Property Investment Thread

[Seannie]

Actually be it stocks or properties the prices are more or less determined controlled by speculators unless the authorities step in to intervere lor. Just like stocks u think look at fundamentals got use if the speculators BBs dont fry the prices up aka pump and dump?? Just as in properties if the big boys dont fry them up for their own huge fat bellies u think prices will up so much? If government dint step in to introduce cooling measures to kill off the speculators the prices would have continued to rocket up. Just like stock mkt if sgx had not disturbed, alot more pennies would still have been fried alot more.

 

[microtek]

Property investing in a nutshell

HDB
- Great for rental yield. About 5%+
- Capital appreciation wise slow as HDB prices will definitely be closely watched from now on by the government as it is PUBLIC housing for the masses. If prices get too high and too fast people get angry. And the government doesn't want angry people. ie: Don't think about your HDB flat doubling in value in 10 years time. Get a BTO if you want to maximize on capital appreciation.

Condo
- Poor rental yield. About 3% or less at the moment
- Capital appreciation is where you make your money. Condos are seen as a status symbol and a luxury so there is always pent up demand. Cooling measures are in effect now but if cooling measures are relaxed things will start moving again. If you look at the new launch "High Park Residences" in Sengkang, they sold 1100 units IN THE FIRST WEEK of sales!

Anyhow, property is a long term investment of about 5 - 10years. Don't expect to make money flipping properties like last time.

 

[wondrdoggie]

Actually, I think many people from our parent's generation made a lot of money from properties. So many stories of a 30k semi d becoming a 4m goldmine.

I just wonder if properties are STILL a great investment vehicle. If I buy a subprime 1200ft2 condo for say 1.5m now, will it ever double to 3m? Will people be able to afford a 3m 1200ft2 condo in the future?

I guess it's all about leverage.

 

[microtek]

Actually, I think many people from our parent's generation made a lot of money from properties. So many stories of a 30k semi d becoming a 4m goldmine.

I just wonder if properties are STILL a great investment vehicle. If I buy a subprime 1200ft2 condo for say 1.5m now, will it ever double to 3m? Will people be able to afford a 3m 1200ft2 condo in the future?

I guess it's all about leverage.

Have to say that gone are the days where you can double or triple your money on property investment. The reason for the price jump is because you're talking about Singapore moving from a 3rd world country into the 1st world. Also don't forget about the massive population increase from 30 - 40yrs ago compared to now. You'd make money on property if you can hold it for at least 5 - 10 years but don't think of doubling your investment. If you're talking about holding the property for 50 years then don't say lah... no idea what would happen by then.

 

[wondrdoggie]

Have to say that gone are the days where you can double or triple your money on property investment. The reason for the price jump is because you're talking about Singapore moving from a 3rd world country into the 1st world. Also don't forget about the massive population increase from 30 - 40yrs ago compared to now. You'd make money on property if you can hold it for at least 5 - 10 years but don't think of doubling your investment. If you're talking about holding the property for 50 years then don't say lah... no idea what would happen by then.

Ya so if following my same example of 1.5m condo, after say 7 years become 2m. That's a 500k/1.5m = 30% gain or 4+% pa Plus say 2% rental yield nett, total 6+%

Is that a good investment? Wouldn't it be easier to invest in traditional mix of bonds and stocks with liquidity and less hassle? Or if die die want to express a position in real estate, why not just buy reits?

However, if you factor in leverage... For a 1.5m condo, say you only pay cash up front of 300k, then your average yield per year is much higher. But that seems really similar to leveraging to buy bonds.

My logic correct or salah?

 

[Mr.Canberra]

Real Estate Investment

Any property with price quantum of S$500K and above definitely need to take up mortgage loan to leverage. Otherwise can forget it. Just dump the money into highy liquid investment instruments.

Also primary residence cannot be considered as an "investment" because you need a roof over your head. Unless you rent out some rooms then can be considered as a performing asset.

Personally if I buy multiple residential properties it will be more like a hobby of collecting overseas hard assets for the purpose of long vacation/work stays during summer/winter.

Otherwise those looking for decent returns in Singapore better think thrice as Singapore properties have very high quantum. Even San Francisco real estate is getting more expensive than New York.

Then there'll be some who champion that Thailand or Malaysia properties are cheaper to invest in. Just take a look at the historical exchange rates of THB and MYR for the past 10 years. When you sell there'll be exchange rate loss even if your property appreciates.

To play safe and hedge against currency volatility can opt for properties that are transacted in GBP or USD.

 

[Shiny Things]

Actually, I think many people from our parent's generation made a lot of money from properties. So many stories of a 30k semi d becoming a 4m goldmine.

I just wonder if properties are STILL a great investment vehicle. If I buy a subprime 1200ft2 condo for say 1.5m now, will it ever double to 3m? Will people be able to afford a 3m 1200ft2 condo in the future?

I guess it's all about leverage.

It'll happen, eventually, just through inflation, but I don't think it's going to happen as fast as it did in the past.

