“It is not when you buy but when you sell that makes learn to your profit”.
Hence I consistently advise my investors to guantee 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 must pay if they sell their property before four years.
Once they have determined the amount of finances they are willing to outlay, they will set themselves at a boon by entering the property market and generating passive income from rental yields regarding putting their cash secured. Based on the current market, I would advise these people keep a lookout regarding any good investment property where prices have dropped very 10% rather than putting it in a fixed deposit which pays 0.5% 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 take advantage of the current low interest rate and put our profit 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 for annual passive income as much as $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 elevate despite the economic uncertainty, we could see that the effect of the cooling measures have lead to a slower rise in prices as the actual 2010.
Currently, we look at that although property prices are holding up, sales are starting to stagnate. I am going to attribute this towards following 2 reasons:
1) Many owners’ unwillingness to sell at affordable prices and buyers’ unwillingness to commit to some higher value tag.
2) Existing demand for properties exceeding supply due to owners finding yourself in no hurry to sell, consequently leading to a improve prices.
I would advise investors to view their Singapore property assets as long-term investments. They should not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the longer term and boost in value due to the 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 consist of types of properties aside from the residential segment (such as New Launches & Resales), jade scape they might also consider buying shophouses which likewise can help generate passive income; that are not prone to the recent government cooling measures like the 16% SSD and 40% downpayment required on residential properties.
I cannot help but stress the value of having ‘holding power’. You must never be made to sell your house (and create 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.