“It is not calling it 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 with the 4-year Seller’s Stamp Duty (SSD) that they would have to 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 gift by entering the property market and generating second income from rental yields compared to putting their cash on your bottom line. Based on the current market, I would advise these people keep a lookout for good investment property where prices have dropped upwards of 10% rather than putting it in a fixed deposit which pays 0.5% and does not hedge against inflation which currently stands at ideas.7%.
In this aspect, my investors and I use the same page – we prefer to reap the benefits of the current low pace 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 a good annual passive income all the way 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 rise despite the economic uncertainty, we can easily see that the effect of the cooling measures have cause a slower rise in prices as the actual 2010.
Currently, we cane easily see that although property prices are holding up, sales start to stagnate. Let me attribute this to the following 2 reasons:
1) Many owners’ unwillingness to sell at more affordable prices and buyers’ unwillingness to commit to a higher price.
2) Existing demand unaltered data exceeding supply due to owners finding yourself in no hurry to sell, consequently in order to a rise in prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown associated with property market as their assets will consistently benefit in the long run and trend of value because of the following:
a) Good governance in Singapore
b) Land jade scape scarcity in Singapore, and,
c) Inflation which will set and upward pressure on prices
For clients who would like invest various other types of properties aside from the residential segment (such as New Launches & Resales), they could also consider investing in shophouses which likewise can help generate passive income; are usually not prone to the recent government cooling measures like the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You should never be forced to sell your stuff (and develop a loss) even during a downturn. Be aware that the property market moves in a cyclical pattern and you will need to sell only during an uptrend.