How do you make money when there's a property bubble?

Article by Michael Tan

There’s a definite price bubble growing. With the reports from various financial dailies showing strong or overwhelming growth in the nation as well as new and bold land acquisitions by several large developers, things are definitely gearing up for 2011. Without doubt, more prime located properties will be launched, and the prices are definitely on the upside.

To know how to look for great deals, when to exit and to achieve Financial Freedom through Property Investment, click here

As a matter of fact, just the other day, I was at an auction for a residential property auctioned for RM500K. It looked more like a night market than a high court auction. Never have I seen so many people anxious to plough their money into properties. There were more than 30 people in the courtroom! The properties, which are in fairly good locations, were bid up and bought at above market value prices! The property auction I attended went for RM800K. For the life of me, I cannot understand the rational behind their actions.

I also experienced and heard of similar cases in the secondary market. I stumbled across a good deal in the market - a small residential property in USJ was going for a reasonably good price. When I showed up for the viewing, there were more than 15 prospective buyers and real estate agents cramped up in the living room! From my observation, property prices in several hot spot areas such as Taman Tun Dr Ismail, Damansara, Bangsar, Subang, Petaling Jaya, USJ and Kota Kemuning, have increase by an average of 40% to 60% since May 2010.

It’s true, the market is hot and it will only get hotter. Bank Negara’s implementation of the 70% capping on the loan-to-value (LTV) was in reaction to the tremendous increase in real estate transactions in the past six months prior to that. However, the question is, will it be enough to slow down the current market momentum?

The question one should ask is “What can a person do, in a situation like this?”

My response to this current situation can be split into two answers. The first answer is for those who currently own one or more properties, primarily for investment purpose. My answer to you is SELL. Run a check for the value of your property, both from the banks as well as from the market (i.e. you can ask your friendly real estate agents). Should the value achieve 30% or more appreciation value within the last two years or less, it is a good indication for you to consider a sale. If the rental rates are great, you might want to consider refinancing, so long as the cash flow remains positive. These are the best time for you to cash out from all the years of investing. Monitor the market well, depending on what type of properties you own and also what type of development you are experiencing in your location, you may want to find the best time within the next couple of months to let go of your property. I figured, within the next couple of years, the market will continue on an uptrend and cashing out during these times will be generally profitable.

For my second answer, if you have already sold all your properties, or don’t have properties to sell yet, then buy with caution. Invest into fundamentals, never on speculations. There are still opportunities in the market. With your ears on the ground, keep your feet firmly planted while shopping for properties. Keep a firm eye on the prices. The best reference is always the rental market. If you are going to buy property for investment purposes, you will need to either rent it out or sell. Selling prices are closely related to the rental prices as well, therefore, you always need to ask yourself “Who is going to rent your property and at what price?” Find out what the rental rates are like. With the exception of houses, a good benchmark for all residential investment grade properties is about 6% (or more) rental returns. The following is the formula to determine rental returns:

If a property cannot achieve such returns, i.e. the selling price is too high as compared to prevailing rental rates; it is definitely not a good idea to buy.

Let’s go back to the fundamentals. Besides rental returns, look out for the take-up rate of the properties in the surrounding areas and ask yourself, “Does it take too long for the tenants to fill up the space? Is there more demand or more supply of space in that area?” Also, who is your target market? Is it a growing or the numbers dwindling?

Regardless of whether you are busy selling or busy buying, start getting busy. The worst thing you could do right now is to freeze. Many are either sitting it out or just plain afraid to get into the market. These are probably the same people whom do not invest in the worst of times too. My question is, if in the good times, you do not invest, and in the bad times, you do not invest, then when do you?

I challenge you to make the best of things, in the best of times and in the worst of times.

If you would like to know how to understand the current market more, and also learn how to negotiate deals, I’ll be having an afternoon session in Penang, this coming Aug 13th, 2011 in Vistana Hotel, Bayan Baru. I would like to take this time to share how the current market is like, and how investors should approach it. I will also share on buying properties with no money down. Yes, its possible, even in times like these.

If you truly want to invest and make money in great times like these, please make the effort to come.

Looking forward to seeing you there.

Till then, happy investing.


Freemen is an organization which has been training investors since 2008 to benefit from any market. We’ve made 200 individuals more than RM3Million in profit, investing in over RM30Million worth of properties, ALL with no money down! Property coach, Michael Tan, a.k.a the Millionaire Maker will be giving a talk this coming Saturday, 13th of Aug in Vistana Hotel, Penang entitled “How to achieve your financial freedom in 5 years of less” from 12:30pm till 5pm. Book early as we will be expecting a full house.

*SPECIAL OFFER: 1st 37 people to register in for this event will get a FREE Property Report 2011 worth RM137. Early bird price at RM 37/pax only

So hurry, learn from the guru and take action now to register here as seats are limited


August 1, 2011 at 12:42 PMcondomana

Dear Michael,

I am contemplating whether to pay RM37 for your seminar, or use that money to indulge myself in durians.

