Your search results

5 Must-Know Questions Before Investing in Real Estate

Posted by Jayson Ang on June 15, 2023

| 0

TLDR

When considering whether to buy a new development or a resale property, it can be challenging. In the blog post mentioned, various aspects of investing in condos in Singapore are discussed, covering topics such as leasehold versus freehold. It provides insights into the real estate market in Bedok, Changi, Pasir Ris, and Tampines in 2023, along with considerations for purchasing a condo despite high PSF. The post also highlights the impact of Singapore’s development on real estate markets and explores buying mega development condos while addressing overlooked issues. Moreover, it delves into cash over valuation in HDB resale flats and offers a simplified guide to buying landed property in Singapore. Additionally, it shares lessons from homebuyers’ experiences in the unpredictable Singapore housing market and lists frequently overlooked questions for new condo buyers to avoid regrets in the future.

Investing in property is a more secure, long-term choice compared to more speculative options like stocks, and remains a popular choice in Singapore – despite the restrictions and cooling measures that make it harder for property investors to make a profit.

But before you commit to your next property, you should ask yourself these five questions to ensure you make the right decision.

1. Am I Eligible To Buy?

Before you purchase another HDB flat, eligibility is a must. If you live in a new or resale HDB flat, or an Executive Condominium (EC), you are obligated to abide by the five-year Minimum Occupancy Period (MOP). This entails that you must stay in your current dwelling for five years before you can acquire your subsequent or second property.

2. What Type Of Property Am I Looking For?

The kind of real estate you plan to purchase will largely influence the further actions you’ll have to take. Examples of real estate types include:

HDB has a wide range of residential properties to offer, from two-room flexi apartments, to luxurious executive flats, as well as Design, Build, and Sell Scheme (DBSS) flats,
Executive Condominiums (ECs),
condos,
apartments,
semi-detached or terrace houses, and even
Good Class Bungalows (GCBs)!

Considerations before buying a second HDB flat

Be sure to confirm your eligibility for an HDB flat under the Ethnic Integration Policy and Singapore Permanent Resident quota!

Upon receiving the keys to your second HDB flat, you must sell your previous HDB flat within a six month period.

3. What Are Key Factors To Consider When Choosing The Right Property?

If you’re seeking to purchase a second property – be it for investment or occupancy – there are four key factors to keep in mind!

1. Location

The location of your property can make a world of difference in the type of tenants you’ll attract.

If your property is in a Central Business District (CBD), you’ll be able to draw in expats seeking to rent near their place of work.

On the other hand, if you are an owner-occupier, your second property’s location will dictate your lifestyle and community.

Choosing to live in the bustling city of Orchard brings the hustle and bustle to your doorstep – life at a faster pace.

But if you decide to buy a home in the heartlands, you will be surrounded by a majority of family units, enjoying a slower lifestyle.

2. Surrounding Developments

If you’re an owner-occupier, what amenities are around your second property? Are there transportation links?

These can influence the kind of tenants you attract, but don’t forget to assess whether the surrounding facilities fit your own domestic requirements.

Are there supermarkets close by?

If you’re buying the second property for your elderly parents, are there hospitals and clinics in the area?

If you have kids, you’ll want to know if there are any good schools in the vicinity too.

3. Upcoming Developments

To ensure you are attracting the right tenants to your property, always make sure to check what Urban Redevelopment Authority (URA) has in store for the area it’s located in.

For instance, the URA’s plan to turn Jurong East into a second Central Business District (CBD) is expected to bring a flurry of property buyers.

With the multitude of malls and retail chains, as well as the proposed Kuala Lumpur-Singapore High Speed Railway, it’s no wonder that Jurong is becoming a sought-after area.

4. Rental Rate

When it comes to investments, it is important to consider potential rental yields and capital appreciations, as well as the estimated return on investment.

You can also analyze average rental rates in the area over the span of five to ten years to see if there is any notable decline.

As a general rule of thumb, the rental rate should be at least enough to cover the monthly loan repayments for the property you sold.

4. If It’s An Investment, Is It The Right Time To Buy?

No matter what type of investment, there are associated risks. In light of the government implementing stricter foreign regulations, expats have been departing the nation, resulting in a drop in the number of inhabitants since 2003, consequently pushing rents downwards.

Don’t Forget About The Total Debt Servicing Ratio (TDSR)

If you are looking to invest in another property and considering taking out a home loan, be sure to take the TDSR into account.

This rule, in place for Singaporean loan holders, prevents borrowers from becoming overleveraged with their debts.

5. Can I Afford A Second Property?

Finally, to determine whether you have the financial capability to purchase a second property, you must carefully calculate the associated costs.

Loan-To-Value (LTV) Ratio

Following the unveiling of the most recent property cooling measures, banks now limit Loan-to-Value (LTV) to 75% when taking out a loan for purchasing property.

For those looking to buy a second property, the maximum LTV stands at 45%, or 25% for loan tenures over 30 years.

Additional Buyers’ Stamp Duty (ABSD)

In December 2021, the Singaporean government, in response to the growing number of transactions and escalating prices, implemented a series of new property cooling measures.

For locals, the Additional Buyer’s Stamp Duty (ABSD) for a second property purchase was set at 17% of the purchase price or value (whichever is higher), while Permanent Residents faced a 25% duty, and foreigners, a 30% duty.

Starting on May 9, 2022, new regulations will come into effect for residential properties transferred into a living trust :

The extra Buyer’s Stamp Duty (ABSD) of 35% now applies when a residential property is transferred into a living trust – even if there isn’t a discernable beneficiary.

By shutting down this loophole, ABSD (Trust) has to be paid upfront when the transfer takes place.

