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Singapore Property Scene Discussion

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4th Gear
19 minutes ago, Wt_know said:

and it’s not ... i can tell you

What are the leading indicators then?

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Hypersonic (edited)

Instead of only discussion on financials and market aspects of properties in Sgp, we should dish out some prop for discussion whether is a good buy or good bye...

This will help Bros here who are looking for props ...

Lemme start first..

Looking ard Seletar area for own stay due to its tranquility and sub 1k psf for 1300-1500 sqf area,..

The Greenwich is not bad but price still a bit high...

Seletar Springs not bad but abt 20 yrs old....

Any further inputs or experience in this area ?

Edited by Freeder
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Twincharged
Just now, Freeder said:

Instead of only discussion on financials and market aspects of properties in Sgp, we should dish out some prop for discussion whether is a good buy or good bye...

This will help Bros here who are looking for props ...

 

Nice idea bro,

But I know bro Mercs is doing a good job of sharing links and info, the other thread has another bro sharing plenty of buy buy news.

So maybe we can do mainly discussions here? 
Of course if someone has a lobang, it will be nice... otherwise we may end up being another ad and buy buy thread occupied by agents with an agenda.... 🙂

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Hypersonic (edited)
8 minutes ago, therock said:

Nice idea bro,

But I know bro Mercs is doing a good job of sharing links and info, the other thread has another bro sharing plenty of buy buy news.

So maybe we can do mainly discussions here? 
Of course if someone has a lobang, it will be nice... otherwise we may end up being another ad and buy buy thread occupied by agents with an agenda.... 🙂

If the agent wants to come in for free meals, can ask him fly kite..

We are discerning to know whether it’s a agent or not..

Bro Mercs is giving great updates on Latest prop news but not much in depth discussion on props that maybe some Bros here are eyeing in...

 

Edited by Freeder

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Twincharged (edited)

Ok, ST says go west..

https://www.straitstimes.com/business/invest/me-my-property-look-west-for-better-rental-yields

 

Quote

 

Me & My Property: Look west for better rental yields

Second CBD in Jurong will create jobs and fuel demand for homes there, says ERA senior exec

When buying property, ERA senior division director Neo Chee Seng looks at its upside potential, rentability, proximity to train stations, amenities and distance from the workplace and schools. ST PHOTO: NG SOR LUAN

Sue-Ann Tan

 

Second CBD in Jurong will create jobs and fuel demand for homes there, says ERA senior exec

The western part of Singapore is an up-and-coming area and holds promise for property buyers looking for better rental yields, says ERA senior division director Neo Chee Seng.

The 48-year-old is waiting for his new home in Clementi, which will be completed around 2023. The 1,292 sq ft Parc Clematis condominium unit will have four bedrooms.

Mr Neo says: "The reason we picked Parc Clematis is its location and the developments planned for the area. There is the development of Singapore's second Central Business District (CBD) in the Jurong Lake District, Jurong Innovation District and the new Tuas port, which combined will create (many) new jobs."

He also notes the construction of two MRT lines - the Jurong Region Line, which will be ready from around 2026, and the Cross Island Line from around 2029.

"With new jobs created in the area, we believe that more people will move to the western part of Singapore in the coming years, driving up demand for properties."

 

Edited by therock
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Twincharged

Don't over borrow:

https://www.straitstimes.com/business/invest/buying-property-with-an-eye-on-liquidity

Quote

Describe your property investing strategy.

A In Singapore, buying a house is a major decision. A freehold landed property is less liquid from an investment point of view. On the other hand, it is a good option for family stay as it brings good capital gain in the long run.

Liquidity is key, so I want to also be able to dispose of my home should I eventually move back to the US for work or retirement.

Notwithstanding the recent rounds of cooling measures, housing prices in Singapore will continue to hold in the long term.

Government intervention is a good effort to stabilise and prevent an overheated property market. Selecting the right property with a good location will likely fetch substantial capital gain over a 10-year period. Property investment is also a good way to safeguard the family (wealth) for future generations.

For any savvy investor, liquidity is very crucial. Therefore, I would be very careful of how much I will be able to stretch my cash on hand and not rely on loans so I can dispose of the asset easily.

My husband and I enjoy living in a big family as we appreciate the support that every family member can provide for one another in many different ways.

Q Are you planning to buy in the next three to five years?

A No plans yet though I am keeping my options open.

In the years to come, if I am still earning money, and after having paid off all three properties, then I might consider buying another unit.

I may even consider purchasing an overseas property in South-east Asia but that does require a fair amount of homework on my part.

Q What do you think of the property market now?

A The market now is stable. Over time, I expect prices to increase but you need to invest with a long-term view.