So, for me to decide, can I please clarify something with you.

When you said you made 200 individuals RM 3 mil in profits, did you mean 200 individuals totalled up made RM 3 mil, or they made RM 3 mil each. Going by your nickname the "Millionaire Maker", I guess you must have meant RM 3 mil in profits each, rather then all totalled up RM 3 mil as that would mean RM15,000 each only.

So if each of them made RM 3 mil by investing in RM 30 mil worth of properties each, that means collectively they have bought RM 6 BILLION worth of properties!! Right?

August 1, 2011 at 1:15 PMKevin

damn good catch, but if you take a look at the website provided above, i think it's more likely RM15,000 profit because the testimonial from 2 of his customers mentioned profit in the region of a few thousands... RM...

August 1, 2011 at 1:16 PMKevin

forgot to add... paying RM37 to earn a few thousands is actually a pretty good return... ;)

August 1, 2011 at 2:17 PMObserver

Dear Michael

I have few questions after reading your above article:

Do you mean all investors should sell if their properties in Penang & Klang Valley as any of the property in these areas has gone up not less than 30% if not > 60% since 2 years ago?

How can you still get 6% return with the current inflated price in Penang unless renting out to expatriate/foreigner ?

How many expatriates/foreingners left in the market to be your tenent ?

Why are you asking people to SELL within these few months since you have figured out the market is going to be uptrend in the next couple of years?

Please do not give answer like; you will get the answer when you attend my session in Penang

August 1, 2011 at 3:00 PMnoble

Mike, your article is so marketing centric - do you need a hard sell?

Can also see contradictions and half truths. And if you already made so much money in properties, then please don't take my RM37 la. We can start with zero down seminars.

August 1, 2011 at 3:19 PMKEN

Dear Micheal,

SInce u mentioned about ZELO downpayment in buying properties...can i owe u RM37 1st? Then i should repay u after i earn money from ur "tips" loh, ok bo? I give u RM37 + extra 30% - 60% also no problem!

August 1, 2011 at 5:07 PMCottage Design

Kanasai Penangites really Kiam Siap!
Micheal dont want come d...
Last warning!

August 1, 2011 at 5:09 PMCottage Design

Micheal, RM37 don't kira la.
Any millions dollars making opportunity can
go E&O hotel ah.. there looks more suitable
for our big business.

August 1, 2011 at 5:58 PMkucing

At this property super-bull time, any Tom Dick and Monkey also can be property Si Fu by just talking cock lah .... Don't believe me ? If Kucing today organise a seminar charging RM1,000 per session, I can even make tonnes of moeny out of it also lah...

Another thing, during recession or property crisis, all these cock-talkers will hide to nowhere !!

The reason is very simple :- nowadays everybody is super-mad about property, everybody also mortgaged all their exsisting properties to the maximum to get more money to F around with property, thinking property investment is sure win money printing machines !!
Experienced / non-experienced Developers also thought property developement will give them high margin of profit, also crazily "sapu-ing" land and waiting to develop these piece of gold-making land !
They all treat property market as share market ! They just forgot about the fundamental, rental yield, economic cycles etc ...

That's how the bubble is created ....

August 1, 2011 at 6:11 PMkucing

P/s :- I can't even share with you one memorable experience :- during property down time in early 2000, I once came across Property Queen Renesial Leong's advertisement for proeprty seminar in paper, she was coming to have seminar in Penang. You know how much she charged ? Zero ! yes ! No kidding ! (now she charged RM1000 per sessions and yet tonnes of people rushing to join in !)

So I registered my name for the seminar then but
the story hasn't ended there... eventually I did not attend the seminar because her staff called me up and told me that the seminar has to be cancelled as there were only 5 persons registered for it !!!

August 2, 2011 at 7:38 AMMIchael Tan

Greetings to all,
☺ I am truly amused by the response from this blog. 1st of all, thank you all so much for the interest that you have shown and the time taken to write your queries and questions.
Allow me to cover this, one at a time.
1. Making people millionaires.
Yes, what you read is true. I haven’t made people millions cash. That was not my intentions. If any of my participants or students made and kept cash RM1million, I would shoot them. It’s a misconception of many that money’s best form is cash. Rather, I help people get property for free, and on top of that, cash money. The cash, really, is an additional bonus. And yes, lots of my participants have gone from zero to property millionaires in less than a year.

2. Time to sell
In every market, there is the peaks and the lows. This is highest peaking time, in the past 9 yr history. Should u sell? It’s really up to u. I am not advocating everyone to sell. I am not. I'm merely pointing out the time in the market. Last thing, try not to catch the peak. Leave something on the table. Biggest common error most people make is to try to sell at the highest. Guess what comes after highest?

3. My Purpose
Finally, lets talk about my purpose in coming.

Penangites: I’m not here to make you rich.

I’m sure Penangites are more than capable of doing that in these great & hot times.

I’m here to make you free.

