Page 1 of 4 1234 LastLast
Results 1 to 30 of 102

Thread: Which investment method yields higher?

  1. #1
    Join Date
    Jun 2008
    Posts
    3,086

    Default Which investment method yields higher?

    Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

    I did a simple maths calculation for the amount of $445K upfront capital.

    Condo:
    Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

    Rental: 3500/mth
    Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
    gross cash: 3500 – 2110 = $1390
    ***must deduct mgmt fee, property tax and income tax

    REIT: 455K
    Dividend: 455K x 6% = 27.3K per year = 2.275K per mth

    From cash flow point of view: REIT is better as $2275 >> $1390, and it’s tax free!

    From capital appreciation point of view: Condo may be better, as property price may inch up year by year. And after 20 years, you will have a fully paid house.

    So which one is better investment method at today’s situation? which one will you choose?

  2. #2
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    Both are risky
    but
    No risk no gain
    Leaving all $$ in banks = inflation risk
    So
    it is the right amount of risk tailored made to your situation and continuous risk mgmt that matters
    Ride at your own risk !!!

  3. #3
    Join Date
    Mar 2008
    Posts
    693

    Default

    Quote Originally Posted by phantom_opera
    Both are risky
    but
    No risk no gain
    Leaving all $$ in banks = inflation risk
    So
    it is the right amount of risk tailored made to your situation and continuous risk mgmt that matters
    very true indeed... all investment voice down to holiding power when mkt turns.
    like TS, i also constanly ask if my $ is not in property, would it be better invested on some financial products? Guess is timing and risk apettite.

    Still prefer property for now as once you buy dont need to do anything, dont need to check the mkt up or down, dont need rebalance the portfolio.. this is for lazy people like me.

  4. #4
    Join Date
    Feb 2009
    Location
    峨眉山
    Posts
    5,512

    Default

    plus property in lousy times u can still LIVE in it and use it

    try LIVE in a REIT
    click: 🏢shoeboxmickeymousehouse 🏢

  5. #5
    ikan bilis's Avatar
    ikan bilis is offline i'm Buaya ! Girls BEWARE !!...
    Join Date
    Apr 2011
    Posts
    1,385

    Default

    Quote Originally Posted by mcmlxxvi
    plus property in lousy times u can still LIVE in it and use it

    try LIVE in a REIT
    ... reit don't bankrupt you when lousy times...

  6. #6
    Join Date
    Feb 2011
    Posts
    8,926

    Default A case of investment gone bad

    Singapore's City Developments, Wachovia Group Team Up To Buy Residential Project

    The 60 percent stake by Wachovia was worth S$259.4 million.

    Source : AFX News Limited, Nov 5, 2007

    ==============

    Wachovia sold its 60 percent stake in the towers at the Cliveden at Grange development for S$204.5 million ($167 million) to the country’s second-largest property developer, City Developments said.

    ===============
    Ride at your own risk !!!

  7. #7
    Join Date
    May 2012
    Posts
    928

    Default

    REITS looks better.

    If project 6% into 20 years, you get 120% of pure dividends. Means you get more than double the initial outlay. Plus the potential upward value of REIT.

    Capital appreciation for own stay is the best.

    Resi rental play has low yield, high risk in today's SG context.

  8. #8
    Join Date
    Oct 2010
    Posts
    2,094

    Default

    Quote Originally Posted by East Lover
    Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

    I did a simple maths calculation for the amount of $445K upfront capital.

    Condo:
    Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

    Rental: 3500/mth
    Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
    gross cash: 3500 – 2110 = $1390
    ***must deduct mgmt fee, property tax and income tax
    wa! left only $1390/mo?!

    WAH KAO.

    i rather hoot shares and collect dividend.. $$250k can collect $800/mo divdend at least (from somewhere i saw on internet lah)


    btw, thanks east_lover zeh zeh for doing the math.
    because $1million is all i can afford to to go for if really want to buy a property..
    but that dream is gone..
    Last edited by roly8; 26-12-12 at 12:18.
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  9. #9
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    Quote Originally Posted by roly8
    wa! left only $1390/mo?!

