest In Fire-Sale Properties With Built-In Profits?
The short answer if you're time starved.
1. Find an urgent seller. (Whether through a private treaty sale or an auction)
2. Buy the property at a significantly lower price than its valuation.
Easier said than done you say?
Indeed. It is not easy to find a property (Especially Pre-COVID-19 or during smooth sailing years) whose owner would agree to sell at a significant loss.
After all, with so much demand from locals and foreigners, a slight discount over the valuation is usually enough to get it off the shelf.
But wait.. do you know that even in good times, there are always genuine fire sale deals around? There will always be people who are caught on hard times or have other pressing reasons to let go urgently.
Out of the many i have seen - Some were migrating, some were retrenched, affected by business losses or lost badly on their investments in the stock market by leveraging way beyond their limits.
Some on the other hand, urgently sell to arbitrage and take advantage of greater yields and upside in the stock market (Like now!)
Okay Stuart, cut to the chase... There are good deals out there but how do i find them?
First, let me qualify that it is not a walk in the park.
Finding gems require alot of hard work. So if you're not prepared to do the work, it's alright, at the end of this article, sign up for my mailing list and if you're lucky, i'll be sending out the occasional REALLY GREAT deal i find which you then may have a chance to be a part of. Just sign up for the mailing list and wait.
A 4 Steps Guide To Finding Fire-Sale Properties with Built-In Profits
Step 1: Select A Project, Segment Or District That You Are Familiar With
There's money to be made in all types of segments BUT you may not have the required experience or knowledge to judge good deals from mediocre ones at a glance.
Hence, to be a proficient fire-sale hunter, you first would need to familiarise with properties in a certain segment, district or even down to specific projects that you really like and know well.
By knowing them well and inside out, you will be able to set a "target buy price" which you know is a good deal.
Personally, my search always revolves around condominiums in Districts 1, 2, 9, 10, 11, 15, 16 and 19. I know these areas very well and have a good pulse on their tenancy take up rates and sales volume at the back of my hand.
There are also certain projects that are personal favourites that i monitor on a micro level such as The Sail @ Marina Bay, The Clift and several in Nathan Road, River Valley and Novena.
I like them for cash flow reasons as good and consistent rentals are 1 of my important rules of thumb when investing. You can read more about this here: (4 Important Entry Signals That Will Greatly Improve Your Property Investment Returns)
Not everyone plays the same game though and i have friends who monitor deals only at enbloc potential projects like Laguna Park, Neptune Court, Braddell View, Novena Court etc.
These however, usually have lower rental yields as they have aged considerably and lack the modern facilities that new projects have.
Step 2: Search Daily Or Weekly On Major Property Portals
Urgent, Fire sale, Serious Seller, Must Sell, Selling at Loss, Below Valuation etc.
If you're not sure how to do so, below are some example screenshots.
*Take note that their mobile app and desktop websites search functions may differ.
Example: For PropertyGuru, you can filter by keywords under the search box right below.
If you're using the mobile app, key the search terms into this box.
For 99.co, you will be able to key the fields here.
For EdgeProp.sg, it's even better as there are 2 fields that can help you narrow your search for fire sale properties. One of them is to select via "% under valuation" while the other is the typical keyword search like the others.
If you are kiasu like i am, you should scout using all 3 portals as far as possible.
Step 3: Discern Whether The Fire-Sale Listings Are GENUINE
Too often, we will find properties listed as urgent or fire sale but yet when we compare the past transaction prices, it is disappointingly not true. Meh.
Agents do use these keywords to create buzz and hype for their listings but it is not untrue all the time.
Sometimes, owners are urgent and desperate to sell BUT may not want their agents to advertise at too low a price as they hope to retain some buffer for negotiations.
Other times, owners could be putting on a strong front but when offers come in, they become alot more amenable.
This is where discernment and hard work comes in.
To be able to separate the genuine ones from the chaff, you will need to arm yourself with tremendous grit and flame-proof armour (Read: Thick skin).
By now, you will need to have a "target buy price" that you are willing to put up a cheque for immediately if a seller obliges.
Inform the agent that you are ready and willing to offer with a cheque at your target price for a certain floor level and/or facing (Be ready for some crude remarks, sarcasm or radio silence).
Agents generally take you seriously when you are ready to put your money where your mouth is and there's a higher chance that your offer will be conveyed.
Typically this buy price should be at
least 20% below the market valuation to be significant and interesting. Hence, it is important that you study the recent past transaction prices carefully to ensure that what you understand as market valuation is up to date.
Before you pounce, it is also important to check with a few bankers to triangulate that the property in question is indeed a good deal. (If you need time tested & proven advisers like bankers/mortgage brokers/lawyers on your side, drop me a note!)
In the event your offer is taken, always view the unit first in case of blind spots & sight the tenancy agreement terms and conditions before you hand over the cheque.
*Note: Please do not go around doing so if you have no intentions of honoring your offer as it affects yours and your agent's credibility. You can be certain that your photo, name and number will surface in industry FB groups to warn others of your existence very soon.
Tip: Always Compare Apples with Apples
Larger units usually go for a lower per square foot (PSF) price while smaller units go for a higher psf. So do not be confused when a good deal seems to present itself but is actually one that has a roof terrace, a patio, high ceiling void air space or just larger than usual.
Too often, i have seen people buy into seemingly good deals but came to regret when they discovered they were paying for low efficiency space as a result of a staircase, not obvious void spaces or wasted terraces.
Step 4: Informing The Area Specialists Of Your Intentions
If all these fail to find you a deal you're satisfied with, then it's time to set up some alerts in the property portals you use to inform you of deals that match your scope of interest.
It is not foolproof though as there are times the system does not capture it and update you.
At the same time, reach out to all the agents who plow the fields of that district/project and inform them of your "target" price for a unit. They are the ones with the most updated intel and can serve as your eyes and ears on the ground.
So be nice, make some friends and you just might be given priority information when the next fire sale deal comes in!
If the above sounds like too much work for you, sign up for my mailing list below and you will be informed of occasional REALLY GREAT DEALS which i find!
Of course, if you're an owner of a really great deal property, i can broadcast it to my readers too, so drop me a note.
In my next post, i will share with you how to unlock built-in profits from fire sale deals that you manage to buy so that you too can achieve what many property investment courses have been advertising as "Zero money down" deals.
Yes, it is possible and there are several ways to achieve this. But this post is too long now and it's time for me to sleep.
Stuart Chng is a Senior Associate Executive Director of OrangeTee & Tie, and a renowned leader and personality in the real estate industry.
He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.
Professionally, he is a real estate investor, trainer, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport,PropertyGuru and other publications.
Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively.
Stuart has also coached many top million dollar producing agents from different real