HWZ Forums

Login Register FAQ Mark Forums Read

Is this a good time to invest in properties?

Like Tree7Likes
Reply
 
LinkBack Thread Tools
Old 07-06-2018, 10:34 AM   #1
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
Is this a good time to invest in properties?

Reading through some threads and there is no shortage of people who accummulate substantial part of their wealth through buying and selling properties. Not saying people who trade properties regularly but ordinarily folks who in their lifetime, maybe, just buy and sell 1 or 2 properties and thatís a few hundred kís profits or millions that now form the bulk of their wealth.

So question, is it now a good time to buy or are prices too high? If you have cash on hand, is it better to wait for property prices to plunge? Will that happen? or do you think those days when one can make much by buying and selling properties are over?
martin is offline   Reply With Quote
Old 07-06-2018, 10:40 AM   #2
High Supremacy Member
 
Perisher's Avatar
 
Join Date: Jan 2015
Posts: 40,199
I think if a big amount of flats reaches 60 years and no SERS for them, price will plunge.
And if flats hit 99 and taken back at $0 value, price would plunge further.

So if you are waiting, still got a few decade.
__________________
Perisher is offline   Reply With Quote
Old 07-06-2018, 11:04 AM   #3
Member
 
Join Date: Dec 2009
Posts: 402
from 4-5 years ago people are already asking this question...
kiatme is offline   Reply With Quote
Old 07-06-2018, 11:11 AM   #4
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
from 4-5 years ago people are already asking this question...
And the answer was?
martin is offline   Reply With Quote
Old 07-06-2018, 11:30 AM   #5
Master Member
 
Join Date: Jun 2010
Posts: 4,329
Reading through some threads and there is no shortage of people who accummulate substantial part of their wealth through buying and selling properties.
OK, but that's like looking around and observing that there's no shortage of people who accumulate(d) a substantial part of their wealth through working and earning a paycheck. Most Singaporean adults work, and likewise most Singaporean adults live in owner-occupied homes. There's also no shortage of people who invest in university educations and become wealthier as a consequence.

These are not particularly interesting observations, and they don't really help you figure out whether real estate specifically will be the best performing investment sector going forward. However, for the record, real estate has not been anywhere near the best performing sector over the past several decades. The healthcare and technology sectors, as notable examples, have performed much better. The world's most valuable publicly traded private company is not a real estate company: it's Apple. Last I checked, literally none of the world's wealthiest people made their fortunes in real estate. You have to dig pretty far down on the list before you find a real estate tycoon. (You also have to dig very far down the list before you find a Singaporean. Hmmmm....)

So question, is it now a good time to buy or are prices too high?
How's your crystal ball working?

Look, I don't have any problem with owner-occupied housing. The government is still building new HDB units and offering attractive 99 year leaseholds, and sometimes you can get nice subsidies to buy them. Mortgage rates are still pretty good. There ain't nothing wrong with all that, as long as you don't overextend yourself.

There are many, many people who find it very difficult to save regularly and to invest prudently. It turns out that if you save early, regularly, and invest over the long-term in something even fairly mediocre (high cost, for example), you can become quite wealthy in absolute terms. Many people find it difficult to do that unless they "straightjacket" themselves in the sense of having a highly illiquid/difficult to trade asset (a home) with no instant price quotations and squiggly lines available on a smartphone (and no endless hours to fill with mindless banter on CNBC), and a mortgage (i.e. bank-enforced savings). HDB doesn't even allow selling a BTO unit within the first 5 years, and that's really illiquid.

Moreover, if you're a long-term investor and buying stocks (for example), it would be very hard indeed not to have some real estate exposure in your stock investments. From a sector point of view, in any reasonably diversified stock portfolio, you're going to have some real estate in there. That's particularly true of the Straits Times Index, which includes several listings that are unambiguously pure play real estate companies. So there's absolutely no danger you're going to have zero real estate in your investment portfolio, assuming you have a diversified portfolio (globally to at least some substantial degree, I'd recommend). But you'll also have lots of other sectors, too.

If you're the sort of person who has the discipline to save early, regularly, and invest over the long-term prudently, then do that and don't worry about picking particular horses (sectors). And get your one owner-occupied home well within your means, particularly if the government is in a generous mood and handing you some free money to do it. If you're not that sort of person -- and there are many people who are not -- then maybe you ought to concentrate on what are probably more mediocre performing investments that effectively enforce savings and investment discipline on you.

Make sense?
iCubes likes this.