    WAH KAO.

    i rather hoot shares and collect dividend.. $$250k can collect $800/mo divdend at least (from somewhere i saw on internet lah)


    btw, thanks east_lover zeh zeh for doing the math.
    because $1million is all i can afford to to go for if really want to buy a property..
    but that dream is gone..
    Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

    But another side, after 20 years you will get fully paid house haha

  10. #10
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    Quote Originally Posted by roly8
    btw, thanks east_lover zeh zeh for doing the math.
    because $1million is all i can afford to to go for if really want to buy a property..
    but that dream is gone..
    I saw several posts from respective forumer did ask similar question - how to invest with 400k spare cash, so i initiated this thread, for open discussion

  11. #11
    Join Date
    Oct 2010
    Posts
    2,094

    Default

    Quote Originally Posted by East Lover
    Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

    But another side, after 20 years you will get fully paid house haha
    let say we have fully paid the condo and minus off all the mgtm fee & tax..

    is $2500/mo realistic number?


    note: property tax might get higher in 20 yr time..



    also:
    one big loophole in the question is:
    how can interest rate stick at $1.xx % for next 20 years ? is it possible??


    but based on what i search on google:
    Yes, there is typically an inverse relationship, high interest rates equals low inflation, low interest rates = high inflation.

    Why? Money, if there is more money in an economy, people tend to spend more, thus (as a whole) driving up the cost of goods and services. If there is less money in an economy, there is less to spend and low demand equals lower prices.

    If interest rates are low, money is easier and cheaper to borrow, hence more money in an economy. If rates are high, it is more expensive to borrow, hence less money in an economy.

    There is also a conept know as stagflation, when interest rates and inflation both increase, such was the case in the Carter Administration. External market factors or market manipulation may cause stagflation.
    stagflation is what i am expecting in near future, man!
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  12. #12
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    Quote Originally Posted by East Lover
    Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

    But another side, after 20 years you will get fully paid house haha
    Cannot calculate based on 1.09% .... more likely to be 2-2.5% even in the next 10y
    Ride at your own risk !!!

  13. #13
    Join Date
    Dec 2011
    Posts
    1,763

    Default

    In my opinion your 1st major investment should always be a property. This is so because of loan restriction on age and inflation effect on time. Then you can move on to minor investment such as shares, bonds, reits, etc. You don't want your investment in shares, bonds and reits to become your major investment because of the speculative nature unless you are a professional in the field.

  14. #14
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    Quote Originally Posted by phantom_opera
    Cannot calculate based on 1.09% .... more likely to be 2-2.5% even in the next 10y
    you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

    so anyone still dear to invest property at this sky high price timing?

  15. #15
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    Quote Originally Posted by East Lover
    you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

    so anyone still dear to invest property at this sky high price timing?
    there are always carrot heads

    D5:

    2012-12-07 #XX-XX 1,399 1,358psf 2009-01-23 680psf $948,522 1,414 19.5
    Ride at your own risk !!!

