Is buying private property a good investment?

BBCWatcher

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Why buy when you can rent for so cheap.
That’s a great question. There are a few possible answers:

* If you want leverage (i.e. debt) that’s still fairly low cost, an owner-occupied home helps. Although so does a margin account at a broker, or amplified bets in futures/options markets, or some of both.

* If you simply want greater control over your home. For example, if you want to paint the walls pale green instead of white because you prefer green, you can.

* If the government is subsidizing your purchase — if the government is providing enough free money that helps tip the decision.

* If you want to reduce your CPF LIFE participation level for some strange reason.
 

JuniorLion

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I am just about to sign the rental agreement for a 5 room HDB flat in Lakeside area near MRT for $1800. I am the tenant. This is like 2008 level of rental, 10 year low. Why buy when you can rent for so cheap.

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Because you cannot guarantee the rent in 2020 would be the same as now.
 

starlight318

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I am just about to sign the rental agreement for a 5 room HDB flat in Lakeside area near MRT for $1800. I am the tenant. This is like 2008 level of rental, 10 year low. Why buy when you can rent for so cheap.

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Wow how come so cheap? Im assuming it's un-furnished? hows the condition of the flat?
 

Mergui219067

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Rent for 50 years.
If we assume your rental will stay about $2k :
$2000x12 months x 50 years = $1.2 million
And you get ZERO.

And the landlord thank you for their yearly Japan family holiday you provide & may sell it high too.

I am just about to sign the rental agreement for a 5 room HDB flat in Lakeside area near MRT for $1800. I am the tenant. This is like 2008 level of rental, 10 year low. Why buy when you can rent for so cheap.

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revhappy

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Wow how come so cheap? Im assuming it's un-furnished? hows the condition of the flat?
It is fully furnished and decent renovation. It is 1997 built so not that old also. The demand for rental has really come down. There are flats that remain vacant for months between tenancy. So tenants like me can call the shots in bringing down the rent.

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revhappy

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Rent for 50 years.
If we assume your rental will stay about $2k :
$2000x12 months x 50 years = $1.2 million
And you get ZERO.

And the landlord thank you for their yearly Japan family holiday you provide & may sell it high too.


Assuming, I don't like leverage. Assuming I need atleast 350K to buy the property outright. If I invest this 350k at conservative 5% returns pa, 350k becomes 4million in 50 years. So I don't mind losing 1.2million.


4cGlorWl.png


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hwmook

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Rent for 50 years.
If we assume your rental will stay about $2k :
$2000x12 months x 50 years = $1.2 million
And you get ZERO.

And the landlord thank you for their yearly Japan family holiday you provide & may sell it high too.



20 years old HDB rent for 50 years will have 29 years lease left. You think it's worth a lot at that time? You are actually selling away your lease every year you rent your place out.
 

revhappy

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Without getting too much into the details, assuming population is not growing exponentially, in a country with high property ownership, it makes sense to rent. In a country with low property ownership it makes sense to buy.

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Toni90

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Assuming, I don't like leverage. Assuming I need atleast 350K to buy the property outright. If I invest this 350k at conservative 5% returns pa, 350k becomes 4million in 50 years. So I don't mind losing 1.2million.


4cGlorWl.png


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They can collect your rental and invest too. Beat your return and still get the house.
 

Sinkie

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I am just about to sign the rental agreement for a 5 room HDB flat in Lakeside area near MRT for $1800. I am the tenant. This is like 2008 level of rental, 10 year low. Why buy when you can rent for so cheap.

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I know of people who owns a hdb and a condo but rent a hdb to stay with his family
 

revhappy

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They can collect your rental and invest too. Beat your return and still get the house.
Property upkeep costs money and it is a depreciating asset. It is only the land that has value and guess who the land belongs to? :)

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Sinkie

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Property upkeep costs money and it is a depreciating asset. It is only the land that has value and guess who the land belongs to? :)

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Omg another hwz rich daddy poor daddy spotted
 

Toni90

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Without getting too much into the details, assuming population is not growing exponentially, in a country with high property ownership, it makes sense to rent. In a country with low property ownership it makes sense to buy.

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In Singapore, tennants are those Ep/spass holders. Their property ownership is very very low. Also very little protection.
 

dork32

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Property is the best hedge against money printing (aka QE) and escalating inflation (stocks don't even come close)!

i did mention something like this before. some smart alec rebut me for it.
 

Mergui219067

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No bank loan as an assumption esp no reasonable good private properties can get for < $1 million ?
I doubt you have that.