Last edited by BBCWatcher; 07-06-2018 at 11:39 AM..
BBCWatcher is offline   Reply With Quote
Old 07-06-2018, 11:49 AM   #6
Member
 
Join Date: Dec 2009
Posts: 402
And the answer was?
https://www.google.com/search?tbs=cd....0.sfhTTQGNikk

just do a google search like this, filter the date to custom range, from 2011 or something to 2015 : site:https://forums.hardwarezone.com.sg/h...homemakers-74/ condo
(not sure if the link i posted above works, if not ownself go google search)

some old links
https://forums.hardwarezone.com.sg/h...w-3979205.html

https://forums.hardwarezone.com.sg/h...4088719-3.html

https://forums.hardwarezone.com.sg/h...b-3754960.html

people always ask this question, from 5 years ago, 10 years ago, every year everyday people complain private property is expensive, waiting for market to crash, its up to you to judge.

Even during bad times there will be good property to buy, it is up to you to judge, if you do not own any properties at all, it would be best to at least own one in my opinion, for investment or for rainy days, at least you will have a roof at the end of the day rather than renting, like most would suggest, just don't dump everything into one basket :S
kiatme is offline   Reply With Quote
Old 07-06-2018, 12:15 PM   #7
High Supremacy Member
 
Perisher's Avatar
 
Join Date: Jan 2015
Posts: 40,199
TS got HDB? Start with BTO lor, that one is hard to lose money.
__________________
Perisher is offline   Reply With Quote
Old 07-06-2018, 12:47 PM   #8
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
@BBCW, i consider myself the average simple hardworking guy who accumulates my little wealth (embarassed to call it wealth, just savings) from employment. I have never thought of buying and selling properties to make money before. Into my 50s, i have only bought 2 properties, first one like most regular guy, a hdb, sold after 15 years of staying and bought a condo, now also into 15 years of staying. Being quite simple-minded, i have put in as much as i can into cpf, into ssb, sometimes fixed d, some reits (for the distributions and not capital gains) and also buying sti etf. Sadly, my other equities investment, just have not performed well. Which led me to to wonder, why not buy a small condo, and then sell later to make profit? But i keep wondering, is it that simple? So besides those listed above, namely, cpf, ssb, fd, reits and etf, just not sure what else. Oh, have also bought some savings plans from insurers too.
martin is offline   Reply With Quote
Old 07-06-2018, 12:48 PM   #9
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
https://www.google.com/search?tbs=cd....0.sfhTTQGNikk

just do a google search like this, filter the date to custom range, from 2011 or something to 2015 : site:https://forums.hardwarezone.com.sg/h...homemakers-74/ condo
(not sure if the link i posted above works, if not ownself go google search)

some old links
https://forums.hardwarezone.com.sg/h...w-3979205.html

https://forums.hardwarezone.com.sg/h...4088719-3.html

https://forums.hardwarezone.com.sg/h...b-3754960.html

people always ask this question, from 5 years ago, 10 years ago, every year everyday people complain private property is expensive, waiting for market to crash, its up to you to judge.

Even during bad times there will be good property to buy, it is up to you to judge, if you do not own any properties at all, it would be best to at least own one in my opinion, for investment or for rainy days, at least you will have a roof at the end of the day rather than renting, like most would suggest, just don't dump everything into one basket :S
Thanks. Will read those.
martin is offline   Reply With Quote
Old 07-06-2018, 12:49 PM   #10
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
TS got HDB? Start with BTO lor, that one is hard to lose money.
Done that already. Now old man liao.
martin is offline   Reply With Quote
Old 07-06-2018, 01:42 PM   #11
Member
 
Join Date: Dec 2009
Posts: 402
so you are looking to invest in a second property ?
maybe some investment guru would like to discuss more on this
But for me, if i'm at 50+, i wouldn't be thinking of investing into a second property - it would mean most likely i'll be getting a bank loan and have to slave it out till i'm 65, plus property is illiquid, given the market now where new launches are from 6xx onwards, you will probably need to hold at least 3-5 years before you see any results.

if i have enough cash to borrow just a minimal sum for second property, i would put my money somewhere else and use the bulk of it for retirement instead

some things i would do would be : (if my flat is under 2 names, wife and myself), i will sell the flat and buy another under my own name, and get my spouse to buy another one, to hold till hold (to avoid ABSD), and for capital gain/rental yields, then will it to my kids
kiatme is offline   Reply With Quote
Old 07-06-2018, 01:51 PM   #12
Master Member
 
Join Date: Jun 2010
Posts: 4,329
Into my 50s....
This part is important. So, your retirement savings time horizon is (let's suppose) about 12 years. "Medium term."

i have only bought 2 properties, first one like most regular guy, a hdb, sold after 15 years of staying and bought a condo, now also into 15 years of staying.
That's one more than most people.

