What a property investor shouldn't do in today's market condition.

[princess_morbucks]

Paying of the loan.... U cannot get tax deduction liao.

Please explain.

[taggy]

Please explain.

Only apply to income tax due to rental.

[princess_morbucks]

Paying of the loan.... U cannot get tax deduction liao.

Are you referring to this?

http://www.iras.gov.sg/irashome/page04.aspx?id=160

I did not know there are so many claimable expenses!

[狮子王]

Wahhhh..Thanks leh.......I very handsome hor....

Since we are at it. Brothers-in-the-knows know that I am now working on my 2014 Celestial Prediction. Many layman, when they read my ......

However, that was before all the QE printing that only the very rich can invest in property. Now the situation is a bit different and warrant further study. So, market at current should be able to tolerate well up to 4%...that is just my thinking at this stage. No conclusion yet so stay tuned !

Good Luck!




神龙股侠
NIL SINE LABORE !

Further, allow me to remind all brothers and sisters that there are many new projects completing by 2015 to 2018. Tenants typically go for NEW projects to rent, that is from my experience. I kena before that is how I know.

My reminder to consider this point carefully before you buy for investment.

Good Luck.

[Cyberknight]

Brudder, if the individual is able to find investment instrument whereby he can get hire return rates compared with bank mortgage interest rate, he should utilize it.

If the individual is not savvy enough, I strongly suggest paying up the housing loan.

If the individual is already happy with his investment, he does not need to hold cash Liao...

If the individual wants to take advantage of future possible cheap sale, the individual needs to hold cash....

So, at the end, it is about what u want now and in the future that will determine the deployment of your cash....

It is e opportunity cost of money. And time value of money.

I still feel borrowing from e bank at 1%-1.5% for investment into property that yields >3% or higher yield shares still make sense.

But for the portion that is considered our equity, cash on hand, I feel setting a 8%-10% IRR is important to take e downside risk. Hence even though the cash may earn no interest now, it can be used to snap up properties when interest rates move up.

That is e time probably when sub 3% yield will be fully used of offset the 3-4% loan interest and fall into negative yield territory.

So the view whether to repay the loan now is that, over the next 2-3 years period, do you think property prices will drop more than 10%. Even keeping as cash, your opportunity cost may still make sense since anything you buy today for 4%-5% yield may also have equity depreciation as evidenced by the REIT of yield stock prices dropping by 5%-10% where the risk view of a economic slowdown is high and removal of the QE

Buying Iskandar does not make sense for me as the IRR is very low and if e argument on e yield play, lagi worse. Yields are less than 2% against real interest cost of 4% at least should you borrowing MYR. Negative gains,.

At least buying Singapore properties now, the yield is positive...

CaSH or equity is KING. Hold on dear for rich pickings when the market turns...

MY Personal opinion.. It might be wrong anyway.

[Ringo33]

I dunno about the chart used by brother Ringo is of any good use frankly do not be anger hor. But, I have always viewed the ABSD as an additional costs of acquiring my new purchase. However, what you said in the previous post reminded me that this ABSD is actually eating away my realised gains !! Oh Thank You for your reminder again......

( To be continued)

ABSD is not really an issue if you are still able to stretch mortgage over 20 to 30 years. Its abit like COE, if you can stretch it over 10 years, no one really cares.

It is the combination of ABSD + LTV + loan tenure up to 65 years that is making it extremely unattractive for buyers in their 50s or 60s to buy anymore investment properties.

For someone to buy a 3rd property that cost say 2.5m, the cash outlay will be

a) $250,000 (ABSD)
b) $69,600 (stamp duty)
c) $1,500,000 (down payment)

Total : $1,819,600 (cash & cpf)

When % of mortgage gets smaller, the benefit of leveraging on low interest also diminish.

So the question to ask is if it is worth the while to pay $250,000 ABSD t gov, withdraw $1.5m of cash and cpf for down payment, and get them all locked down for 3 to 4 year (due to SSD).

[狮子王]

It is e opportunity cost of money. And time value of money.
......
CaSH or equity is KING. Hold on dear for rich pickings when the market turns...

MY Personal opinion.. It might be wrong anyway.

Dear good brother, nobody can be wrong in a discussion. That is what this forum is for and why it exists for people like us.

All must share our opinions and views here so that we can all be guided by our experience to make the correct choice.

As a matter of fact, last 2 years I had unloaded 2 properties ( bought long before the CM1 and unloaded without knowing that more CMs will come LOL ) and now I am considering also whether to reinvest this fund when brother Ringo33 reminded me of the stamp duties will be a major consideration point for leverage & interest rates. This is because a "cost" has become a question of whether it will be an worthwhile investing action to take.

Anywhere, brother Cyberking made some very good points, thanks for your generous sharing

Your handsome sister,
The Dark Angel

[Cyberknight]

Brother 狮子王, you are too kind. Learnt a lot from your sharing too.

My view, cash or equity is e most expensive form of capital. Bank loans are cheap. Use leverage wherever possible.

If you are working, keep the IRAS NOA clean, check your credit bureau record regularly,. Know how much you can borrow. Line the bankers and lawyers up. Test the ideas with them. Somehow you be surprised how far you can gear up.

I for one, will cancel all cash lines. When you need them, it is 1hour approval anyway. Keep some credit cards will do and use GIRO.