 

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Twincharged

Buy within your means:

https://www.straitstimes.com/business/invest/timing-it-right-buying-within-your-means

Quote

What's your financing strategy?

A Home loans are still among the cheapest loans around. If possible, we would like to take up a larger home loan and put the money into other instruments if the timing is right.

Currently, our loan tenure is 25 years and we went for the maximum loan-to-valuation at that time. Loan interest rates have been benign, which is to our advantage.

I would like to stay in floating rates for the foreseeable future - with the United States Federal Reserve keeping interest rates near zero and indicating that rates will stay until the economy recovers from Covid-19, it is unlikely that we will see mortgage rates go up to pre-coronavirus levels in the next two to three years.

Q What's your overall investing strategy?

A I buy and hold real estate investment trusts because I am quite familiar with the products and how they generate income and pay unitholders.

Sometimes, I also buy into growth sectors such as data centres and e-commerce, which have turned out to be the biggest winner in the Covid-19 situation.

My husband is much more sophisticated in trading stocks, exchange-traded funds and foreign exchange, so I leave the short-term trading to him.

Due to the current volatility in the stock market, we have increased our allocation to these financial products to boost our investment coffers.

 

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Twincharged

How to invest:

Do check that the yield from a property can match or do better :

https://www.straitstimes.com/business/managing-money-in-tough-times

 

Quote

How to invest idle cash

Many with idle cash don't want to go into stocks right now, thinking it is too risky. Who can blame them?

They want a safe investment that pays a high interest rate. That's hard to find since interest rates everywhere are at an all-time low and the coronavirus has pushed them even lower. Some European countries have had negative interest rates for more than a year. Denmark has the longest and lowest negative rates and it has worked well for them.

Safe bonds pay only 1 per cent or 2 per cent, making it hardly worthwhile to tie up your money.

Is there a way to earn a reasonable interest while taking little risk? One way is to simply buy a portfolio of bonds with higher risk. These are ranked BB and lower by S&P and popularly known as "junk" bonds.

Caution: Many of these bonds are not ranked at all.

That's dangerous since you don't know the risk you are taking unless you can understand and compare bond contracts, which is difficult.

Junk bonds used to be "risky but fair", with reasonable returns of 4. 5 per cent or 6 per cent. Surprisingly, junk bonds still pay those high rates but now there's a catch.

The issuers don't drop interest rates but make buyers pay for the high rates by taking away standard protections should the bonds default. This has kept the bonds looking profitable but they are full of risks that investors can't see.

It's a reason to view all high-yield bonds with suspicion and probably give them a pass. There are safer ways to earn high returns:

S-REITS

These are Singapore real estate investment trusts and are a portfolio of real estate investments.

They specialise in real estate such as shopping malls, residential properties and office buildings.

Reits here must pay out 90 per cent of their earnings to investors to keep their tax-exempt status. This results in payouts of 5 per cent, 6 per cent and 7 per cent with little risk.

The main risk is the Reits' prices can fall. Still, their yield is more stable than other stocks. And even if the price falls, it must drop by more than its yield before you lose money.

We have about 40 Reits listed here with an average yield of 6 per cent. You can also diversify with an index by buying a Reit ETF listed on the Singapore Exchange.

PREFERRED STOCK

These pay a steady return on the "par value" of the stock, which is the price when the preferred stock was issued. Expect a return of about 5 per cent and they are safe if issued by a large firm or bank.

All three Singapore banks have issued preferred shares. A problem is preferred shares may be less liquid, so you may have to take a discount to sell them. You can avoid this with a "limit order", which sells only when your stock hits a specific price.

CPF ACCOUNTS

You may not think of this as an investment but you should. All you have to do is leave your money in your CPF account and it will pay from 2.5 per cent in the Ordinary Account to as much as 6 per cent (with conditions) in the Special Account. The interest on CPF savings is provided for by the Government, making it risk-free and even safer than AAA-rated bonds.

 

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5th Gear
1 hour ago, Wt_know said:

copy & paste from propertyguru loan calculator

$1M investment property, take $750K loan, 20 years loan tenure assuming 45 yrs age + 20 years loan (max at 65?)

the monthly mortgage is around $3.5K

with taxes and expenses, how to have "positive rental income"? [confused] 

buy full cash or downpayment at least $0.5M?

F72A8FCF-5EE2-4D32-832C-19687C6512F3.jpeg

Essentially, a $1 mil dollar property will have negative cash flow with the taxes, commission, maintenance, agent commission.

If factored in the loss of opportunities on the investment fund used e.g. CPF interest, then property investment will be unattractive.

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Twincharged

https://www.straitstimes.com/business/invest/is-the-pandemic-a-good-time-to-buy-a-property

Quote

Before you buy a home...