  16. #16
    Join Date
    Feb 2009
    Location
    峨眉山
    Posts
    5,512

    Default

    S'pore REIT market on the rise, but risks remain

    By Linette Lim | Posted: 29 October 2012 2150 hrs

    SINGAPORE: The Singapore real estate investment trust (REIT) market is up about 40 per cent this year -- double the returns in major REIT markets like the US and Japan.
    While returns and yield spreads on Singapore REITs may be the best in the world, some analysts said the market could become over-invested
    In 2002, CapitaMall Trust became the first Singapore-listed REIT. A decade on, there are over 20 REITs across the commercial, industrial, hotel and healthcare property sectors.
    Low interest rates on bank deposits have helped to keep investor interest high in REITs and other stapled securities.
    Industrial REITs for example pay dividends of up to eight per cent -- more than the five to six per cent offered by blue chip stocks.
    Gabriel Yap, executive chairman of GCP Global, said: "The REITs are trading at about 20 times the PE (price to earnings ratio) as compared to the real estate developers at only 12 times. Because it's a REIT structure that pays stable dividends, the valuations are much higher."
    Some analysts said REITs may be an over-invested asset class.
    Excluding other stapled securities and business trusts, such as Hutchison Port Holdings Trust, the REIT market in Singapore has a market capitalisation of around US$38 billion. That is up more than three times from its post-Lehman crisis bottom in 2008.
    Terence Wong, executive director at DMG
    click: 🏢shoeboxmickeymousehouse 🏢

  17. #17
    Join Date
    Feb 2009
    Location
    峨眉山
    Posts
    5,512

    Default

    contd...

    and Partners Research, said: "There is a risk of the sector being over-owned, since everybody wants a piece of the pie right now. We've seen that in 2006 and 2007, where REITs were seen very much as a growth stock. And I think that's the danger.
    "Right now, we're seeing the same thing, with the REITs rising about 40 per cent so far this year. When complacency sets in, if the party ends, I think a lot of people will get hurt."
    From 2004 to 2007, many REITs enjoyed high valuations due to the stock market boom. REIT managers borrowed money to acquire new properties, increasing their gearing.
    But the financial crisis struck in 2008, and many REIT managers with over-geared balance sheets were forced to raise cash by issuing more equity, thereby diluting the value of the stock.
    In a little more than six months, from May to December 2008, the market capitalisation of REITs had fallen 2.6 times.
    -CNA/ac
    click: 🏢shoeboxmickeymousehouse 🏢

  18. #18
    Join Date
    Oct 2010
    Posts
    2,094

    Default

    Quote Originally Posted by East Lover
    you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

    so anyone still dear to invest property at this sky high price timing?
    people who have too much $$$ to spend or those who kena the 'fear' of losing/missing out etc..
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  19. #19
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    Quote Originally Posted by roly8
    people who have too much $$$ to spend or those who kena the 'fear' of losing/missing out etc..
    2012-11-27 SKIES MILTONIA 27 YISHUN 99 YRS FROM 2012 CONDOMINIUM 527sqft 1,221psf $644,000

    Yes, if people are willing to pay 1221psf for Yishun far from MRT ... what's more?
    Our OCR approaching Hong Kong NT pricing liao ...
    Ride at your own risk !!!

  20. #20
    Join Date
    Jun 2009
    Posts
    2,309

    Default

    I think your focus on the yield is seriously flawed.

    It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

    Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

    I always think once the property reaches a maximum potential, you should let the next person have it.

    What is max potential ? You will have to figure it out yourself lor!

    Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

    DKSG

  21. #21
    Join Date
    Dec 2011
    Posts
    1,763

    Default

    Quote Originally Posted by phantom_opera
    there are always carrot heads

    D5:

    2012-12-07 #XX-XX 1,399 1,358psf 2009-01-23 680psf $948,522 1,414 19.5
    Property is highly individualized, thus allows for freak price increase. Development of mrt, building of major shopping center or business hubs resulting in such abnormal increase. Reits on the other hand only allow for uniform increase.

  22. #22
    Join Date
    Dec 2011
    Posts
    1,763

    Default

    Quote Originally Posted by DKSG
    I think your focus on the yield is seriously flawed.

    It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

    Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

    I always think once the property reaches a maximum potential, you should let the next person have it.

    What is max potential ? You will have to figure it out yourself lor!

    Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

    DKSG
    U and me looking at it so eye to eye

  23. #23
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    i agree with you - must know how and when to exit before music stop.

    but the question is where to park your extra earned 0.8 million after exit?
    also, must be patient to wait for next new song...
    Quote Originally Posted by DKSG
    I think your focus on the yield is seriously flawed.

