How Hard Is It To Profit Off Rental Properties?

By Dr. Patrick Liew, Multi Award-Winning Entrepreneur (Guest Writer)
Date: 25 July 2020

To generate stable, secure and sustainable profits from rental properties, remember four key criteria using the acronym – GEMS.

First, G stands for Growth Area.

What’s a growth area?

This is an area whereby the government has invested billions of dollars to build, for example, a new township, business district, high-tech center, technological hub, major train station, and other major developments.

The government would have to invest resources to clear the land, improve the infrastructure, develop amenities and facilities, and establish an ecosystem of support and services.

The private sector has also poured billions of dollars into the area, for example, building shopping malls, industrial parks, and recreational and leisure facilities.

As a result of these billions of dollars’ worth of investments, the price, value and profit potential of properties in that area soared.

I target growth areas where the supply is limited and the demand is growing strong.

Case in point, I was among the first to buy three condo units at the Marina Bay Area.

Billions have been spent to turn the area into the next Central Business District as well as banking and financial hub.

I bought the units cheap.

And with inner city living as a trend, I was able to rent out the condos and fetch great rents.

I can share with you many more of such examples.

Second, E stands for Existing Tenant.

Most of my properties have either a credible tenant in place or a tenant who is moving in.

For example, I bought a property that was directly opposite a new campus of a prominent university.

The university was located close to the city.

There weren’t enough properties around the university.

I was able to have ongoing rents from either the students or the executives working in the city.

And over the years, the rents have been growing in conjunction with the growth of the university and city.

Consequently, the rents not only serviced my bank mortgages, there are money coming into my pocket – month to month and year to year. Forever.

If I have time, I can share with you many more of such examples.

Third, M stands for Market Demand.

In every city and country, there will be areas where there are always a strong demand from buyers and tenants – even during a crisis.

Let me give you an example.

During the global economic crisis, the economy took a nosedive.

Property market crashed.

I flew to New York, the epicenter of the crisis.

Property prices were tumbling everywhere.

But you know what?

I found five areas where prices and rents were still going up.

This news was reported by the National Association of Realtors.

You can google and search for news of such evergreen properties. Their prices were still increasing during a crisis.

After the crisis, owners of these properties made millions of dollars.

Let me share with you an example.

During the SARS crisis, I bought a property in one of the hottest parts of Orchard Road and right in the heart of the business district and shopping belt.

If I tell you the purchase price, you’ll fall off the chair.

Let’s just say it’s the price of a low-end condo unit.

Absolutely no problem getting rents.

I can show you many of such properties and prove to you why even during a crisis, the prices and rents will hold steady and even go up.

Fourth, S stands for Special Properties that cater to a niche market.

These properties are demand-driven properties and will enjoy growing demand and rents.

For example, after a particular government and private sector had invested billions of dollars to build a second CBD, I was among the first to buy a property there and at a cheap price.

I have a steady stream of potential tenants and the rents continue to increase.

Another example, a major company identified a hot area for serviced offices.

They rented our properties to cater to a special market and signed a long-term tenancy agreement with us.

By applying the GEMS model wisely, you can enjoy good and sustainable returns.