My favourite rule-of-thumb metric for "are properties expensive or cheap" is the gross rental yield - the annual rent divided by the price. If your gross rental yield is a couple of percent, that's really low, and it's probably not a great investment (because the price is high or the rent is low). If it's in double-digits, it's probably a pretty good investment (though anything with a really high rental yield probably has other problems).

And rental yields on Singaporean residential property are really low right now - the gross yield is something like 2-3%, and if you take out expenses from that you might find your net rental yield is negative. Sure, you'll get capital growth, but if rental yields are that low (or even negative) then it becomes awfully expensive to hold a property with a giant mortgage on it.

So yeah, I wouldn't want to own Singaporean resi property at these yields, for the same reason I wouldn't want to own a house in San Francisco or Sydney.

 

[Seannie]

Then there'll be some who champion that Thailand or Malaysia properties are cheaper to invest in. Just take a look at the historical exchange rates of THB and MYR for the past 10 years. When you sell there'll be exchange rate loss even if your property appreciates.

Sakti mr win got 3 properties in msia. But he take up loan only pay a bit of downpayment. Uses sgd to convert to myr to pay his monthly instalment. Think no loss for him bah? If myr goes down over time, his sgd also stronger net off already. So still got capital appreciation gains right?

Prime areas some more. Jin sakti. Ask him why not consider vietnam say he not interested. Duno why.

 

[microtek]

Ya so if following my same example of 1.5m condo, after say 7 years become 2m. That's a 500k/1.5m = 30% gain or 4+% pa Plus say 2% rental yield nett, total 6+%

Is that a good investment? Wouldn't it be easier to invest in traditional mix of bonds and stocks with liquidity and less hassle? Or if die die want to express a position in real estate, why not just buy reits?

However, if you factor in leverage... For a 1.5m condo, say you only pay cash up front of 300k, then your average yield per year is much higher. But that seems really similar to leveraging to buy bonds.

My logic correct or salah?

If I could predict the future I'd know how to answer you. LOL. If somehow there is a property price spike in the future like from 2005 - 2010 then you'd have made more on property. So the best is, as everybody says, is to spread out your investments and invest in some property and then, high dividend shares and bonds etc...

 

[microtek]

Sakti mr win got 3 properties in msia. But he take up loan only pay a bit of downpayment. Uses sgd to convert to myr to pay his monthly instalment. Think no loss for him bah? If myr goes down over time, his sgd also stronger net off already. So still got capital appreciation gains right?

Prime areas some more. Jin sakti. Ask him why not consider vietnam say he not interested. Duno why.

There is a serious oversupply of Malaysian properties now, the RM dropped to 1:3, you can't find tenants, the interest is 5%+ and you will need to factor in wear and tear costs as it is landed property. And you know how unstable the Malaysian government is so that doesn't seem like a good investment to me. And if the house if empty for too long maybe robbers might break in and tear out all the metal to sell. Just hope the security in the area is good.

I won't touch Malaysian property even if it's cheap. Just do a google and you can easily find many articles about this.

 

[OngHuatHuat]

I din do exact calculation, but my burden seems to decrease a lot over the years.
Initial installment was ringgit 4135(rental cover 2100) = sgd 847.90 at an exchange of 1 sgd to 2.4 myr
Current installment still 4135 despite of raise in interest rate(coz normally I did a huge payment upfront every year, so that i won't be bothered too much by the monthly payment and to cut down on some interest), but now I only paying 671 sgd at an exchange rate of 3.03.

People tend to look at only jb when they invest Malaysia properties. My first property in Malaysia is at petaling jaya, somewhere near one utama shopping mall and university of Malaya.

I expected the property to decrease price this year, but it din. Seems like demand still strong towards prime area landed despite of tightening housing loans in Malaysia.

The next 2 I don't dare to say so much now since I haven't gotten my houses yet. I hope can rent out with a relatively decent yield.

Sakti mr win got 3 properties in msia. But he take up loan only pay a bit of downpayment. Uses sgd to convert to myr to pay his monthly instalment. Think no loss for him bah? If myr goes down over time, his sgd also stronger net off already. So still got capital appreciation gains right?

Prime areas some more. Jin sakti. Ask him why not consider vietnam say he not interested. Duno why.

 

[OngHuatHuat]

Oversupply of condo, yes.
Oversupply of landed in prime area? Definitely not.

Most developers don't build landed nowadays coz margin much lower.
Some investors don want to buy landed coz the yield is very low, but since last year, condo market was suffering while landed still attracted decent buying. Not as strong as last time, one year 10-20 % but current increment for landed still decent.

There is a group of investors who only aim landed and forgo the yield.

Malaysia inflation is quite scary compared to Singapore. Luckily they curb the loan approval, if not now the price should be skyrocketed already.

There is a serious oversupply of Malaysian properties now, the RM dropped to 1:3, you can't find tenants, the interest is 5%+ and you will need to factor in wear and tear costs as it is landed property. And you know how unstable the Malaysian government is so that doesn't seem like a good investment to me. And if the house if empty for too long maybe robbers might break in and tear out all the metal to sell. Just hope the security in the area is good.

I won't touch Malaysian property even if it's cheap. Just do a google and you can easily find many articles about this.

