View Full Version : Cash flow
Just wondering - do all the seasoned property investors here consider positive cash flow as part of your investment consideration? (i.e positive cash after off-setting mortgage and maintenance from the tenancy)
Currently, we're seeing about 5%+ rental yield for MM in good locations, 3-4% for 99-yr regular condo in OCR and RCR, 1-3% for CCR and negative yields for some bigger landed + GCB based on today's asking prices. Prices have gone up so much these couple of years that yields have come down a lot.
I presume only the MMs and 99-yr leasehold will get positive cashflow based on today's interest rates.
Question is - interest rates will rise one day and erode into that positive cash flow. If that cash flow become negative, will you still hold on to the investment properties?
I'm asking because normally the ones with deeper pockets don't really care. But nowadays we have many lower-middle/middle class investors who are already vested. Cash flow is an important consideration for them.
So would most dispose of their properties when that happens and move on to other asset classes?
Check this out
http://sbr.com.sg/economy/news/check-out-why-low-interest-rates-will-persist-until-2015
Sibor History
http://www.salary.sg/2009/historical-sibor-see-graph/
Housing PPI
http://www.singaporepropertycycle.com.sg/market-trends/singapore-property-price-index/
Interpolate between sibor history and housing PPI to find your answer.
2nd investment, downpayment is 40% with 60% loan.... repayment, minimal impact.
:cheers3::cheers3::cheers3::cheers3::cheers3::cheers3:
looks like seasoned investors (me included:p) not going to reply.
looks like seasoned investors (me included:p) not going to reply.
But you just did.
if u are worried about cashflow, it means u are overleveraged.
Just wondering - do all the seasoned property investors here consider positive cash flow as part of your investment consideration? (i.e positive cash after off-setting mortgage and maintenance from the tenancy)
Currently, we're seeing about 5%+ rental yield for MM in good locations, 3-4% for 99-yr regular condo in OCR and RCR, 1-3% for CCR and negative yields for some bigger landed + GCB based on today's asking prices. Prices have gone up so much these couple of years that yields have come down a lot.
I presume only the MMs and 99-yr leasehold will get positive cashflow based on today's interest rates.
Question is - interest rates will rise one day and erode into that positive cash flow. If that cash flow become negative, will you still hold on to the investment properties?
I'm asking because normally the ones with deeper pockets don't really care. But nowadays we have many lower-middle/middle class investors who are already vested. Cash flow is an important consideration for them.
So would most dispose of their properties when that happens and move on to other asset classes?
Interest rates rise will coincide with recession so you'll probably see reduced rent or worst case, can't rent out. On top of that, still must pay property tax and condo maintenance -> negative yield.
Check this out
http://sbr.com.sg/economy/news/check-out-why-low-interest-rates-will-persist-until-2015
Sibor History
http://www.salary.sg/2009/historical-sibor-see-graph/
Housing PPI
http://www.singaporepropertycycle.com.sg/market-trends/singapore-property-price-index/
Interpolate between sibor history and housing PPI to find your answer.
2nd investment, downpayment is 40% with 60% loan.... repayment, minimal impact.
:cheers3::cheers3::cheers3::cheers3::cheers3::cheers3:
Yes chestnut bro, repayment might not make a big impact for those with sufficient buffer. But nowadays we are starting to see aunties, uncles and marginal players rushing to show flats to "book" a property "in case the next generation cannot afford to own one". If sustained negative cash flow persists, it could be a different reality or those who "show-hand" to borrow money from relatives/parents etc to make up the 40% downpayment.
Yes chestnut bro, repayment might not make a big impact for those with sufficient buffer. But nowadays we are starting to see aunties, uncles and marginal players rushing to show flats to "book" a property "in case the next generation cannot afford to own one". If sustained negative cash flow persists, it could be a different reality or those who "show-hand" to borrow money from relatives/parents etc to make up the 40% downpayment.
Bro, to begin with... If a person has the capability to fork out 40%, what does this tell you??? Imagine 1Mil... That's 40%.... Do you think the man on the street has 500K (including ABSD of either 7% or 10% + 3% tax).
