Property Views

[laughingcat]

MMM:

Sharing my personal view on property.


We know of someone who owns around 6-7 property and rents it out. I heard some are on deferred payment scheme. I wondered if that is a really a money making thing to do as following are my considerations :
- 10% or 15% now ABSD
- cash outfront for new purchases
- lower loan quatum for subsequent property (cash outlay again)
- raising interest rate on bank loans
- property tax
- low rental as it's a still a tenant's market
- condo maintenance fee

With all these, I doubt that the 3.5-4K \"good\" rental is enough to cover the cost involved. So I wondered what is the motivation to purchase so many property and how can one make money from rental??? It doesn't make financial sense.

I had this conversation with him and he told me he is after capital gain. Which I agree if you enter the market at the right time, there is potential to make. But again, property is about location, location and location. For us, we will only go for freehold or 999 years. dh cannot bring himself to pay for 99 years.

MMM, you are right on. With those cost that you have listed out, the 3.5 - 4k rental cost is not enough to cover. Not forgetting when those contract ends and minor touch up needed. Yes, it just doesn't make financial sense especially with the new ruling as compared to those eons years when there is no restriction at all. Just the other days, I made a rough calculation for a friend and the earning per year is near to zero, when she totally forgot to factor in the possibility of rising interest cost. If solely used for investment purposes with no holding power, then it is not worthwhile. I rather used the money on other investment.

But if one looks at another perspective, it could be actually worthwhile investment - to keep the property for the children in later years. So might as well, continue with the rental and making sure that cost kept to minimum. It will still work out ok.

[lee_yl]

Estéema:

lee_yl:

I think making money from properties is all about entering the market at the correct time.

Next is location, location and location! Best is right next to any MRT (or perhaps, surrounded by good schools).

One must have the ability to hold until the next market upturn. Just collect rental in the meantime. In the long run, the property prices will more likely than not be higher than today’s pricing.

For me, if given a choice, I prefer FHs. FHs near MRT the best. I am no speculator and plan to hold for years.


.

Many only look at dollar value gains.

Don't forget there's interest on loans & compounded over the years can be hefty. If one depends on loan, also hv to be aware of rising interest & if hv no holding power, will be auction off by banks.

Need to compute lawyers' fee, property taxes, maintenance fees which raises over the years & condos may not be well managed & requires you to put in further funds into sinking fund for repairs & maintenance.

When buy for investment, one sells net abv expenses. When one buy as a home & cash out to buy ano will hv to pay similar high prices unless they downgrade e.g. fr condo to HDB.

Some may forget as we age, there'll be difficulties in maintaining loan interests esp when one looses their jobs & find it harder to keep up with a new economy with new eypmt changes.

Now we have a total of 3 FHs of which 2 are fully paid off, only left with the smallest unit still with a mortgage paying off using DH’s CPF. The investment units will serve as a source of passive income in years to come as part of our retirement planning. To me, property is always the best hedge against inflation.

I don’t touch shares anymore as I tend to get too greedy. 10 years ago, I once bought a promising company’s shares at 70cents, today it is only at around 17cents. Even though I have the holding power and a long investment horizon, I don’t think the share price of this company will ever recover.

Looking from a different perspective, I doubt if anyone ever bought a property worth $700K but only worth $170K, 10 years later. To me, the stock market is much more volatile and scarier than the property market.

Regarding rising interest rate, I guess people have been too used to pay near 0% for too long (hey, HDB loans are at 2.6%pa). DH told me the highest interest we ever paid on a mortgage was more than 5% interest and back then, people were still buying properties like nobody’s business!!

For rental units, there’s someone helping to pay your monthly mortgage, and you only need to top up a bit more and the house will be yours fully paid in years to come, so there’s no need to be overly worried.

Talking about maintenance, I nearly committed to a distressed sale last year, but the cluster’s monthly maintenance was more than $1K a month and a friend told me it’s a big no no, considering that maintenance would only increase over time and by the time we retire, $1K+ a month is a lot for retirees.

Who knows, in another decade, after our girls married off, we will rent out all our properties to collect rental and both DH and I will just rent a 3rm HDB flat to stay? Maybe 20years later, I will do a review here.

PS: Buyers please do your homework and be prudent and not be overstretched in your finances.

[lee_yl]

ngl2010:

We know of somebody that owns 15 properties. He was just a technician. Now he is full time managing his properties. He bought them when there was no ABSD, no TDSR, no SSD. Very savvy property investor.

The person who inspired me was a lady friend in her 20s then, around the same age as me, but already owned 2 FH properties. She led a thrifty lifestyle and only brought 2 slices of bread to office daily as lunch. Although I lost contact with her I always remember her words, “when we are young, we should save up and invest for retirement.”

[laughingcat]

WOW! lee_yl, 3 FH :udawoman:


These days, I only invest in overseas stock and the profit reap per year is more than the 1 local investment FH property.

