Thursday, January 27, 2011

What to do in this burning hot market?

In this scalding property market, what is the most appropriate property to buy now?


1.   Land in Singapore is scarce. Therefore, prices are always stable on the uptrend.
2.   There are only so many landed property (about 60,000 units?) in Singapore, unlike the condominiums (millions of units).
3.   There are still undervalued 999-years or freehold landed property to look out for. (Trust me, look around for landed properties that are more than 20 years old.)
4.   You can build your dream house, according to your own liking.
5.   Landed property has the least impact caused by any noises (i.e. financial crisis, slow economy)
6.   You pay about the same price as condominiums.
7.   You own a part of Singapore. Isn't that great?

Yesterday, I visited a friend's place at Telok Kurau. It's a new freehold development that has just TOP. The unit is only about 480 sqft. The corridor gives the feeling that you are in a hotel, less the air-con. There is an offer to buy it at $600,000. That's a crazy $1,250psf. However, my friend bought it last year at about $520,000. The unit can fetch a rental of about $2600 to $2800 a month. That's a yearly income of about $28,000 to $30,000, minus all the fees and taxes. Anyway, it's her very first own property. She says she will enjoy her stay there for a year, before she decides what to do next. She is right. She has taken the very first step to own a property, as I have mentioned in my book.

When she bought the place, she just paid with 5% cash, about $26,000. So if she were to rent out the place, that more than 100% returns in the first year. Isn't that great? However, because of the new cooling measures, you may have to pay a cash upfront of at least $52,000. Your yearly returns will be reduced by half.

My relative bought a one bedroom unit (600 sqft) on 17th floor in the West in 2002. It was only 99-year leasehold. She bought it at $385,000 and currently it can fetch a price of $600,000. If she were to sell it, her savings that she used to bought it has grown at a rate of about 11.2% compounded. This rate is calculated after deducting the interest she paid to the bank and other fees involved.

Isn't it clear where you should park your money now?

Time to start doing homework and grow your money...


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