So lets say a 600K mm, he forks out 240K + (60K or 78K - round off). That's 300K.... Not many have that kind of money.... IF they can accumulate the downpayment for their 2nd or more property, they sure are one hack of solid in my mind.... They are no ordinary people....
Next, the uncles and aunties you are referring to are most probably buying for their kids or acting in proxies for their more "mature kids"....
Bro, if you pay 40-50% down, work out the monthly installment should interest rate shoot up... Find out the mortgage repayment amount and you will know if they have holding power if rental drop... That will give you an idea of this people....
If you tell me downpayment is 0%, 10%, 20% I will be more inclined to agree with you that I will not know how many are weak holders and how many are strong holders.... The minute the govt increase downpayment to 40%, the risk drops...
It's like the car market.... Those who cannot afford the 50% down has been weeded out....
You have a rite to your view... I am not here to challenge you... If you think they are at risk, sure.... no prob...
1/2 full or 1/2 empty :confused::confused::confused::confused::confused:
But if you do all your calculations on paper, you will see more information...
Cheers
:cheers4::cheers4::cheers4::cheers4::cheers4:
Interest rates rise will coincide with recession so you'll probably see reduced rent or worst case, can't rent out. On top of that, still must pay property tax and condo maintenance -> negative yield.
:scared-4: :scared-4: :scared-4:
Oh dear. Quickly sell all before that happens!
Interest rates rise will coincide with recession so you'll probably see reduced rent or worst case, can't rent out. On top of that, still must pay property tax and condo maintenance -> negative yield.
if rental not enough to cover installment,still need to pay rental income tax right?
if rental not enough to cover installment,still need to pay rental income tax right?
no need if rental cannot cover all the expenses.
or to simplify, if rental cannot cover the interest portion of the monthly installment, no need to pay rental income tax
i still buying. But I am ordinary people...:D
Talk of negative yield, buying gold is the worst! Pay so much still have to pay rent for storage of the gold (instead of collecting rent). How hah? Why so many people bought and still buying? :doh:
Interest rates rise will coincide with recession so you'll probably see reduced rent or worst case, can't rent out. On top of that, still must pay property tax and condo maintenance -> negative yield.
Talk of negative yield, buying gold is the worst! Pay so much still have to pay rent for storage of the gold (instead of collecting rent). How hah? Why so many people bought and still buying? :doh:
because i love the sound the gold bars make when they hit each other. it is a very expensive addiction.:)
Do you go to the bank every day to hear the sound of the gold bars make when they are hitting each other? LOL:D
This is a very expensive addiction! You continue to collect, you will continue to pay more for storage.:p
because i love the sound the gold bars make when they hit each other. it is a very expensive addiction.:)
Do you go to the bank every day to hear the sound of the gold bars make when they are hitting each other? LOL:D
This is a very expensive addiction! You continue to collect, you will continue to pay more for storage.:p
storage fees only for gold certificate.
SDB is fixed per year, doesnt matter how many physical bars there is inside.
no need to go bank every day. keep some in the safe, play with it and use it to do some light exercise :) although many dont believe, 2kg of gold bar seems heavier than 2liter of water when you carry them.
alas, there is no gold bug anonymous, unlike alcoholic anonymous.
Heard gold will continue to drop for a while. :)
storage fees only for gold certificate.
SDB is fixed per year, doesnt matter how many physical bars there is inside.
no need to go bank every day. keep some in the safe, play with it and use it to do some light exercise :) although many dont believe, 2kg of gold bar seems heavier than 2liter of water when you carry them.
alas, there is no gold bug anonymous, unlike alcoholic anonymous.
because i love the sound the gold bars make when they hit each other. it is a very expensive addiction.:)
Hang 2 bars by the window and hear them clang! Golden wind chimes....:D
Make sure it securely otherwise can kill someone below. :scared-4:
Hang 2 bars by the window and hear them clang! Golden wind chimes....:D
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