[doodbug]

well done lee_yl!

we came into the SG property market a little late. we didn’t really know what to do after the hdb flat was paid for. invested in a couple of overseas units, and it was a huge learning experience. lots of risks and lots to learn.
in singapore, we ended up getting a small fh landed property on the thinking that should the day come that we lose jobs / retire / unable to service the mortgage of the house, we can sell the house, live in the hdb flat, and the equity will be part of our retirement funds. the later D-day comes, the more equity, i guess. it was between a fh landed or condo, and we think the capital appreciation may be a bit better with landed, at the time we were entering the market.

[MyPillow]

laughingcat:

WOW! lee_yl, 3 FH :udawoman:


These days, I only invest in overseas stock and the profit reap per year is more than the 1 local investment FH property.

the rent collected from the unit help to finance the FH condo - the condo is self financing in a way! at the end of the day, leeyl FH unit , is somehow considered \"FREE\" ( there are other maintenance cost n property taxes - but i think all these are negligible cost as she earn back a FH condo) this is quite a good plan for long term investment , can pass down to kids too,since its fh

[Estéema]

lee_yl,


You’re very well prepared for retirement with golden nest-eggs - not one hut 3. You bought yr 3 properties with 2 fully paid up eons ago. It’ll be diff for most man-in-street to profit or even try to keep their properties if they start buying only now.

Then Spore land has not been so well developed. Interest rates will be climbing fr almost zero & as u said it has room to hit 5%. Inflation not as high, supply of homes were less & easier to rent out for income.

Also do bear in mind as we keep properties for future generations, most Sporeans will not be passing on land, as best is FH owise increasingly will be 999yr or 99yr. Old properties need a lot of repairs, and not as attractive for tenants.

DH’s young colleague invest into a walk-up apt & imagine the high reqmt for maintenance & repairs. He didn’t get a tenant after more than a year. Then this foreigner (fr Austria) took advantage of the run down place & throw numerous complaints but each time contractors were arranged for rectification works for bathtub, facet or air-cond, tenant will hv all sort of excuses to avoid work being down. M’time he deviously skip paying rent (which is alr below mkt rate) exceeding 6 mths, before owner applied to court to evict the tenant. Although court rule in favour of owner, tenant always not ard to be evicted by bailiff.

Eventually, DH’s colleague didn’t evict him but the en bloc saved him fr the tenant.

So, many wld not hv anticipated complications & calculate purely on dollar value. Many things had changed & property investment today is not lucrative anymore.

Where else can Spore develop property w/o en bloc & bull-dozing landed properties to build up? These all drive costs further up, skyrocket high. Our future generations will find it hard to own properties & even if we pass on these props are alr older & need funds to maintain. If selling off, it’ll just be as costly to find replacement.

I certainly hope govt put in more measures to favour SC ownerships & more hindrances for foreign buyers.

Looking at Australia’s model in foreign land ownership, the locals still find it tough owning properties for themselves. Most go on rentals. Same with the US, when sub-prime kicked in, many cldnt hold on to their homes & gonon rentals but only in poor areas away fr expensive homes. Some frds thot they rush in to invest & got burnt coz they had to pour in lots of maintenance & managing fee but hard to find paying tenants & even found, had mths in-btwn rentals w/o rental income. They end up pouring more money till they had to cut their loses. It’s not just a Sporean phenomena.

[zac's mum]

Wah! So it seems DH and I are the only “suckers” here who have been overly prudent. Bought our HDB based on 1 person’s income (just in case 1 of us lost our job, or in case I needed to become a SAHM for my planned child).


Started our family and used our spare cash to pay for preschool expenses. Meantime fully paid up our HDB loan with CPF.

Now to avoid the ABSD, selling off the HDB so we can upgrade to an old condo with large space. With minimal loan.

Maybe majority don’t do things this way. But the recent cooling measures really helps us this demographic.

[cherrygal]

-deleted-

[MyPillow]

zac's mum:

Wah! So it seems DH and I are the only “suckers” here who have been overly prudent. Bought our HDB based on 1 person’s income (just in case 1 of us lost our job, or in case I needed to become a SAHM for my planned child).


Started our family and used our spare cash to pay for preschool expenses. Meantime fully paid up our HDB loan with CPF.

Now to avoid the ABSD, selling off the HDB so we can upgrade to an old condo with large space. With minimal loan.

Maybe majority don’t do things this way. But the recent cooling measures really helps us this demographic.

yes, I feel the new cooling measure help to block those anyhow investors, more benefits for first time upgrader . I started fr hdb flat too , 16yrs ago but was really cheap then. The best period to buy was 2005 to 2008 - condo was cheap - i was over prudent & missed good buys that time , thus miss earning $$$ ( i had frens who earned bet $400k to $800k - no absd, no seller stamp duty too )