“It is not calling it buy but when you sell that makes principal to your profit”.
Hence I consistently advise my investors to take care that 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 advantage by entering the property market and generating second income from rental yields rather than putting their cash staying with you. Based on the current market, I would advise they will keep a lookout any kind of good investment property where prices have dropped very 10% rather than putting it in a fixed deposit which pays three.5% and does not hedge against inflation which currently stands at suggestions.7%.
In this aspect, my investors and I take presctiption the same page – we prefer to make the most of the current low price and put our money 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 as many as $1500 after off-setting mortgage costs. This equates a good annual passive income up 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 go up despite the economic uncertainty, jade scape we can see that the effect of the cooling measures have cause a slower rise in prices as compared to 2010.
Currently, we cane easily see that although property prices are holding up, sales start to stagnate. I am going to attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at less expensive prices and buyers’ unwillingness to commit to some higher value tag.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently in order to a increase 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 within property market as their assets will consistently benefit in time and boost in value due to the 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 in addition to the residential segment (such as New Launches & Resales), they likewise consider throughout shophouses which likewise assist generate passive income; and thus not at the mercy of the recent government cooling measures like the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the importance of having ‘holding power’. You must never be required to sell your house (and make a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and really sell only during an uptrend.