I am interested in serving those that want to invest for their future. I’m here for people who care about their retirement funds, kids education and a lifestyle without jobs (if they don’t want to work anymore).

Property investment is a vehicle, a tool, if used properly, can provide you for a lifetime. My purpose is to share, how to do that.

In these crazy times, people get crazier and forget the big picture. That’s how people get burnt. My purpose of coming to Penang is to help as many gain back their sanity and focus on investing right, in good times and bad.

All of us have a choice. I have mine. I choose to serve those that are keen to invest in their future. If you feel the same, then start by investing RM37. If at the end, the purpose is not met, I’ll buy you RM37 worth of durians ☺
Please don’t come to my talk to learn how to make fast money, find lubang or kang tau. I cannot and will not promise you how to do that. You already know your market far better than me.
I see lots of you in this forum, already know how to make fast money. So yes, perhaps its time, some of you come out and talk. It would be nice to see more share on their success.
Again, thank you all for your feedback. I do hope to see those who are interested come. Wishing all a happy and prosperous time investing.

Michael Tan

August 2, 2011 at 10:28 AMKEN

Michael ,

Thx for your cool response, personally , i "Like" it ^^

Your re a very good tai-chi master ! hor liao!

August 2, 2011 at 11:21 AMCottage Design

Well, I Michael , Great professional Answer.
Cool! hahaha... U can really tahan bombard!
Even Peangites so teruk also U can tahan.
Ok. I will go see you RM37 I will pay!

August 2, 2011 at 2:24 PMkucing

Well, I myself is a seasoned property investor who has experienced through 2 property booms and bursts at around 1982-3 and 1996-7.

Early 2000s, I have heard of only Renesial Leong & Milan Doshi as property investment talkers. Nowadays I almost lose count of number of property talkers/trainers etc or even investment clubs on offer in the market !!

No offend to this "cool" Micheal Tan, maybe he has a better ideas, knowledges and innovative plans then others ? ? Or his teaching method is better than others ?

Well, Micheal, sorry for trying to break your rice bowl unintentionally by talking cock myself here... or maybe not his rice bowl (as he might not need this to earn a living) but rather his durian bowl (earn some pocket money for durian ?) LOL....

Just go and share what you think is right for the proeprty investing newbies !! Hope lives can be saved from there !

August 7, 2011 at 9:34 PMLauZhi

I really doubt of this mai kai tan(Sell Chicken Egg)!! I m from KL, I have been hearing his kaki busuk(s) everyday, such as:

1. A self claim property guru who has no investment experience
2. Use charity to attract people to join his seminar but money go in into his pocket
3. Trying to JV with more reputable property sifu but later kick the sifu out of picture
4. Very un-professional to his JV partner
5. Never pay his supplier for work done.....etc..

I also not sure why this idiot can attract your attention ....

Be-careful, he is the industry spoiler like Kishore in forex trading previously ...

August 14, 2011 at 12:02 PMI am who I am

It was a "GREAT" class...
I learn "how to make no money down for property", make it clear, just the statement but not real how. The whole class never disclose anything but only shout on "I". Most funny thing is when people asked on which area of the property that his student shared just invested, answer is cannot tell?!! WTF?
It was just a class that promote you to attend another class which is higher fee.
I am not only waste my RM 37 but also wasting my time to hearing all "how" (only the words how)
I am not here to offend him but pls share more thing which is more convincing in the preview class so that more people willing to join.
I believe not only I myself have such feeling. Pls share more all the penangnites who have attended the class. Against, not to offend him but let more ppl and also let him know preview class had to be shared and disclose more thing.

August 14, 2011 at 11:39 PMcas

Can't agree more with the above statement.
He spent 2 hrs talking about the formula, then the next 2 hrs, damn, is selling his RM6.8k class (which he offered at RM3.9k as a "promotion")

Entire class is just asking ppl to say "I", and do the high five with the neighbour sitting next to you, WTF.

I don't mind spending RM37 if he has more sharing, in this class, you pay RM37 to only find out how much asset you need (with 8% rental return) in order to be financially freedom. All these formulas can be found in many books...don't waste your money next time.

August 15, 2011 at 1:41 AMObserver

Dear CAS
I had hinted you not to expect too much (comments in the other article "Fundamentals to property investment")
You paid RM 37 and I didn't pay anything (provided with free food) also geeting the same answers. Thinks twice & ask yourself "should they waste their time" if their approaches are so effective, somemore no money down. Dr Clement Chiang used to appear in the papers to lure students for his so called gauranteed return investment approach but now you can't see him in the paper anymore.

October 17, 2011 at 12:25 AMRafael

Michael Tan has been busted in a vending machine scam biz.

There are evidences he is involved from below penang apartment forum.

Please judge yourself

October 24, 2011 at 12:05 PMSK

Yes, let's judge for ourselves. If we're after the truth, good, let's go all the way, hear from the guy himself too.

So here's what Michael Tan says in his blog about the matter, at:

So what's your conclusion?