Is buying private property a good investment?

chienwei

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I know it is a generic question, but if you buy maybe a small condo for rental and hopefully can sell years later at a higher price, is it a good investment?

I am trying to compare between property and stock index funds.

any advice?

my info:
male in mid thirties, live with parents.
never bought any property before.

can only afford 1 property, will need loan, unless borrow from family.

Update on 5 Mar: Thanks ervino for the links. I understand better now. Will look at the other threads more and do some research.
Thanks all for sharing your thoughts!
 
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SBC

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Yes, in general. Not so if you need to pay ABSD.

Generic answer with generic question.
 

JuniorLion

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Freehold? Leasehold?
Resale?

The risks are higher than ETF but of course, rewards are higher. You need to do your due diligence.

With stocks, you can average down or cut losses, unless you are buying on margin.

You have many chances in stocks, but just one in property. Unless you can afford several.
 

xtwis7

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In my opinion, properties nowadays aren’t as lucrative as they used to be. But that was also when every Aunty Uncle was also flipping them which caused prices to rocket.

You got to factor in a lot of variables when it comes to rental:

1) Taxes
2) Maintenance
3) Luck of finding a good tenant
4) Liquidity of your assets
 

crimsontactics

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Nope.

My dad only made 100k from a 1m condo in 5 year.

Compounded ror less than 2% pa.

You can easily find investment which pays out at least 2% each year.

Sent from . using GAGT
 

AMD_FREAK

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My dream was to save up and buy a 2nd property. But looking at the prices and ability to rent it out (after factoring in maintenance fees), I find that the yield not worth it. Given that I still have existing mortgage, I need to fork out 40% downpayment for my 2nd property. Equities are more worth investing in my opinion, requiring lesser startup money, and I can diversify to spread my risk. Too much $ lock up in property, lesser flexibility if I want to cash out to invest in other places.

The only exception is, if there is GFC, then I might buy my 2nd property. But then again, if I can buy good SG blue chips at low price that consistently gives good dividend yield, I might also forgo my 2nd property plan :D
 

BBCWatcher

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With respect to real estate in Singapore specifically, the government has made itself perfectly clear that it will not tolerate anything resembling a real estate bubble. So your upside potential is strictly limited. Many other potential investments do not share that characteristic.

Which is not to say that I’m opposed to all real estate investing, but in my view it shouldn’t be any more than 20% of your total investment portfolio. Bear in mind that plenty of SGX listed stocks are actually real estate investments — CapitaLand, for example — so when calculating your real estate exposure you should take that fact into account. (There are other stock markets with real estate listings, but the SGX is pretty heavily real estate weighted.)
 

SBC

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My dream was to save up and buy a 2nd property. But looking at the prices and ability to rent it out (after factoring in maintenance fees), I find that the yield not worth it. Given that I still have existing mortgage, I need to fork out 40% downpayment for my 2nd property. Equities are more worth investing in my opinion, requiring lesser startup money, and I can diversify to spread my risk. Too much $ lock up in property, lesser flexibility if I want to cash out to invest in other places.

The only exception is, if there is GFC, then I might buy my 2nd property. But then again, if I can buy good SG blue chips at low price that consistently gives good dividend yield, I might also forgo my 2nd property plan :D

What’s your current property? And it’s value?

Did you consider to loan this loan to get 80% LTV for the 2nd property?
 

cscs3

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I think recently channel 8 one finacial show interview say all.
If you are think to use it as investment, you may find return is disappointed due to all time low renting return.

Not to forget interest rate is on the raise.
 

chienwei

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What’s your current property? And it’s value?

Did you consider to loan this loan to get 80% LTV for the 2nd property?
i dun own any property, living in parents' flat....

sorry, will update my info in first post later

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chienwei

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Nope.

My dad only made 100k from a 1m condo in 5 year.

Compounded ror less than 2% pa.

You can easily find investment which pays out at least 2% each year.

Sent from . using GAGT
this 100k includes revenue/costs from renting?

Sent from Xiaomi REDMI NOTE 4 using GAGT
 

chienwei

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With respect to real estate in Singapore specifically, the government has made itself perfectly clear that it will not tolerate anything resembling a real estate bubble. So your upside potential is strictly limited. Many other potential investments do not share that characteristic.

Which is not to say that I’m opposed to all real estate investing, but in my view it shouldn’t be any more than 20% of your total investment portfolio. Bear in mind that plenty of SGX listed stocks are actually real estate investments — CapitaLand, for example — so when calculating your real estate exposure you should take that fact into account. (There are other stock markets with real estate listings, but the SGX is pretty heavily real estate weighted.)
yes, i am also concerned that buying property for investment will be more than 20%....
in fact its more than 100% of my networth cos i need to go in debt to buy it

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chienwei

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My dream was to save up and buy a 2nd property. But looking at the prices and ability to rent it out (after factoring in maintenance fees), I find that the yield not worth it. Given that I still have existing mortgage, I need to fork out 40% downpayment for my 2nd property. Equities are more worth investing in my opinion, requiring lesser startup money, and I can diversify to spread my risk. Too much $ lock up in property, lesser flexibility if I want to cash out to invest in other places.

The only exception is, if there is GFC, then I might buy my 2nd property. But then again, if I can buy good SG blue chips at low price that consistently gives good dividend yield, I might also forgo my 2nd property plan :D
what is a GFC?

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JuniorLion

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yes, i am also concerned that buying property for investment will be more than 20%....
in fact its more than 100% of my networth cos i need to go in debt to buy it

Sent from Xiaomi REDMI NOTE 4 using GAGT

The days of 1970s-1980s-1990s are gone for prices to skyrocket now. All the measures are in place for that to happen. Even if the market continues to show signs of heating up once again, government will step in. What will happen if govt doesn't step in? Where will your children live in?

Look to stocks for your investments. Unless you have high risk appetite.
 

BBCWatcher

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yes, i am also concerned that buying property for investment will be more than 20%....
in fact its more than 100% of my networth cos i need to go in debt to buy it
I’m also not opposed to owner-occupied housing that’s fit for own purpose, for some years at least, and particularly when the government subsidizes you.
 

JuniorLion

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Indeed very few Singaporeans can become millionaires with stocks but properties .

There are blocks & blocks of newly minted millionaires recently after enbloc.

These guys bought their properties >10 years ago.

Also, unless you have sufficient funds to own 2 properties, enbloc means you have to buy another property to stay in or perhaps live underneath the bridge.
 

Mergui219067

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Someone said the same thing 10-20 years ago
and ended up would not afford even a OCR condo.

Your next EC will be be $1-1-1.2k psf soon.
More and more HDB will close deals at close to $1 million and above. :o

The days of 1970s-1980s-1990s are gone for prices to skyrocket now. All the measures are in place for that to happen. Even if the market continues to show signs of heating up once again, government will step in. What will happen if govt doesn't step in? Where will your children live in?

Look to stocks for your investments. Unless you have high risk appetite.
 
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