    It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

    Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

    I always think once the property reaches a maximum potential, you should let the next person have it.

    What is max potential ? You will have to figure it out yourself lor!

    Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

    DKSG

  24. #24
    Join Date
    Feb 2009
    Location
    峨眉山
    Posts
    5,512

  25. #25
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    Thanks! is this warrior you? so young~

    Financial Independence at 30 years old
    I really hope to celebrate my 30th birthday in 2013 by achieving S$1k per month (S$12k per annum) in dividends. Based on my current portfolio, I will be receiving an estimated S$11.3k in 2013. That is still a little way off my target.

    • Starhub (10 lots) = S$2, 000
    • Singtel (7 lots) = S$1, 106
    • AIMS AMP (18 lots) = S$1, 800
    • SPH (5 lots) = S$1, 200
    • CMT (7 lots) = S$672
    • M1 (5 lots) = S$725
    • CACHE (10 lots) = S$857
    • FCT (7 lots) = S$758
    • PLife REIT (4 lots) = S$412
    • Suntec REIT (6 lots) = S$564
    • First REIT (10 lots) = S$672
    • Sabana REIT (6 lots) = S$561

  26. #26
    Join Date
    Sep 2008
    Posts
    2,660

    Default

    Quote Originally Posted by East Lover
    i agree with you - must know how and when to exit before music stop.

    but the question is where to park your extra earned 0.8 million after exit?
    also, must be patient to wait for next new song...
    property shens like DKSG will also be on the look out and chao char no day no night spotting for the next gem One of the 2 exit strategies is when the max potential is already there n you have found the next gem to diversify

  27. #27
    Join Date
    Feb 2009
    Location
    峨眉山
    Posts
    5,512

    Default

    el not me but some blog i googled

    which i think gd read for reit n00b like me
    click: 🏢shoeboxmickeymousehouse 🏢

  28. #28
    Join Date
    Oct 2010
    Posts
    2,094

    Default

    Quote Originally Posted by DKSG
    I think your focus on the yield is seriously flawed.

    It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

    Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

    I always think once the property reaches a maximum potential, you should let the next person have it.

    What is max potential ? You will have to figure it out yourself lor!

    Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

    DKSG
    +3

    respected post!

    this is the dude that i mention who get $800/mo from dividend..not that bad from stock trading..
    I took the road less traveled by, and that has made all the difference.” - Robert Frost quotes (American poet, 1874-1963)

  29. #29
    Join Date
    Feb 2011
    Posts
    8,926

    Default

    u have not seen bloodbath in REITs post Lehman

    diversify means your investment must not react the same way to the same event

    holding 50% REIT and 50% property is not diversify
    Ride at your own risk !!!

  30. #30
    Join Date
    Jun 2008
    Posts
    3,086

    Default

    Quote Originally Posted by phantom_opera
    u have not seen bloodbath in REITs post Lehman

    diversify means your investment must not react the same way to the same event

    holding 50% REIT and 50% property is not diversify
    this warrior's profile quick balance leh, some blue chip some REIT.

    Would you like to share some also?

Similar Threads

  1. Higher development, investment income boost UOL's Q2
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 11-08-18, 01:21
  2. 57,000 investment homes face higher taxes
    By reporter2 in forum Finance and Legal
    Replies: 2
    -: 14-03-13, 18:52
  3. Higher taxes on high-end and investment homes
    By reporter2 in forum Finance and Legal
    Replies: 0
    -: 05-03-13, 17:13
  4. Shoebox flats rake in higher rental yields
    By reporter2 in forum Singapore Private Condominium Property Discussion and News
    Replies: 25
    -: 11-05-12, 22:04
  5. Shoebox flats rake in higher rental yields
    By bargain hunter in forum Singapore Private Condominium Property Discussion and News
    Replies: 3
    -: 20-04-12, 19:42

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •