HDB Fully paid up ?

[peacefulday]

The best time to consider a new private property is to wait for the reversal of ABSD.

By that time, property prices must be selling at some discounts.

Cooling measure is just to let the hot cake cool a bit and still can gradually up. The ABSD is a disguised 'win-win' tool to channel income into gahmen account. Further add or reversal of ABSD still one road up, still won't get cheap especially for the new launch PC.

 

[Mecisteus]

Cooling measure is just to let the hot cake cool a bit and still can gradually up. The ABSD is a disguised 'win-win' tool to channel income into gahmen account. Further add or reversal of ABSD still one road up, still won't get cheap especially for the new launch PC.

ABSD will reverse when financial crisis comes and property prices start crumbling.

You can choose to buy now but I always advise my friends to wait.

Buying a property is not like buying stocks whereby the latter you can choose to DCA or buy in small portion.

 

[peacefulday]

ABSD will reverse when financial crisis comes and property prices start crumbling.

You can choose to buy now but I always advise my friends to wait.

Buying a property is not like buying stocks whereby the latter you can choose to DCA or buy in small portion.

I am referring to those premium good location type, and my interest more to new launch. Mostly better value for longer years and can overcome crisis period. Invest in property is about location and its won't come cheap. Those unsold inventory cheap one will become even cheaper during hard hit time and if you are waiting for this group of course can wait.

 

[peacefulday]

I am conservative on hdb loan. My path 1st bto -> 2nd bto, opt to fully paid it. Don't always follow blindly on hearsay, use loan to invest unless you proved that you have their skills and knowledges.

 

[madtari]

That's what I'm doing. Managed to paid off my hdb loan within MOP. Ready to buy a 2nd one when the opportunity arises. Can take up to 80% loan since no outstanding loan and can use cpf to pay installment. Super affordable as long as I can make the downpayment.

don't listen to property agents.

best if you keep your fully paid HDB ..
and then save up to buy the 2nd private property.

 

[ceciltan]

Why invest in property when you can invest in reits with much lesser hassle.

Both can capital gain.
Reits dividend sure have, property might not be able to rent out.
Dividend no tax, rental income got tax.
Property need pay property tax, reits dun need.
You prob be paying mortgage loan for property.
Property got monthly fees to pay.
Now invest 2nd property need pay so much extra fee. ABSD, BSD, stamp duty, agent fee. Reits, if you hold forever, you only pay
one time brokerage fee.

Someone pls try to convince me why one should invest in property other than capital gain potential which Reits Also got.

 

[peacefulday]

I called these investments as diversified. Can owned a fixed deposits, a property, a ssd, a insurance, a stock in each market, a cpf SA, a gold, a oil, a currency, etc. Not easily achieve lol lol

You can have multiple stocks in a market, my view is a basket.

Why invest in property when you can invest in reits with much lesser hassle.

Both can capital gain.
Reits dividend sure have, property might not be able to rent out.
Dividend no tax, rental income got tax.
Property need pay property tax, reits dun need.
You prob be paying mortgage loan for property.
Property got monthly fees to pay.
Now invest 2nd property need pay so much extra fee. ABSD, BSD, stamp duty, agent fee. Reits, if you hold forever, you only pay
one time brokerage fee.

Someone pls try to convince me why one should invest in property other than capital gain potential which Reits Also got.

 

[wutawa]

Wah how come I got alot of rich friends that pay their house fully...lagi best they use cash pay all..did not even take loan

I paid fully using cpf and cash. No loans.

 

[madtari]

Leverage and low cost of borrowing are the 2 keywords. I don't need to convince you
Your own money, your own decisions.

EDIT: Let me supplement you with an example. Supposed you buy a 1mil condo and paid 200k, loan 800k. In a span of 3 years, lets assume the price to increased to say 1.2mil at 20% capital gain. Your investment ROI is actually 100% since your capital outlay is only 200k. Of course strictly speaking you need to minus off all fees n taxes in order to derive at the actual ROI.

Why invest in property when you can invest in reits with much lesser hassle.

