PROPERTY BUYERS’ CONCERNS
Disclaimer: Below are only the opinions of the writers and readers should not construe it as advice given to them and readers must take full responsibilities for all decisions made.
There are so many projects and so many properties in Singapore. What should you choose?
Should you choose a resale or should you choose a new launch project?
Before you begin, it is most important to know your own objective in getting this property.
Are you buying for stay or are you buying for investment?
Oftentimes, buyers told me that it can be for stay and for investment. I looked at them in bewilderment. What they mean is they want to buy a property for stay but they hope that it will be a good investment as well in the long run. Did I get it right?
Some buyers mean the other way: we buy for investment now and eventually we can retire in that property.
Buying for stay is totally different from buying for investment. Let me elaborate.
Buying for stay means you are concern whether the rooms are big enough, whether there are schools nearby where your children can go to schools, whether the kitchen is big enough, whether the floor is high enough for those for love high floors, whether there is any afternoon sun, whether they are supermarket or wet markets nearby…..whether it is move in condition, ………..…the list goes on…….
Buying for investment is totally different: I only need to find you a property that is easily rentable, near Mrt preferred, it can be small but high rental yield and it can appreciate in the long run and is within your budget. That’s it.
Can you see the difference?
Do not confuse yourself and if you do, you will end up with a property that is not good enough for investment if you put your own personal preference into it. For eg, you may prefer spacious property but spacious property has very low yield; for eg; a 800 sq ft 1 bedroom cost $1.6 million can only be rented for $4000 and below is low yield though it may be luxurious. You will be better off with a property that rents $4000 a month at a price of $1.2 million. Whether the property is luxurious or not is not important; more importantly is the property consistently rentable?
If you are looking for own stay, then your wife’s priorities are important. It should be near schools and big enough for your family needs. Whether the rental yield is good or not is therefore not important as living well and comfortable is fundamental to your well being.
Therefore, the first step is to have a clear objective.
With a clear objective, finding a property becomes very easy.
Your specifications become super clear.
SHOULD YOU BUY NOW?
2015 is the year for buyers. Prices had come down quite a bit and news seem to be negative endlessly.
What is your action?
Should I wait further or should I buy now?
As shared earlier, if you have clear objective, then it is easy for you to find the property. And you can find the property whether the property market is good or bad. It really does not matter very much. Let me explain.
The property index is only an average index. If you really study the property market very carefully, you will notice that some properties did not come down in 2015 but went up instead? Do you know which are the ones?
When government announced the TEL Mrt line that runs through East coast to be ready by 2023, Costa Del Sol went up instead of coming down. Why? This project is very beautiful with wonderful facilities at only $13xx psf with a future mrt and seaview becomes very appealing.
Assuming you are looking to buy for investment, then some new launches can be appealing because the developers priced to clear stocks. Using comparative rents from surrounding completed projects, calculate the rental yield that you are going to get and if your rental yield is high, it will be a compelling factor to invest.
You may also look at completed projects where there are existing tenancies. If the projects are well located and appealing, then it will be easy to rent consistently. Do not get me wrong to interpret that rent cannot drop when I say that rental can be consistently easy for certain properties. For every seasoned investors, we know that rents do come down during bad times and eventually will go up again as population is set to increase in the long run. When we say is consistently easy to rent, we mean by adjusting rental expectations to compete well in the market, tenants will still choose to rent that particular property as the property is well located and appealing to tenants. As long as rent is fair, the tenants will take it up. Oftentimes, landlords find it difficult to get tenants is when they price their rentals above market price. After being empty for a few months then they realized that they had asked too high. Hence, be open to listen to experienced agents when they feedback to you on the rentals expectations and you will not suffer unnecessarily.
In a good property market and in any market, measure the rental yield to know whether the property is good for investment. For those who ignored these fundamentals, they had recently paid a heavy price for it. You have read on newspapers that they had lost millions. These properties are ultra luxurious and rental yield is very low. If you are looking for such properties to stay, I would say it is a great time to pick them up at low prices. But if you are looking for such properties for investments, be prepared to have negative cash flows as such properties though cheaper now are still difficult to rent as tenants who can afford such high levels of rentals between $10,000 to $30,000 are few. These properties are for the ultra rich to invest. They have deep pockets and they will be able to hold till the property market picks up and the increase will likewise be millions. This arena of high end properties are not for the majority to invest.
Hence if you are looking for a property to invest, focus on the rental yield and is like a compass that will guide you through the good times as well as the bad times.
OUR PLEASURE TO SERVE YOU
Give us a call and is our greatest joy to find a property that will bring good fortunes to you. We believe in adding value to you and serve you with clarity and profitability in property investments.
Copyright © Tracy Goh 2015