We present the case of John and his parents. John is an undergraduate student who has taken finance and investment classes that cover a range of asset-types, including real estate. During a family dinner, when discussing a module that John was taking in the university, Real Estate Investments and Finance, his parents divulged that they have made a real estate investment several years ago: a 3-bedroom freehold condominium unit in Johor, Malaysia.
Their decision to commit was based on 3 key factors:
1. They believe that real estate is a safe asset that will constantly grow in value. If held for long enough, the capital gains will return a hefty sum. Surely, real estate is a worthwhile investment with little downside risk.
2. They trusted their friend’s ‘hot tip’ and dived head first without weighing all the costs and benefits that the investment might bring. They assumed that if it