Planning to buy a property soon? Ms Christine Li has these tips for three common groups of buyers.

Q I am a first-time buyer who has been waiting on the sidelines. What should I consider?

A A first-timer has no additional buyer's stamp duty (ABSD) to pay and qualifies for many housing grants. If you are buying an executive condominium (EC) and your monthly income is within the ceiling of $12,000, you are eligible for a grant amount of between $10,000 and $30,000.

Those with a monthly household income of more than $12,000 and up to $16,000 may buy an EC unit, but without housing grants. If you are buying a Housing Board Build-To-Order flat, you may be entitled to the Enhanced CPF Housing Grant if your combined monthly household income does not exceed $9,000. Many Singaporeans like to start with an HDB flat when they first enter the workforce as it is much easier on their finances.

If you are taking out an HDB housing loan, you can borrow up to 90 per cent of the value of the flat. The remaining down payment can be paid using CPF and cash. Taking a bank loan is not a bad idea now, as interest rates have reached a new low.

I would suggest that people who are more financially stable go for an EC if you qualify, because new ones are reserved for Singaporeans only. But when they reach the five-year minimum occupation period, you can sell on the open market to both Singaporeans and permanent residents. When ECs are fully privatised, foreigners are also eligible to buy them. There is no difference between an EC and a private condominium after 10 years.

Q If I am staying in an HDB flat and I want to upgrade to a condominium, what should I take note of?

A You might want to ask yourself a few questions before taking the plunge. Private properties tend to be more expensive but smaller in terms of living space compared with HDB flats. It might look good on the surface, but quality of life does get compromised somewhat. If you are moving to a more expensive apartment and compromising on living space, it may not serve your long-term needs, such as when you have a bigger family, for instance.

Since Covid-19 is affecting our economic prospects, you might want to exercise financial prudence in the event that there are job losses and pay cuts. A financial stress test might be useful to understand whether you can afford the upgrade.

If the upgrade is because of other factors such as wanting to be near schools, changes in family size or simply a rise in income, you can buy something within your budget and still be near transport nodes and amenities.

New home sales directly from developers might be convenient in this instance because you can choose to sell your HDB flat within six months after you take delivery of the new home and get back your ABSD. Or if you prefer to keep your HDB flat, do your sums to decide if it is worth keeping as the ABSD on a second property is 12 per cent now.

Q I already own a condominium and I want to pick up another as an investment property. What should I consider?

A This goes back to the basics on why you want to buy an investment property. Is it simply for rental income and future capital appreciation? If that is the case, you need to work out your cash flow to determine if it is indeed an investment and not a liability. People often buy a private property thinking that they will somehow reap profits in the future. They do not consider the possibility that they may not find tenants. This is a pitfall.

We have seen many soured investments in recent years because capital appreciation did not materialise and the investment units could not yield the expected returns.

So you should work out the realistic return after accounting for ABSD, mortgage repayments, property tax, maintenance and brokerage fees (for marketing the unit every one to two years), and miscellaneous expenses such as furnishing.

If at the end of the day you are getting better returns than stocks or real estate investment trusts, then go for investment property.

Otherwise, it is probably not worth the hassle. If the aim of the investment is to buy something for your children or for retirement purposes, then go ahead and get one, especially if you have very little or no loan obligations on your first property.

If you are a bit more adventurous, some overseas property may have better growth prospects such as in major capitals or growth cities in South-east Asia, or even mature markets such as London.

Q What to consider if you are looking for a property for yourself?

A I am probably more inclined to buy a landed property. Although it is a restricted market with no foreigner participation, it still presents a good value proposition in the current market.

First, landed homes are always limited in supply. With rising affluence and a growing population in Singapore, landed properties will likely not be short of buyers over the medium to long term.

Second, I am attracted to the development opportunity of turning a single-storey house into a three-storey terrace house or semi-detached house.

Being a real estate practitioner, I often dream of being able to design and build my own house and sell it for a profit. This could be a lot more rewarding than simply waiting for capital appreciation.

Personally I like landed enclaves that are near amenities and international schools, as they would have the advantage of having more potential tenants. That makes the asset relatively more liquid when you need to find a buyer or tenant in future.

 

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Supersonic (edited)
50 minutes ago, awhtc said:

Essentially, a $1 mil dollar property will have negative cash flow with the taxes, commission, maintenance, agent commission.