Smart people do that & get better return in investing.
Assume the stock 5% return ?
Your landlord will be asking $2k for that 10 years ?
20 years later ? 30years later ?

Many Sinkies are collecting $1.5-7 millions from enbloc / property appreciation after 10-30 years of rental free stay .
And those like you would miss out.

Assuming, I don't like leverage. Assuming I need atleast 350K to buy the property outright. If I invest this 350k at conservative 5% returns pa, 350k becomes 4million in 50 years. So I don't mind losing 1.2million.


4cGlorWl.png


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BBCWatcher

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JuniorLion said:
Because you cannot guarantee the rent in 2020 would be the same as now.
You can negotiate that. Just sign a longer lease, or a lease with an option to renew at a particular not-to-exceed price. The disadvantage is that the rental rate could be lower in 2020.

Rent for 50 years.
If we assume your rental will stay about $2k :
$2000x12 months x 50 years = $1.2 million
And you get ZERO.
No, you get quite a lot: 50 years of a roof over your head with practically zero upfront capital and zero debt. That’s also over half a 99 year leasehold, the nicer half. (Nobody ever buys a HDB unit, really. “Buying” is merely prepayment of 99 years of rental, plus a minimum occupancy period.)

And the landlord thank you for their yearly Japan family holiday you provide & may sell it high too.
Or not.

It’s incredibly common for corporations, which are longer lived (or expect to be) than individuals, to rent their office and other commercial spaces. They do so for entirely sensible, rational reasons. There’s no automatically right or wrong answer here. However, when rents are low relative to purchase prices — as they certainly seem to be right now — renting is relatively more financially attractive than it was in the past. (Or, more precisely, typical 2 year leases versus 99 year leases.)
 

BBCWatcher

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Renting also means you can more easily do things such as:

* Get married, then move into a bigger home;

* Have a child, then move into a bigger home;

* Have a child about to start school, then move into a home closer to a desired school (with a space for your child);

* Work overseas for a while;

* Move into a smaller home when your child(ren) have grown up and left home;

* Retire, and move into another home in Singapore or overseas;

* Move into a home on a lower floor, or nearer an elevator, if a member of the household has mobility issues;

* Move away from noisy neighbors, a big multi-year construction project across the street, or any other nuisances.

* Always stay in newer units if you wish.

* Change jobs, and move closer to your new place of work for a shorter commute.

* Easily adjust to your employer’s location changes, and maintain your short commute.

* Move closer to a new and better supermarket that opens.

* Adjust to an expanding MRT network.

* Move closer to other new amenities that you like, such as a park, jogging trail, theater, or whatever.

* Stay closer to other family members as they move around.

All without significant transaction costs or other such difficulties. Renting offers many lifestyle advantages, actually.
 
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BBCWatcher

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Many landlords are ‘nice people’ you would ever met.
Most of them. But if not, renters can change landlords easily. Owners also have landlords (of common areas and such), but it’s harder and more expensive to change those landlords.

OMG , someone thinks house shifting is fun !
No, not fun, but wondering whether the next baby on the way will sleep in the bathroom or in the closet is not fun either. Wondering how you’ll manage a 45 minute longer commute each way to/from work is not fun. Etc.

There are definitely flexibility advantages in renting. I don’t think that point can even be debated seriously — it’s just a simple fact. How much you might value that greater flexibility is a separate question.
 

revhappy

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Renting also means you can more easily do things such as:

* Get married, then move into a bigger home;

* Have a child, then move into a bigger home;

* Have a child about to start school, then move into a home closer to a desired school (with a space for your child);

* Work overseas for a while;

* Move into a smaller home when your child(ren) have grown up and left home;

* Retire, and move into another home in Singapore or overseas;

* Move into a home on a lower floor, or nearer an elevator, if a member of the household has mobility issues;

* Move away from noisy neighbors, a big multi-year construction project across the street, or any other nuisances.

* Always stay in newer units if you wish.

* Change jobs, and move closer to your new place of work for a shorter commute.

* Easily adjust to your employer’s location changes, and maintain your short commute.

* Move closer to a new and better supermarket that opens.

* Adjust to an expanding MRT network.

* Move closer to other new amenities that you like, such as a park, jogging trail, theater, or whatever.

* Stay closer to other family members as they move around.

All without significant transaction costs or other such difficulties. Renting offers many lifestyle advantages, actually.
Exactly. I am moving from Tampines to Lakeside, because I chose school for my daughter there. My office is in the town, so my commute will be same but for my daughter it will be very close to her school.

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