Being quite simple-minded, i have put in as much as i can into cpf, into ssb, sometimes fixed d, some reits (for the distributions and not capital gains) and also buying sti etf.
One observation: you invested 100% onshore in Singapore in heavily Singapore dollar-correlated investments. Over the roughly 30 years when you saved/invested, Singapore did only "OK." In those years there were two financial crises that greatly affected Singapore: the Asian Financial Crisis and the Global Financial Crisis. The SARS crisis was not helpful either. I don't know if you just mindlessly put $X/month into a low cost STI fund (pretty good) or tried to time the markets across those years (not good), but it sounds like the latter.

So what now? Read on....

Which led me to to wonder, why not buy a small condo, and then sell later to make profit? But i keep wondering, is it that simple?
No, I'm afraid it's not simple.

So besides those listed above, namely, cpf, ssb, fd, reits and etf, just not sure what else. Oh, have also bought some savings plans from insurers too.
Eek. I'm not a fan of those savings plans, with the possible and rare exceptions of the ~3 year simple fixed deposit-like endowment plans that insurance companies occasionally and briefly open.

OK, first of all, if you've got all that, you're most probably doing better than most at age 50-something. So congratulations, you've made it this far.

What now? Well, you've got roughly 12 years before retirement, I assume. If you're not 55 yet, the next big decision(s) will be CPF-related. Here's what I'd do:

(a) If your Special Account is below the Full Retirement Sum, then top it up one last time for tax relief ($7,000), then fill your Special Account to the FRS using an OA to SA transfer.

(b) Same thing for your spouse/partner, assuming she's/he's of similar age. If non-working/limited income, you can make the $7,000 deposit for tax relief.

(c) Seriously consider ERS-level RA top-ups on your 55th birthdays. (See below.)

(d) You've obviously got plenty of Singapore real estate exposure because you own a condo, hold REITs (heavily Singapore-focused, I assume), and hold a STI ETF (which is perhaps the world's most real estate-heavy stock index). So you're not in any danger of missing out on a fabulous bull market for real estate over the next 12+ years with your current holdings. Yes, I'm being slightly sarcastic. ("Doc, I'm not feeling well. This afternoon I drank 7 beers. Should I drink an 8th to feel better?" )

You've been heavily into real estate all along, are still heavily into real estate (in Singapore), and you're wondering why you're not even wealthier. Is that at least roughly correct?

Now, I wouldn't make any sudden adjustments, but I would do a bit of fine tuning. As you approach retirement years you'll want to gradually, progressively, ease out of the riskier parts of your portfolio into something that's safer (but also lower yielding, I'm afraid -- this'll be a somewhat delicate balance). And I think you're too over-exposed to Singapore at present (do you plan to retire in Singapore?), although the rest of the world is a little expensive right now. So I think I'd do these things to rebalance a bit:

(d1) Over the next 7 years, starting with next month (July, issue code NX16100F), make some annual purchases of the 7 year Singapore government bond. You could also buy the 10 year bond annually, for the next 10 years. There's a slight chance the 10 year will come to auction this October in a reopen, but more likely you'll have to wait until next year for that one. That'll build what's called a "bond ladder" of medium-term bonds. Then keep recycling these bonds. And since you'll be easing into this over the next 11 years, it'll be a gradual move as you glide closer to retirement. These bonds will pay coupons, and as each bond matures (in retirement) you can decide whether you want to use the proceeds for consumption or reinvestment. You can buy as little as $1,000 face value per bond, and it's free to buy them and to hold them to maturity.

This approach basically replicates the popular A35 bond fund, but you avoid the management fees and have guaranteed principal (if you hold your bonds to maturity) in exchange for less liquidity, which I think is a very reasonable trade in these circumstances. But A35 is OK, although I like SSBs better if you haven't hit your $100K/person yet.

So, let's suppose you want to end up with $34,000 of government bonds (face value) after 10 years. (You'll see why I picked that number in a moment.) What'd you do is buy $2,000 worth (face value) of the 7 year bond every year for 7 years, total = $14,000. Then you'd also buy $2,000 worth of the 10 year bond every year for the next 10 years, total = $20,000. That gets you to $34,000 worth of bonds (grand total), on a face value basis, and you can keep cycling those bonds through annually as each new bond auction comes up, if you wish.

