Buy Property?

[bigwalabig]

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[focus1974]

Rule 1) Never redeem your loan...
Rule 2) Set aside 1yr installment payment as reserve
Rule 3) Buy another property since you are already familiar with it (timing to be decided by you).

 

[wahkao3]

if u ask me, i dont like property
iliquid and i need to manage it

for stocks, different story. so stocks for me

 

[SkatyBoy]

if u ask me, i dont like property
iliquid and i need to manage it

for stocks, different story. so stocks for me

So, REITs is suitable for you?

 

[arctician]

only pay it down if ur returns on investment cant offset costs of financing

eg.. i have 500k cash right now and 500k outstanding mortgage at 0.9% with cimb bank..do i pay it down? answer is no because i can park it in uob high yield at 1.68% and earn on the arbitrage. If you are taking a car loan at 2.88% or credit card loan at 26%..then of coz e answer is clear

 

[Shiny Things]

Another thread prompted me to start this post so here I will go.

I am not sure which path to go and any advice will be greatly appreciated. I am 30 this year and own 2 commercial properties generating rental income. My loans is about 460k and I have another 150k of cash.

Should I invest this 150k in equities, another property, etc or should I redeem one of my loans?

I have no dependents and am still living with parents.

Thanks!

Probably depends on the interest rates you're paying on the loans. If either of them isn't being fully covered by the rental income on the property, then you should pay that one down so that it's not leaving you negatively geared.

Otherwise, like focus1974 said, keep one or two years' instalment payments in a cash reserve and then find something else to do with the rest of the cash. I say stocks and bonds; you might say "more properties".

 

[wahkao3]

So, REITs is suitable for you?

i like reits but so does everyone else
when everyone likes them, i think i will pass

wait till nobody likes them, then i chiong in to buy

 

[wahkao3]

only pay it down if ur returns on investment cant offset costs of financing

eg.. i have 500k cash right now and 500k outstanding mortgage at 0.9% with cimb bank..do i pay it down? answer is no because i can park it in uob high yield at 1.68% and earn on the arbitrage. If you are taking a car loan at 2.88% or credit card loan at 26%..then of coz e answer is clear

omg how they give u 0.9%

 

[arctician]

omg how they give u 0.9%

its hypothetical example la..but i checked with them recently n they are really offering 0.9% for first year..1.7% for 2nd

 

[bigwalabig]

Thanks everyone! My Interest rate is between 1.65% to 2%. Commercial property loan rates are way higher then residential and alot of banks do not loan to individuals buying commercial.

I'm also thinking of putting more into equities but am torn since real estate prices are coming down fast.

Current holding AIMS AMP, Raffles Medical and Neratel.

Aims has been providing good dividend income.

Another issue I was facing is my loan is split into 150k and 300k. I need to pay repricing of about $600 every 2 years. Didn't feel was worth for the 150k loan since the quantum is small.

 

[djchris]

To be honest, you should keep doing what you are good at. If buying properties is what you are good at, why jump into equities?

 

[bigwalabig]

Thanks! I guess its for properties, the capital outlay is huge and the yields are low. Hence considering other investments as well

To be honest, you should keep doing what you are good at. If buying properties is what you are good at, why jump into equities?

 

[focus1974]

Another issue I was facing is my loan is split into 150k and 300k. I need to pay repricing of about $600 every 2 years. Didn't feel was worth for the 150k loan since the quantum is small.

Yes, when your loan quantum is too small .. it might be beneficial to you to pay down the loan as it is harding to refinance or reprice at favourable rates.

I would guess $150k one should be paid off soon and not drag on .. if not they might be charging you a big spread coz they know no other bank want to take that in.

 

[wahkao3]

its hypothetical example la..but i checked with them recently n they are really offering 0.9% for first year..1.7% for 2nd

Then can just take first year and pay back on 2nd year? cannot right?
whats the effective annual rate?

 

[Perisher]

whats the effective annual rate?

If not wrong, first few years is fixed at a low rate, then becomes floating for bank loans.
HDB loans, the interest rate loan is 0.1% above the current CPF rate.

 

[arctician]

Then can just take first year and pay back on 2nd year? cannot right?
whats the effective annual rate?

its a 2 year lock in fixed loan..u can do partial prepayment with 1 month advance notice anytime throughout the 2 year period

my plan is to ride on fixed rate of 0.9% for 1st year..then 2nd year paid it down

so ur effective rate <1%..meanwhile park in ocbc bonus saver plus or buy short term preference shares enjoy the arbitrage

 

[bigwalabig]

thanks guys, i will redeem the smaller loan

 

[wintersonata1234]

My friend ard 60 years old just shared with me, he is currently paying about 4% interest on his housing loan as he cant refinance...really? so scary...I though rate is now only ard 2% topside.

 

[bigwalabig]

My friend ard 60 years old just shared with me, he is currently paying about 4% interest on his housing loan as he cant refinance...really? so scary...I though rate is now only ard 2% topside.

Oh, How come he can't refinance?

 

[djchris]

Maybe his remaining loan amount is too low or he's too old?