If factored in the loss of opportunities on the investment fund used e.g. CPF interest, then property investment will be unattractive.

if buyer is 30 years old, can do 35 years loan ...

the longer the loan the lower the monthly mortgage 

with super duper low interest, there will be positive rental income and plus capital appreciation after 3 years (at least 3% rise pa) ... [thumbsup] 

with property tax, rental income tax, expenses invested, monthly maintenance, agent commission, etc ..

a bit stretch but can do with rental touching $2.8K-$2.9K

2020-10-25_110816.jpg

Edited by Wt_know

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Turbocharged

For everyone's first property, they all hope to buy low. 

After that, they hope to sell high. 

If sell low buy low, or sell high buy high still ok.

I keep reminding myself, a valuation is temporary, a mortgage loan is permanent.

When the tide goes out, we will see who has been swimming without trunks. 

Keep in mind property agents don't worry about price high or price low as much as they worry if no one sells or no one buys, because then there is no commission.

So to an agent, anytime is a good time to buy or sell property. 

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Supercharged
2 hours ago, Wt_know said:

copy & paste from propertyguru loan calculator

$1M investment property, take $750K loan, 20 years loan tenure assuming 45 yrs age + 20 years loan (max at 65?)

the monthly mortgage is around $3.5K

with taxes and expenses, how to have "positive rental income"? [confused] 

buy full cash or downpayment at least $0.5M?

F72A8FCF-5EE2-4D32-832C-19687C6512F3.jpeg

Not sure what u mean may positive rental income. To me as long rental minus expenses (interest, upkeep, empty month), it is positive. Whether it beats cpf 2.5% is another question. 

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Supersonic (edited)
9 minutes ago, Wind30 said:

Not sure what u mean may positive rental income. To me as long rental minus expenses (interest, upkeep, empty month), it is positive. Whether it beats cpf 2.5% is another question. 

positive rental income = you collect $100 or $200 every month after minus all expenses including monthly mortgage

agent always said if every month you need to fork out $$$ even as little as $100 for the investment property, then it is not positive, it's negative = good bye

or as what you said ... in total for the whole year ... it must be positive return and not negative return ... 

based on $3.5K monthly mortgage and rental of $3K per month = got positive?

and then the argument of wait for capital appreciation of $100K-$200K comes into picture

Edited by Wt_know
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Supercharged (edited)
14 minutes ago, Wt_know said:

positive rental income = you collect $100 or $500 every month after minus all expenses including monthly mortgage 

for example, agent said if every month you need to fork out $$ even $100 for the investment property, then it is not positive ... it's negative

That number is meaningless as it just depend on what is the Downpayment.

I look at the downpayment as how much my yield as after getting net income, ignoring mortgage principle payments. 
basically, if my down is 500k for 1.8 million property. I work out my rental income minus expenses and divide that by 500k to calculate my yield. As theoretically those 500k also can deliver yield by putting them in other places.

for that 1.8 mil property, rental is 63k per year. Interest payments at 1%, gives 13k a year. 5.2k for maintenance. 5k for commission and vacant time. 10k a year for renovation and repair. 33k in total. Income is 30k per year. Yield over 500k is 6%. Which is pretty high, much higher than bank interest rates. 
but that numbers can change a lot, especially the 13k interest rate. If it was 3% instead, the income will be just 4K, giving you an yield of 0.8%...
 

 

Edited by Wind30
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Supersonic (edited)
5 minutes ago, Wind30 said:

That number is meaningless as it just depend on what is the Downpayment.

I look at the downpayment as how much my yield as after getting net income, ignoring mortgage principle payments. 
basically, if my down is 500k for 1.8 million property. I work out my rental income minus expenses and divide that by 500k to calculate my yield. As theoretically those 500k also can deliver yield by putting them in other places.

the argument is to use as "little" money as possible to get a property exploiting the power of leverage with the super duper low interest ... hence, i am thinking how ... :D

so $1M property, min down is $250K, max loan is $750K ... no?

 

 

Edited by Wt_know
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1st Gear
47 minutes ago, Wind30 said:

That number is meaningless as it just depend on what is the Downpayment.

I look at the downpayment as how much my yield as after getting net income, ignoring mortgage principle payments. 
basically, if my down is 500k for 1.8 million property. I work out my rental income minus expenses and divide that by 500k to calculate my yield. As theoretically those 500k also can deliver yield by putting them in other places.

for that 1.8 mil property, rental is 63k per year. Interest payments at 1%, gives 13k a year. 5.2k for maintenance. 5k for commission and vacant time. 10k a year for renovation and repair. 33k in total. Income is 30k per year. Yield over 500k is 6%. Which is pretty high, much higher than bank interest rates. 
but that numbers can change a lot, especially the 13k interest rate. If it was 3% instead, the income will be just 4K, giving you an yield of 0.8%...
 

 

63K rental for 1.8m prop means 3.5% annual yield. That is very rare in today's market.

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