“It is not in case you buy but when you sell that makes the gap to your profit”.
Hence I consistently advise my investors to ensure that they have gone through their financial plans thoroughly as they will be entering into a 4-year commitment – after for the 4-year Seller’s Stamp Duty (SSD) that they would have to pay if they sell their property before four years.
Once they have determined the amount of finances they are willing to outlay, jade scape they will set themselves at a boon by entering the property market and generating passive income from rental yields regarding putting their cash on your bottom line. Based on the current market, I would advise these people keep a lookout regarding any good investment property where prices have dropped a great deal more 10% rather than putting it in a fixed deposit which pays .5% and does not hedge against inflation which currently stands at simple.7%.
In this aspect, my investors and I take any presctiption the same page – we prefer to reap the benefits of the current low interest rate and put our profit in property assets to produce 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 up to $18 000 per annum which easily beats returns from fixed deposits and also outperforms dividend returns from stocks.
Even though prices of private properties have continued to rise despite the economic uncertainty, we could see that the effect of the cooling measures have can lead to a slower rise in prices as when compared with 2010.
Currently, we observe that although property prices are holding up, sales are starting to stagnate. I will attribute this for the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit with a higher charges.
2) Existing demand unaltered data exceeding supply due to owners being in no hurry to sell, consequently resulting in a improve prices.
I would advise investors to view their Singapore property assets as long-term investments. They ought to not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in time and increasing amount of value as a result of following:
a) Good governance in Singapore
b) Land scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest some other types of properties aside from the residential segment (such as New Launches & Resales), they might also consider investing in shophouses which likewise will help generate passive income; and thus not depending upon the recent government cooling measures similar to the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the importance of having ‘holding power’. Never be required to sell your property (and develop a loss) even during a downturn. Always remember that the property market moves in a cyclical pattern and it’s sell only during an uptrend.