Both can capital gain.
Reits dividend sure have, property might not be able to rent out.
Dividend no tax, rental income got tax.
Property need pay property tax, reits dun need.
You prob be paying mortgage loan for property.
Property got monthly fees to pay.
Now invest 2nd property need pay so much extra fee. ABSD, BSD, stamp duty, agent fee. Reits, if you hold forever, you only pay
one time brokerage fee.

Someone pls try to convince me why one should invest in property other than capital gain potential which Reits Also got.

 

[SBC]

don't listen to property agents.

best if you keep your fully paid HDB ..
and then save up to buy the 2nd private property.

Option 1:
- Keep HDB
- Buy private as 2nd property. Pay 12% ABSD

Option 2:
- Sell existing HDB
- couple single 2 separate properties.
- no need to pay ABSD

Which will couples choose these days?

 

[SBC]

Why invest in property when you can invest in reits with much lesser hassle.

Both can capital gain.
Reits dividend sure have, property might not be able to rent out.
Dividend no tax, rental income got tax.
Property need pay property tax, reits dun need.
You prob be paying mortgage loan for property.
Property got monthly fees to pay.
Now invest 2nd property need pay so much extra fee. ABSD, BSD, stamp duty, agent fee. Reits, if you hold forever, you only pay
one time brokerage fee.

Someone pls try to convince me why one should invest in property other than capital gain potential which Reits Also got.

Why not both? Haha

 

[focus1974]

Option 1:
- Keep HDB
- Buy private as 2nd property. Pay 12% ABSD

Option 2:
- Sell existing HDB
- couple single 2 separate properties.
- no need to pay ABSD

Which will couples choose these days?

U never mentioned.. take on more leverage and most actually have to downgrade the residence into smaller unit if they do not want to take on too much leverage(but still have to take more than if u keep HDB fullypaid)

 

[BBCWatcher]

Leverage and low cost of borrowing are the 2 keywords. I don't need to convince you
Your own money, your own decisions.

REITs borrow! There’s plenty of leverage! Ascendas, to pick an example, currently has S$4.4 billion of debt on its balance sheet.

There’s a difference, though: a REIT (or REIT index fund) shareholder is not personally liable for the mortgages. And that’s a good thing, in case you’re wondering.

 

[madtari]

I'm replying to ceciltan post on the difference in investing in a property vs buying reits. My leverage refers to individual investor. Although one can also borrow to invest in stocks, but the cost is much higher than mortgage (as it's considered as non-secured loan unlike mortgage).

REITs borrow! There’s plenty of leverage! Ascendas, to pick an example, currently has S$4.4 billion of debt on its balance sheet.

There’s a difference, though: a REIT (or REIT index fund) shareholder is not personally liable for the mortgages. And that’s a good thing, in case you’re wondering.

 

[Mecisteus]

I'm replying to ceciltan post on the difference in investing in a property vs buying reits. My leverage refers to individual investor. Although one can also borrow to invest in stocks, but the cost is much higher than mortgage (as it's considered as non-secured loan unlike mortgage).

What he meant is buying a property with leverage has the same effect as buying reits.

Reits is already a leveraged investment vehicle. If property managers don't leverage, the returns on reits will be very pathetic.

 

[focus1974]

What he meant is buying a property with leverage has the same effect as buying reits.

Reits is already a leveraged investment vehicle. If property managers don't leverage, the returns on reits will be very pathetic.

what madtari meant is ..there is a difference in the returns from your own leverage property versus an unleveraged reits.

one you buy with leverage, the other you buy unlevered.

 

[BBCWatcher]

what madtari meant is ..there is a difference in the returns from your own leverage property versus an unleveraged reits.

one you buy with leverage, the other you buy unlevered.

No, that’s incorrect.

If leverage influences returns, it influences returns. That’s whether the leverage is in the form of a mortgage with your name on it or in the form of REIT shares with the REIT’s name on the mortgage(s). Either way, you’re getting the returns of leverage, whatever they are. (The REIT is required by law to return at least 90% of returns to shareholders, something your spouse isn’t legally required to do. )

There’s a difference for you: you are not personally liable for mortgage debt when you own shares of REITs (individually or in index fund form). A missed or late mortgage payment has no impact on your credit score when you’re a REIT investor. This lack of personal credit liability is a good thing. Another good thing is that you can invest in REITs in much, much smaller increments — and far more easily — than you can in whole properties. Which aren’t whole properties anyway, at least not very often, because they’re whole buildings that are carved up into partitioned shoeboxes. It’s still a share, most often.

