“It is not when 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 taking into consideration 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, they will set themselves at a gift by entering the property market and generating second income from rental yields regarding putting their cash secured. Based on the current market, I would advise that they keep a lookout regarding any good investment property where prices have dropped more than 10% rather than putting it in a fixed deposit which pays 0.5% and does not hedge against inflation which currently stands at 5.7%.
In this aspect, my investors and jade scape I take presctiption the same page – we prefer to reap the benefits the current low fee and put our take advantage property assets to produce a positive cash flow via rental income. I myself have personally seen some properties generating positive monthly cash flow of of up to $1500 after off-setting mortgage costs. This equates with regard to an annual passive income as much as $18 000 per annum which easily beats returns from fixed deposits plus outperforms dividend returns from stocks.
Even though prices of private properties have continued to despite the economic uncertainty, we could see that the effect of the cooling measures have can lead to 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. I’m going to attribute this for the following 2 reasons:
1) Many owners’ unwillingness to sell at lower prices and buyers’ unwillingness to commit to some higher the price tag.
2) Existing demand for properties exceeding supply due to owners being in no hurry to sell, consequently in order to a embrace prices.
I would advise investors to view their Singapore property assets as long-term investments. Really should not be excessively alarmed by a slowdown in the property market as their assets will consistently benefit in the long run and boost in value because of 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 might also consider buying shophouses which likewise support generate passive income; that are not depending upon the recent government cooling measures prefer the 16% SSD and 40% downpayment required on homes.
I cannot help but stress the value of having ‘holding power’. You should never be required to sell household (and make a loss) even during a downturn. Remember that the property market moves in a cyclical pattern and you will need to sell only during an uptrend.