Committing to Singapore Properties

“It is not in case you buy but when you sell that makes principal to your profit”.

Hence I consistently advise my investors to be certain they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after taking into consideration the 4-year Seller’s Stamp Duty (SSD) that they must pay if they sell their property before 4 years.

Once they have determined the amount of finances they are willing to outlay, they will set themselves at a great advantage by entering the property market and generating second income from rental yields compared to putting their cash on your bottom line. Based on the current market, I would advise may keep a lookout for good investment property where prices have dropped a great deal more 10% rather than putting it in a fixed deposit which pays two.5% and does not hedge against inflation which currently stands at ideas.7%.

In this aspect, my investors and I are on the same page – we prefer to reap the benefits the current low pace and put our profit in property assets to generate a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of up to $1500 after off-setting mortgage costs. This equates with regard to an annual passive income all the way to $18 000 per annum which easily beats returns from fixed deposits as well outperforms dividend returns from stocks.

Even though prices of private properties have continued to rise despite the economic uncertainty, we can see that the effect of the cooling measures have cause a slower rise in prices as the actual 2010.

Currently, we can see that although property prices are holding up, sales are starting to stagnate. I’m going to attribute this into the following 2 reasons:

1) Many owners’ unwillingness to sell at less expensive prices and jade scape buyers’ unwillingness to commit to a higher charges.

2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a enhance prices.

I would advise investors to view their Singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown each morning property market as their assets will consistently benefit in time and increase in value as a result of following:

a) Good governance in Singapore

b) Land scarcity in Singapore, and,

c) Inflation which will place and upward pressure on prices

For clients who would like invest some other types of properties besides the residential segment (such as New Launches & Resales), they could also consider buying shophouses which likewise can help generate passive income; and thus not subject to the recent government cooling measures such as the 16% SSD and 40% downpayment required on homes.

I cannot help but stress the value of having ‘holding power’. Never be required to sell house (and create a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and require to sell only during an uptrend.

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