 

[Shiny Things]

My logic correct or salah?

Yep, you're 100% right.

 

[zuoom]

What prime area?

 

[OngHuatHuat]

Developed areas like petaling jaya and kl city for example bangsar, bangsar south etc.
now even puchong landed is asking more than 1 million for new landed house. Naturally people will start looking at resale market for landed.

The problem with kl market is there isn't any land available for new landed closer to city centre, they only have new condos.
People have to buy from area that is very far from city center and suffer a long distance travel to work place, like 1.5 hours to 2 hours from home(same as jb to Singapore). If they want to own new houses, options are limited. If they like landed, they are forced to buy from existing owners in city centre. My logic of purchasing my first house lies with this.

I don't buy condos in Malaysia unless that condo is really at prime location and comes with a cheap price i.e. The owner forced sale by banks. If not, I don't touch.

What prime area?

 

[GoldenBargain]

Any property with price quantum of S$500K and above definitely need to take up mortgage loan to leverage. Otherwise can forget it. Just dump the money into highy liquid investment instruments.

Also primary residence cannot be considered as an "investment" because you need a roof over your head. Unless you rent out some rooms then can be considered as a performing asset.

Personally if I buy multiple residential properties it will be more like a hobby of collecting overseas hard assets for the purpose of long vacation/work stays during summer/winter.

Otherwise those looking for decent returns in Singapore better think thrice as Singapore properties have very high quantum. Even San Francisco real estate is getting more expensive than New York.

Then there'll be some who champion that Thailand or Malaysia properties are cheaper to invest in. Just take a look at the historical exchange rates of THB and MYR for the past 10 years. When you sell there'll be exchange rate loss even if your property appreciates.

To play safe and hedge against currency volatility can opt for properties that are transacted in GBP or USD.

I am currently doing the due diligence on purchasing a property in Australia for that precise reason. Not in Sydney. Prices there are insane. In wine country actually. It looks like the prospects are good. They are building a small airport there soon, they plan to grow the population there and tourism. Very conservative math seem to indicate a decent rental yield. We would happily head there for a holiday if the house is empty. FX rate is low right now, and I can plonk down 50% of the cost straight away to mitigate fx risk a bit. But like I highlighted, initial stages. Gotta check on taxes, external cost more.

 

[Mr.Canberra]

Overseas Properties

I am currently doing the due diligence on purchasing a property in Australia for that precise reason. Not in Sydney. Prices there are insane. In wine country actually. It looks like the prospects are good. They are building a small airport there soon, they plan to grow the population there and tourism. Very conservative math seem to indicate a decent rental yield. We would happily head there for a holiday if the house is empty. FX rate is low right now, and I can plonk down 50% of the cost straight away to mitigate fx risk a bit. But like I highlighted, initial stages. Gotta check on taxes, external cost more.

Yes first mover advantage will always maximise returns with a lower cost of investment.

Also be aware of the weather. Too hot or too cold is not "liveable".

For Australia be wary of the laws and regulations as foreign ownership in land and property is a hot issue right now.

One thing bad about ang moh countries is the properties in certain areas can be very affordable but the annual property tax is killer!

 

[NewInvestor]

Ya so if following my same example of 1.5m condo, after say 7 years become 2m. That's a 500k/1.5m = 30% gain or 4+% pa Plus say 2% rental yield nett, total 6+%

Is that a good investment? Wouldn't it be easier to invest in traditional mix of bonds and stocks with liquidity and less hassle? Or if die die want to express a position in real estate, why not just buy reits?

However, if you factor in leverage... For a 1.5m condo, say you only pay cash up front of 300k, then your average yield per year is much higher. But that seems really similar to leveraging to buy bonds.

My logic correct or salah?

I think u are abt 80% correct and although I don't calculate the way u did, u r right that it is not worth investing in Spore properties at the moment. My main reason for saying so is that paying the ABSD makes the mathematics unattractive.

 

[GoldenBargain]

Yes first mover advantage will always maximise returns with a lower cost of investment.

Also be aware of the weather. Too hot or too cold is not "liveable".

For Australia be wary of the laws and regulations as foreign ownership in land and property is a hot issue right now.

One thing bad about ang moh countries is the properties in certain areas can be very affordable but the annual property tax is killer!

Agree. Foreign buyer have to be first buyer of a property. Looking at buying the land and building. So that clears the current law. We can only sell to Aussies. Not too fussed cod looking at this place for rental income. Not to flip. Appreciation in the property price should happen seeing as the plan is to sell no sooner than 20 yrs. considering the rental could pay off the house conservatively in six years.

Def need to research on the hidden cost. Property tax, income tax, municipal tax etc.

 

[NewInvestor]

Agree. Foreign buyer have to be first buyer of a property. Looking at buying the land and building. So that clears the current law. We can only sell to Aussies. Not too fussed cod looking at this place for rental income. Not to flip. Appreciation in the property price should happen seeing as the plan is to sell no sooner than 20 yrs. considering the rental could pay off the house conservatively in six years.

Def need to research on the hidden cost. Property tax, income tax, municipal tax etc.

Rental paying off the house in 6 years? That is a very good investment.