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

From Garden City to Smart Nation: Singapore’s Top 5 Goals Building a Sustainable and Livable City

Jayson Ang – February 20, 2024 –

Singapore is a small island city-state with a population of over 5 million people. Its urban landscape is constantly evolving,...

All Blog Posts Buying Tips

Learn How To Negotiate For The Best Price When Purchasing a Resale HDB Flat

Jayson Ang – February 17, 2023 –

Navigating the complexities of purchasing a resale HDB flat requires honing negotiation skills and market awareness. Understanding property valuations, seller...

All Buying Tips Opinion

3 Things You Need to Know if You Are Buying a Second Property

Jayson Ang – August 21, 2023 –

TLDR When considering buying a second property in Singapore, ensure eligibility by meeting the Minimum Occupancy Period (MOP) and understanding...

Mandarin Top 5

Top 5 : Best Karting Circuits in Singapore

Jayson Ang – December 21, 2024 –

Singapore, a bustling city-state known for its modern architecture, cleanliness, and vibrant culture, is also home to a thriving karting...

All Blog Posts Buying Tips

Discover the Benefits of a SORA Home Loan in 2023: Why Consider SORA Interest Rates

Jayson Ang – May 17, 2023 –

TLDR The article discusses the transition from SIBOR and SOR to SORA as the new benchmark rate in Singapore's banking...

Mandarin Top 5

Top 5 Seafood Restaurants in Singapore

Jayson Ang – April 3, 2024 –

Singapore, a melting pot of cultures and culinary delights, is well-known for its diverse food scene. With its strategic location...

Mandarin Top 5

Top 5 Factors Should Be Taken Into Consideration When Choosing The Right Neighborhood To Invest In Singapore’s Real Estate Market

Jayson Ang – January 10, 2025 –

Singapore's real estate market is known for its stability and potential for growth, making it an attractive investment destination for...

Mandarin Top 5

Singapore Property Investing: Is It Better To Flip Or Hold?

Jayson Ang – May 18, 2024 –

Investing in Singapore property can be a profitable venture, but investors must choose the right strategy to maximize their returns....

Mandarin Top 5

Top 5 Most Common Red Flags To Watch Out For When Investing In Singapore Property

Jayson Ang – August 11, 2024 –

Investing in Singapore property has long been considered a lucrative and stable way to build wealth. However, like any investment,...

Mandarin Top 5

Top 5 : Factors Influence Real Estate Investors’ Decisions when Investing in Singapore Condos?

Jayson Ang – December 11, 2024 –

Singapore's real estate market has always been an attractive investment option for both local and foreign investors. The city-state's stable...

Mandarin Top 5

Navigating Singapore’s Real Estate Market: The Truth Behind 5 Common Misconceptions

Jayson Ang – March 19, 2024 –

The real estate market in Singapore is known for its stability and attractiveness to investors both locally and internationally. However,...

Mandarin Top 5

Top 5 : Questions Should Investors Be Asking Before Investing In Singapore’s High-End Rental Market

Jayson Ang – February 1, 2025 –

Singapore's high-end rental market has been a hot topic of discussion among investors worldwide. With the city-state's robust economy, excellent...

All Buying Tips

When to Strike Gold: The Ultimate Guide to Selling Your House in Singapore!

Jayson Ang – June 28, 2024 –

TLDR When deciding the best time to sell your property, consider various factors such as market trends, financial goals, and...

Mandarin Top 5

Top 5 Reasons : Why Singapore’s Property Market Is a Safe Haven for Investors in Uncertain Times – Insider Analysis!

Jayson Ang – September 16, 2024 –

In today's uncertain global economic climate, investors are constantly on the lookout for safe havens to park their wealth. Amidst...

All Blog Posts Buying Tips

Are You Considering Paying Off Your Mortgage Loan Ahead of Time? Is It the Right Financial Move?

Jayson Ang – May 11, 2023 –

TLDR When considering mortgage options in Singapore, it's essential to understand the differences between HDB loans and bank loans. HDB...

All Blog Posts Opinion

Don’t Miss Out: Take Control of Your Life in Your 30s and 40s

Jayson Ang – December 28, 2022 –

TLDR The stages of wealth management vary from ages 30 to 80, with different focuses and considerations at each stage:...

Mandarin Top 5

Top 5 Reasons Why Singapore’s Property Market Is A Haven For High Net Worth Investors

Jayson Ang – September 26, 2024 –

Singapore's property market has long been a magnet for high net worth investors, both local and international. The city-state's strategic...

All Blog Posts

Singapore Property Swapper

Jayson Ang – December 7, 2022 –

https://www.youtube.com/watch?v=B1NTnjxDPy4 Jayson Ang, also known as the Singapore Property Swapper, is a certified Propnex agent and top 1% producer who...

All Buying Tips

Simplified Guide to Buying Landed Property in Singapore

Jayson Ang – January 8, 2024 –

TLDR When considering buying a landed property in Singapore, you have options like terrace homes, semi-detached houses, and bungalows. Understanding...