How do you spot a good property investment unit? For a start, you can copy other successful property investors, or do your homework by checking vacancy rates, research nearby schools and check for upcoming major infrastructure developments.
In Singapore, we often find ourselves asking: How can an island this tiny have so many property investment choices? It doesn’t help that sometimes, being across the street will raise or lower the rental income by more than 10 per cent. It’s true, there’s a bit of property wizardry involved in finding a good investment unit; but here are some quick tips that don’t require a whole army of property analysts:
While we’re against herd mentality, this is one move that’s always useful for beginners looking for an investment unit. Look around for a veteran investor, whom you consider fairly successful – they don’t even need to be at the top of the property game, just more experienced and with a better track record than you.
Look in the same general areas that they do, and try to find out which properties they’re interested. Chances are, they know something that you don’t.
Using this analogy, major chain brands such as McDonald’s and Uniqlo, do extensive analysis before picking a location. While you can’t afford the same advisory services, you can take a page out of their book.
For example, when Uniqlo first set up in Singapore, they picked Tampines One, a suburban mall, instead of the usual Orchard Road location. That was a pretty good cue for investors, to look around the same general area; they wouldn’t have set up there if there was a lack of foot traffic.
For Food and Beverage (F&B) locations, an old tactic is to try and spot major fast food chains. If you see these in the area, you know that foot traffic is probably good.
A lot of investors check rental yields in an area. That’s useful, but seasoned landlords are also careful to check vacancy rates when scouting for an investment property.
This is a more immediate indicator of the current situation. For example, in February last year, there were high vacancy rates in the Sentosa Cove area. This was a good clue that things were not hunky dory, despite the usually high rental incomes associated with the area (it was due to a shrinking number of well-heeled expatriates, an ongoing problem this year).
You probably know that, if you live near a particular school, your children are more likely to get in. As such, there’s always good demand for homes near “elite” schools. But even if a school is not as famous, it still benefits the landlord.
The reason is that, if the family’s children attend the nearby school, they’re less likely to want to move. That results in longer leases.
If you don’t know what the word “hipster” means, take a walk along Jalan Besar or Tiong Bahru. Some of the more “ulu” and rundown places are actually home to pricey cafes. At the same time, you may notice some of the corner shops are actually high-priced boutiques, that are just ironically low-end in appearance.
Gentrification is one of those things that happens organically – it’s seldom planned by the town council or government. This is why you need to walk around and check with your own eyes, rather than just relying on the Urban Redevelopment Authority’s (URA) master plan.
2 years ago · 6 min read · Source: 99.co (18 Dec 2019)