Here in Singapore, and indeed around the world, we’re always on the lookout for how we can make extra cash. One of the popular ways that Singaporeans turn to is investment in property, with a particular focus on generating monthly rental income.
While it’s easy to claim that you want to invest in land, there’s a lot more to it than meets the eye, with the main factor being that you can spot a successful investment in land.
These are some of the main things to look out for when you’re on the lookout for an investment property.
Emphasise on entry price
We firmly support the view that investment in real estate should not be a lottery. Some consider how much you’re getting off a real estate purchase at the point of selling, but what others don’t know is that it’s already calculated at the point of buy. Knowing the value of a home you are purchasing inside is critical.
One should get a property at or below current value, not above. You shouldn’t purchase a property assuming it will help future purchases. We suggest checking the historical psf price trend to see if it is going upwards, downwards or flat to help you decide on your purchase price. The data can be found on the URA web site.
Look for value, not the most affordable price
Properties that come with a freehold lease or are close to MRT stations typically command a higher premium in the same location compared with 99-year leasehold projects and those that are not around MRT stations.
If you can spot the premium properties that are offered at the non-premium property level, you can be sure it is a must-grab. Many buyers purchase from close international schools and are willing to pay a premium from a ready pool of tenants for the ‘guaranteed’ rental income.
And you shouldn’t just look at that one thing. Many schools rent houses, and could be moving abroad. Instead, consider the bigger context and search for other factors that will lead to good future rent and return on capital.
Focus on location
You have heard this probably before, but it is true. Location is almost everything, really. Needless to say, being close to town center is a tremendous boon to the value of the house, particularly if you rent it out too. Look for properties outside the center area close to transportation hubs or commercial buildings such as shopping malls or amenities. Schools are good too. Prime position does come with a cost, though. In traveling further away you may want to strike a balance but being accessible to major transport will still be advantageous.
Be aware of masterplans
All three agents agree that it is crucial that there should be improvement in that region in order for a property to have potential for capital appreciation. They advise buyers to review the URA Masterplan to decide which areas will be built by the government as money is spent on infrastructure , transportation and amenities. The key shot to price increases in the arm was the launch of integrated resort Marina Bay Sands.
“I believe buyers taking the first mover advantage will benefit from the upcoming developments in Marina South. It’s priced sensibly, has a reputable developer, a famous architect, and is linked to malls and four MRT lines. “I believe buyers taking the first mover advantage will benefit from the upcoming developments in Marina South.It’s priced sensibly, has a reputable developer, a famous architect, and is linked to malls and four MRT lines.
Be prepared to enter the market
When you’re actively and genuinely searching for property to purchase, irrespective of the reason, the first move is to make sure you ‘re on a sound financial footing. It ensures you’ve done your loan appraisal beforehand and can quickly hit the iron while it’s hot (and available). Since there’s a lot of eyes on the market, other people will snap a decent chance if you’re taking too long to commit.
There will always be a golden window of opportunity to purchase an undervalued home. But, what’s good for you is generally pretty good for everyone, meaning everyone is able to catch it when they see it. When you see units that ask for below current market price range, chances are you’ve found an undervalued home.
Monitor vacancy rates for residential properties
A lot of investors test rental yields in an city. That’s helpful, but experienced landlords are also careful and watch vacancy rates while looking for a real estate.
It is a more direct measure of the current situation . For example, there were high vacancy rates in the Sentosa Cove region in February last year. That was a clear sign that things were not hunky dory, given the typically high rental income associated with the region (it was due to a dwindling number of well-heeled expatriates, an ongoing issue this year).
Watch for already ageing estates
No, it’s not hoping for an en-bloc sale while there’s the chance. It’s about rental yield. Note, renters don’t really know how many years they ‘re left on the lease – what they know about is flexibility and flexibility.
This means that an older property, if it is in the right location, could produce the same rental income as comparatively newer properties. Since its price is lower due to age, you would actually have a higher rental income. However, you need to make sure that the maintenance or restoration price is not too high. In many cases, hiring a painting contractor and getting some restoration works done will make it much more palatable to potential tenants. Also, you need to be sure of its rentability, as it is not easy to sell a condominium with an expiring lease.
