How to identify good flats for purchase?

[pinko]

Once the stock market drops further I plan to buy lots of shares, which will double in value after 6 months. Then I plan to sell the shares and buy a handful of flats for half the price 6 months ago. The price of the flats should double in 3 years, so I sell them and retire in 4 years from now (dreams, dreams...).

In any case, if the price of the shares does double in 6 months (or even 1 year) and I have a couple of million bucks to spare on flats, how does one chose the flats with the greatest growth potential? Of course I plan to rent the flats out for 3 years, and use that money to pay the mortgage.

Any tips?

[er2]

make sure that the flats have big bedrooms. So that you can keep all your cash under the mattress.

[clarence_kwan_h]

1) Flats located in luxury area like happy valley, jardine lookout, repulse bay, mid level, etc.

2) Flats of big estate like Taikoo Shing, South Horizon, etc.

[gilleshk]

Obvioulsy flats in a desirable area would be preferable and they will tend to appreciate more in good times. But you're also going to pay a lot more...which in your case means a larger downpayment than you may be comfortable with...

Another interesting investment option is to look for a flat in a good older building with lots of elderly residents. You find one that hasn't been renovated in at least 10 years and put a bit of money to clean it up. You will then reap the double profit of spiffing up a place and waiting for a better market.

Otherwise, you can stick with established developments in good areas, I would recommend the upper part of Wanchai, Happy Valley, Causeway Bay, Sheung Wan and the Quarry Bay/Tai Koo, Kornhill area, the upper parts of Tin Hau and North Point... A good thought about Western District properties since they might be cheaper with good appreciation potential since the MTR will be going that way in a few years.

I'd say the minimum ratio of finding a good place is to visit at least 10 for each one you intend to buy in an area. Try to talk to some residents and maybe the guards to get a feel for the clientele of the building and whether there are problems(vermin, security, leaks, water pressure etc...) Never trust any agents, they get their money from the sellers and not buyers... Be careful about leaving yourself a good safety margin... Interest rates are very low now but it's good to look at scenarios where interest rates are at 8-9% to see whether you can sustain this for an extended period or if you can't find tenants for a few months...

I'm certainly hoping to cash in from this little financial hick up...I'm hoping for a market rebound in the spring/summer. I flipped a property last spring when it was quite high so I'll be on the hunt for some deals in 2009.

[KnowItAll]

>> South Horizon

This has been a problem estate for the longest time. Supply if far more than the demand.

[KnowItAll]

>> which will double in value after 6 months

What happens if it takes goes down by another 25% and the doubling takes 4 years? Are you prepared for the worst case scenario?

[gilleshk]

>> South Horizon

This has been a problem estate for the longest time. Supply if far more than the demand.

True but it caters to a certain type and if you renovate a place and furnish it nicely you should be able to get teacher tenants from the two international schools in Aberdeen and the MTR going to the South Side should spike it up a bit. Generally though, I wouldn't expect a large return from a property there.

[gilleshk]

>> which will double in value after 6 months

What happens if it takes goes down by another 25% and the doubling takes 4 years? Are you prepared for the worst case scenario?

The market could very well flatten for 10 years, those who bought at the height in '97 were barely back up to that level last summer.

Diversification is the key and trying to time things right in a short period of time is akin to going to Macau...

My motto is buy low and be patient... buy things that you know and have confidence in and buy things I might enjoy for a while if selling isn't right(nice golf property in Thailand or a ski/golf property in New Zealand or Canada-taxes on capital gains there yuck)