You don't have to do it exactly this way, and you don't have to be too precise, but that's the basic idea how you can end up with a portfolio of medium term government bonds. Place only non-competitive bids on (but not too much before) the bank's (not the government's) deadline day for orders.

(d2) Assuming your Medisave balances have reached the Basic Healthcare Sum -- if they haven't, you may be able to top them up for tax relief -- starting from (and near) age 55 you can use CPF like a weirdly high yielding piggybank/on demand savings account. You each have a CPF Annual Limit of $37,740. If you're working and hitting the limit, you're done for the year -- the compulsory contributions fill that limit. But if you're not hitting the annual limit, or when you stop working and don't have any compulsory contributions, you can make a voluntary "all three account" top-up using CPF Form VC/1 or its electronic equivalent. When you do that, the funds go into your OA, MA, and SA according to normal allocation rules. These VC/1 funds will earn a blended OA+SA interest rate that'll be something like 2.7%/year. (The exact blended rate will depend on your age and how much, if any, of this contribution ends up refilling Medisave.) And funds can be withdrawn any time you wish, except for the portion that refills Medisave (which can be withdrawn only for qualified medical spending, including base Integrated Shield and MediShield Life premiums).

This is a cute little CPF trick as you approach age 55, and ~2.7% risk free is obviously quite good. The only catch is that you're limited to $37,740/year per person of deposits into this strange on demand savings account.

(d3) Consider a little bit of low cost global stock index fund (e.g. IWDA) and possibly a global investment grade corporate bond fund (e.g. CORP). But gradually, easing into that, over years, with monthly or bimonthly purchases depending on how the commissions work. That'll gradually increase your current ex-Singapore exposure from today's approximately zero to something above zero, and it'll gradually decrease your real estate sector-specific exposure. In other words, it'll defend you somewhat against "black swan" events involving Singapore and/or real estate, and that's worth doing all by itself, even if it's not wildly profitable in the end (although it could be). How much? If you're retiring in Singapore and have CPF LIFE and government bonds and bond-like wealth well nailed down, as above, I think you can safely increase the global part to about 20% of total household net worth. I don't think I'd go much past that. The "rule of thumb" when you land in retirement -- let's suppose by age 65 -- is that you should be about 70% bonds (and bond-like) and 30% stocks, and that'd support a lifetime of retirement income well.

(e) In my view CPF LIFE works best if you wait until age 70 to start payouts and choose the Escalating Plan. That approach maximizes the longevity insurance attributes of CPF LIFE, and that's its highest best use, in my view. So you should try to plan for bridging to that income stream in that way. And if that can be ERS-level CPF LIFE on your 55th birthday, even better.

How does all that look?
BBCWatcher is offline   Reply With Quote
Old 07-06-2018, 01:55 PM   #13
Member
 
Join Date: Aug 2010
Posts: 225
sometimes luck plays a part as well in property investments.
r-federer is offline   Reply With Quote
Old 07-06-2018, 02:08 PM   #14
Arch-Supremacy Member
 
Join Date: Jun 2000
Posts: 16,871
And the answer was?
Is all words of mount from those estate agent. All 99 years flat or cond is the same. Different is you buy high or low. And if you use loan to support your investment, by factor in all the Misc expenses, loan interest. You may find in long run, you returned may be around 3 to less then 5%. Then why take the the risk to invest on something that hold up your big sum of money?

Self stay is a different story.
For Malaysia, you have to factor in political situation too. New government can invalidate contract signed by previous government, then you should expact government policy can be changed anytime too.

Last edited by cscs3; 07-06-2018 at 02:10 PM..
cscs3 is offline   Reply With Quote
Old 07-06-2018, 04:02 PM   #15
Senior Member
 
Join Date: Sep 2008
Posts: 1,212
Here is what is bugging me.

If assuming i have $1m now placed in the various instruments i listed above, ie, cpf, ssb, reits, etf, fixed d, savings plans, etc. If i liquidate these and buy a small condo, I donít need to loan from banks, wouldnít rental yields already more or less match or triumph the above PLUS, and this is what I keep thinking, there is also the hope of good capital gains if property prices go up?
martin is offline   Reply With Quote
Reply
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Terms of Service for more information.


Thread Tools

Posting Rules

Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are On