We’re not talking about borrowing to buy shares of REITs, which is also possible (“double leverage”). When you merely use cash to buy REIT or REIT fund shares, you’re still making highly leveraged bets on real estate. It’s the REIT doing that on your behalf, and whatever the returns to leverage are (if any), you fully participate.

There’s a tremendous amount of nonsense — or insert a stronger term here — that property agents spew. Add this nonsense about “leverage” to the pile of junk arguments.

 

[Mecisteus]

what madtari meant is ..there is a difference in the returns from your own leverage property versus an unleveraged reits.

one you buy with leverage, the other you buy unlevered.

Assuming there are 2 comparable properties A and B. Assume no transaction fee and tax.

1 tycoon buys property A with cash. 1 particular REIT owns property B with 100% equity. No other property held by this REIT.

Both properties will appreciate and depreciate at the same rate. Both REIT and tycoon will have comparable returns on their investment vehicle. Agree?

Now let's assume this tycoon uses 40% debt to buy property A and the REIT uses 40% debt to buy property B. Let's assume tenor and i/r on debt are the same.

Will it be sensible to think that both tycoon and REIT to experience the same rate of return too?

No reason why return of 1 vehicle can differ significantly from the other.

 

[madtari]

What he meant is buying a property with leverage has the same effect as buying reits.

Reits is already a leveraged investment vehicle. If property managers don't leverage, the returns on reits will be very pathetic.

I see! Thanks. I missed his point completely I guess.

Assuming there are 2 comparable properties A and B. Assume no transaction fee and tax.

1 tycoon buys property A with cash. 1 particular REIT owns property B with 100% equity. No other property held by this REIT.

Both properties will appreciate and depreciate at the same rate. Both REIT and tycoon will have comparable returns on their investment vehicle. Agree?

Now let's assume this tycoon uses 40% debt to buy property A and the REIT uses 40% debt to buy property B. Let's assume tenor and i/r on debt are the same.

Will it be sensible to think that both tycoon and REIT to experience the same rate of return too?

No reason why return of 1 vehicle can differ significantly from the other.

But you see... REIT has a gearing cap of 40%, individual real estate buyer can loan up to 80%. Although I don't have the data to back my statement, but I think it can be safe to assume for larger assets like mall, its capital gain will be harder to compete against residential property's gain?

 

[BBCWatcher]

MikeDirnt78 is exactly right.

Now let’s make this slightly more complicated. Let’s consider an individual buyer of a single (partitioned) condo. Here’s the typical pattern:

1. Spend some time saving up a down payment in a low yielding vehicle (SSBs, OA, etc.)

2. Take out a mortgage — let’s suppose this is 50% LTV.

3. Pay off the mortgage so that the leverage falls to zero. (Some even do this on an accelerated repayment basis.)

Step 2 is the only part that involves leverage, and in this example it’s a maximum of 50% and falls to zero leverage.

That’s not what REITs do, and by direct extension not what REIT investors experience. A REIT investor skips step 1 completely (or almost completely) and jumps right in, in a low denomination. Then makes incremental buys. The REIT (or REIT fund) holds a portfolio of properties and mortgages, but it typically maintains a target leverage ratio and holds it more or less steady, “forever.” There is no step 3 either, at least not to any significant degree. If leverage is wonderful, then a REIT investor enjoys it immediately (no step 1) and keeps enjoying it forever (no step 3).

Yes, this is how it really works. If you love leverage on real estate, then REITs (or REIT funds) are the very best ways you can maximize your love. Yes, with your cash and the REITs’ leverage, which you fully participate in as a REIT investor.

These are not investment recommendations. (I really don’t think you should overweight real estate.) I’m simply explaining the reality of the situation.