Property Tax

At the Singapore Budget on February 18, 2022, the authorities declared that the Property tax rates for both owner-occupied and non-owner-occupied residential properties will be increased in two phases from 2023.

Homeowners with an annual value greater than $30,000 will see a rise ranging from 5 to 23 percent in 2023, and 6 to 32 percent in 2024.

When buying your second home in Singapore, it pays to be financially prudent, as the taxes on non-owner-occupied properties, such as investment properties, are set to rise.

The current 10-20 percent tax will go up to 11-27 percent in 2023 and 12-36 percent in 2024.

To ensure you are on the right track with your purchase, it is a wise idea to create a clear plan with a financial planner, so you don’t end up in any unexpected financial difficulties.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

Mandarin Top 5

Top 5 Factors : Why Investing In A Property With A Good View Can Be A Profitable Move In Singapore

Jayson Ang – August 1, 2024 –

Investing in a property with a good view in Singapore can be a profitable move for several reasons. Here are...

Mandarin Top 5

5 Factors : Why Singapore’s Property Market Is A Good Hedge Against Inflation

Jayson Ang – May 26, 2024 –

As inflation becomes a growing concern for investors worldwide, the stability of Singapore's property market has become an attractive option...

All Blog Posts Buying Tips

Are You Worried About Overpaying On Your Property? Here’s The Secret To Finding Out Its Perfect Purchase Price!

Jayson Ang – March 14, 2023 –

TLDR Understanding property valuations and their impact on mortgage loans is crucial in the Singapore real estate market. By considering...

All Blog Posts Buying Tips

5 Disastrous Property Transaction Nightmares (and How to Avoid Them)!

Jayson Ang – April 20, 2023 –

TLDR When attempting to sell your property, various worst-case scenarios can hinder the sale process significantly. These scenarios include buyers...

Mandarin Top 5

Top 5 Emerging Trends in Singapore Real Estate: What Investors Need to Know

Jayson Ang – November 1, 2024 –

The Singapore real estate market has experienced significant growth in recent years, attracting investors from around the world. As the...

All Buying Tips

Could You Still End Up Losing Money When Buying Property in Singapore During a Market Slump?

Jayson Ang – February 14, 2024 –

TLDR When it comes to property investments, timing is crucial. Buying at the right moment is only half the battle;...

Buying Tips Mandarin Top 5

5 Reasons Why Timing the Singapore Property Market is a Risk You Shouldn’t Take

Jayson Ang – June 28, 2023 –

5 Reasons Why Timing the Singapore Property Market is a Risk You Shouldn't Take Entering the Singapore property market can...

All Blog Posts Opinion

Case Study : With Income Of $180K per Annum, Which Options Should I Choose?

Jayson Ang – February 28, 2023 –

TLDR When making property decisions in Singapore, it's crucial to consider various factors like affordability, loan-to-value ratios, and CPF requirements....

All Blog Posts Opinion

5 Reasons Why You Should Consider Hiring an Agent Instead of DIY-ing It

Jayson Ang – June 9, 2023 –

TLDR Understanding the complexities of the real estate market and transactions can be overwhelming. Enlisting the help of a real...

All Buying Tips Opinion

7 Essential Considerations to Keep in Mind When Assessing a Floor Plan for a New Condominium Development

Jayson Ang – March 6, 2024 –

TLDR When selecting a property unit, carefully examine the floor plan beyond aesthetics. Consider non-living spaces like ledges and void...

All Buying Tips Opinion

Discover Affordable Executive Condos in 2024 Starting at $560,000

Jayson Ang – October 23, 2024 –

TLDR The Executive Condos (ECs) offer affordable options compared to private properties in Singapore. Despite price variations, most ECs remain...

All Buying Tips Opinion Selling Tips

Market Mistakes in Property Investment: Key Lessons and Strategies for Success

Jayson Ang – July 16, 2024 –

TLDR In property investment, common mistakes include lack of research, overleveraging, and neglecting due diligence. To succeed, conduct thorough market...

All Blog Posts Buying Tips

6 Essential Factors HDB Upgraders Should Be Aware Of Before Purchasing a Condo in 2023

Jayson Ang – June 12, 2023 –

TLDR When upgrading your property, consider factors like rental rates, Buyer's Stamp Duty adjustments, higher interest rates for bank loans,...

All Blog Posts Opinion

How Will Singapore’s Development Influence The Real Estate Markets In Bedok, Changi, Pasir Ris, And Tampines : 2023

Jayson Ang – April 5, 2023 –

TLDR You will find detailed insights into upcoming housing developments in the East of Singapore, specifically in areas like Bayshore,...

Mandarin Top 5

The Psychology of Property Investing: 5 Reasons Why Singaporeans Love Real Estate

Jayson Ang – May 4, 2024 –

Real estate investing has always been a popular way to grow wealth and secure financial stability. In Singapore, the love...

Mandarin Top 5

5 Reasons Why Singapore Loves Investing in Properties

Jayson Ang – March 28, 2024 –

Property investing is a popular and lucrative option in Singapore due to several reasons. Firstly, Singapore's stable and growing economy...

Buying Tips Mandarin Top 5

5 Hidden Expenses to Watch Out for When Buying a Home in Singapore

Jayson Ang – July 2, 2023 –

5 Hidden Expenses to Watch Out for When Buying a Home in Singapore Buying a property in Singapore can be...

All Buying Tips Opinion

Beyond Buying: Innovative Strategies for Property Investment Success

Jayson Ang – September 14, 2024 –

TLDR The world of property investment and real estate trends offers vast opportunities. Stay informed with effective property investment strategies...