Looking to invest your money into real estate but don’t know where to start? Or perhaps you’ve heard about how lucrative real estate investing is but don’t have the means to even start? Well we all have to start somewhere, don’t we?
And we at SRX are always happy to help, so here are some things for you to consider:
Why are you looking at property investment?
So firstly, ask yourself why you’re looking at investing in property. I mean, there are other platforms and means to invest your hard-earned cash. So why do people go into property investing then?
When it comes to investing in property, those interested look at two areas, namely capital gain and/or rental income. It’s safe to say in Singapore there generally is capital appreciation when it comes to property; it’s just a matter of how much. Furthermore, with constant development always taking place around Singapore, it’s fair to say that there’s a huge opportunity here.
For instance, my family home was situated opposite Tampines Junior College since I was a kid. Just a few years back, the Tampines East MRT station on the Downtown Line opened, and the value of our place rose significantly, which meant a lot of $$$ when we finally sold our place.
Another option, which I believe is more common especially in recent times, is to earn a continuous stream of income through rental opportunities. Coming from someone who is spending close to $2k a month from renting a studio apartment, trust me when I say it’s good money (though my bank account mourns).
To put it into context, say you pay $1million for your property and rent out the entire unit for $7,000 a month, you will be able to earn $84,000 per year. You’re earning a rental yield of 8.4% and if you’re able to rent out the place consistently, you’ll be able to cover the cost of your property in approximately 12-14 years. And don’t forget the capital appreciation that you may potentially enjoy then too if you decide to sell your place.
How do you even get started? What are the costs?
Having that capital is the main starting point. Once you add up all the costs involved with investing in a certain property, you’ll need to see whether the trade-off with income or capital appreciation earned is worth it.
Seeing as the government is pretty involved in the property scene in Singapore, there have been measures put in place to discourage Singaporeans from owning too many properties (not enough houses in Singapore so please share) or making quick-fire sales after a short period.
Key measures to consider are 1) Additional Buyer’s Stamp Duty (refer to our article on ABSD to find out more) and Seller’s Stamp Duty (SSD). Seller’s Stamp Duty is mainly in place to counter property owners from selling before the agreed-upon holding period.
On top of that, if you’re planning to take out a loan to finance your property purchase, you’ll need to take into account your Total Debt Servicing Ratio, where your monthly loan payments can’t exceed 60% of your income. Plus, you really won’t want to be left living paycheck to paycheck.
Then there’s also the Loan-to-Value Ratio, which determines how much you’re able to borrow from a bank, tied to the cost of your apartment. Essentially this will be based on the number of mortgages you currently have. Say you already have taken out a loan for your current place and are looking to purchase another property, you will only be able to loan up to 45% of your property’s value, compared to the initial 75% for your first property.
Especially if you’re renting out your place, you will also need to take into renovation costs that will come into place that will be a key factor in the rental price you’re able to secure.
OK, I’ve decided. Now, what do I do?
Congratulations! Well now comes the fun part – finding the property to invest in, which you can easily do so at SRX.
If you’re looking at a resale property, simply head on over to SRX’s resale listings, to find for this potential investment property – be it a HDB or Condominium.
Or if you prefer investing a brand-new condominium, you’ll want to head on over to SRX’s New Launches, so you can check out recently launched or upcoming condominiums. You can also easily refer to the New Project Insights to reference the percentage of units sold and launched, the average price, and average price per square foot (PSF), of various new and upcoming condominiums, all at a glance.
Source: editorial
Source: SRX (13 Dec 2019)