WAYS TO INVEST IN SINGAPORE’S PROPERTY MARKET

25 April 2018

WAYS TO INVEST IN SINGAPORE’S PROPERTY MARKET

Multiplying your wealth through property investment is a common investment method and proven over the past 50 years especially in Singapore property market ever since we gained independence in year 1965. The real estate market has plentiful of opportunities as everyone needs a house for sheltered, be it for ownership or rental, everyone needs a house. Rewarding profits as it seems but the property investment process may be complicating with couple of hidden costs and fees needed to be incurred unlike stocks and bonds investments. Fret not, there are ways to invest in real estate, it doesn’t always have to be the physical real estate itself like the humble HDB unit in Woodlands or lavish condominium in Queenstown. 

Extra to spare
Basically, the property owner will have to pay for interest rates, maintenance fees, legal fees and other hidden costs. As for tenant, all they need to pay is their rental fees which could be a lump sum of the landlords’ monthly commitments. This conventional investment has been around for long, land ownership. The person who buys a property is called the property owner and the person who rents the property is called tenant. You have extra room in your 2-bedroom Woodlands’ HDB that’s empty and you want to generate passive income, what do you do about it? You might as well rent out that extra room. That’s if you have an obedient tenant that pays on time and take care of the landlord’s house. What happens if it’s the opposite? Bad tenants that delay the rental payment, wrecked the house and causing nuisance with neighbours, that calls for double trouble with your cash flow. You spent more than you expected for fixing the troubles caused by troubled tenant. Hassle as it seems but if you don’t mind getting your hands on dealing with your property and tenant, you will probably taking it as an experience and journey in the property rental market.

Property with rental
Have you ever thought of buying a tenanted property? Well, you can do so with existing tenants on the property. Not only this gives you a head start to cover your mortgage loans, but you save a step from searching the right tenant to rent your property. Besides, you don’t need the hassle to profile your tenants because it has been down previously. This method not only limited to private residential property but retails and offices that business has run for years. At least, that gives you an assurance that your property has been occupied. Best part, you save a round of agent fees looking for tenants to rent your property. There’s always a but when you buy a tenanted property, be sure to check with the previous owner the reason to put up the property for sale and all the previous tenants’ background. It would be terrible if you get caught for previous tenants’ wrongdoings.  

Real Estate Investment Trusts (REIT)
One of the ways that can get you invest in real estate without being actively and physically involved in real property. REIT is a fund setup to invest in mortgage instruments, bonds and stocks related to real estate, it is getting increasingly popular amongst budding investors. The barrier entry is low and there is no hidden costs besides the transaction costs. One of the characteristic of REITs that differs from the real estate investment is that it is more liquid compared to the physical real property. Besides, it is easier for budding investors to increase their capital or wealth for the actual property. You can check out here for the list of REITs available in Singapore. 

Flipping properties
Before we go further on this method, ask yourself, are you a risk taker? Are you willing to face the wild side of the real estate investments? This category of investor will not buy and hold for high profit margin, they hunt for opportunities and selling their property under the market value. They don’t hold their properties for beyond one year, they prefer to trade within four to six months where they will sell when the property is making profit without major renovation works. All they need is minor aesthetic repairs to look more appealing for sale like upscale your condominium in Choa Chu Kang with plaster ceiling. 

However, there’s one thing that no one wants to tell you being a flipper, you got to have holding power and your financial capabilities must be strong enough to support your mortgage loans for long term. It can be devastating if the economic crisis hits and leading your cash flow to be negative and losses. That’s when your asset is turning into your liabilities. For beginner investors, do make sure your financial health is pinky enough to make it through the tough times. 

There are several ways and types of real estate investment that can could potentially grow your wealth but that does not mean all ways are 100% guaranteed profit. It is best that you tested out or do couple of researches whichever method that you are comfortable with and not jeopardizing your financial health. Every investor have their own preferred style that either could make it or break it. Make careful choices and weigh out all costs and benefits before taking actions. 

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