The bankers can't wait to lend you $$$ if if CBS is good.

If you are self employed or holding irregular income, then normalize your NOA so the bank can better approve your loan.

Always keep positive IrR or positive yield, then e investments can grow

[Cyberknight]

Opportunities are always open and the market always price it wrong in one form or another. You need to know what kind of opportunity to look for, test it in excel sheet, run sensitivity. Then when the mispricing happens, just whack. No need to think Liao

[walkthetiger]

Wahhhh..Thanks leh.......I very handsome hor....

Since we are at it. Brothers-in-the-knows know that I am now working on my 2014 Celestial Prediction. Many layman, when they read my "prediction", they all laugh at me, not knowing how I form such prediction. Actually, it is a very simple research method I used. I look at countries GDPs, banker's behaviors, government policies, forex movement, stock market, fund flows and then finally I will draw upon a conclusion of the general direction of that particular year. However, I have to encode the data and talk in a siao lang manner. Not saying that I am 100% accurate, but now I am looking at analysts behaviors and right now, no final conclusion but I can share with you guys what I think at this stage:

Interest rates may move up ( not 100% confident that it will, but Moody's was so confident in her recent reports on Singapore banks that I suspect the chances of increase is high ). From my previous experience before the existence of Internet, I know Singapore property market at that time can tolerate up to 8% of the increase.

However, that was before all the QE printing that only the very rich can invest in property. Now the situation is a bit different and warrant further study. So, market at current should be able to tolerate well up to 4%...that is just my thinking at this stage. No conclusion yet so stay tuned !

Good Luck!




神龙股侠
NIL SINE LABORE !

Learnt a lot from you. Thank.
Make sense to hold my ammunition, worth to wait a bit longer, no rush to get in now.

[Cyberknight]

Opportunities are always open and the market always price it wrong in one form or another. You need to know what kind of opportunity to look for, test it in excel sheet, run sensitivity. Then when the mispricing happens, just whack. No need to think Liao

For the record. My last property move was in nov 2012 where I sold an condo and bought another condo simultaneously in 2 days. avoided ABSD. And the coolest part of it, execution day was such a breeze.

It took a 6 months effort to build an excel model of e scenarios. When the arbitrage opportunity opens precisely for me in oct. I just grab...as seen in e excel...

[DC33_2008]

It is always good to leverage on OPM. What if correction is only 10% even with the gradual increase of interest rate?

It is e opportunity cost of money. And time value of money.

I still feel borrowing from e bank at 1%-1.5% for investment into property that yields >3% or higher yield shares still make sense.

But for the portion that is considered our equity, cash on hand, I feel setting a 8%-10% IRR is important to take e downside risk. Hence even though the cash may earn no interest now, it can be used to snap up properties when interest rates move up.

That is e time probably when sub 3% yield will be fully used of offset the 3-4% loan interest and fall into negative yield territory.

So the view whether to repay the loan now is that, over the next 2-3 years period, do you think property prices will drop more than 10%. Even keeping as cash, your opportunity cost may still make sense since anything you buy today for 4%-5% yield may also have equity depreciation as evidenced by the REIT of yield stock prices dropping by 5%-10% where the risk view of a economic slowdown is high and removal of the QE

Buying Iskandar does not make sense for me as the IRR is very low and if e argument on e yield play, lagi worse. Yields are less than 2% against real interest cost of 4% at least should you borrowing MYR. Negative gains,.

At least buying Singapore properties now, the yield is positive...

CaSH or equity is KING. Hold on dear for rich pickings when the market turns...

MY Personal opinion.. It might be wrong anyway.

[puffer_fish]

GREAT DISCUSSION...very informative and engaging read

[earthling]

It all depends on the portfolio one has. How many properties? How many outstanding loans? How much cash on hand? When were these properties bought? (e.g. Before or after 2009? 1998? Or earlier.) Different scenarios require different strategies...

If one has only one property (with or w/o outstanding loan) and has enough cash for a second property just go for it. If only has one, how to consider property investor? However, what to buy (be it J Gateway or The Sail) one has to consider the various market factors according to one's circumstances. Remember, 知己知彼 百战百胜。There is really no right or wrong answers as in which one to buy. One man's meat is another man's poison; I don't wish to dwell into this here and start an argument.

If already has 2 or more properties, then from an investor's point of view, it still make sense to buy if the returns is positive after factor in all the costs and taxes and the property bought is capable of generating positive cash flow and has high capital appreciation over time. These are getting harder to come by with today's prices though.

I agree that holding cash now could be good so that it can be use for capital repayment when interest rates shoot up or to enter the market when there is a correction.

Sell only if need cash or to fund better investment prospects. If there's nothing better to invest, go for a holiday and enjoy life!

[wirehtc]

Property investment is out for Singapore. If u don't wish to invest overseas property, invest in yourself: knowledge, health n relationships.

[Cyberknight]

It is always good to leverage on OPM. What if correction is only 10% even with the gradual increase of interest rate?

Build the scenarios.

Take 10% correction factor, apply gradual slope of interest rate increase. Move e ruler for entry period.

Economic opportunity costs means weighing the different opportunity profile.

PM me if anyone needs a stArter excel model for new home buyers. I just constructed it for my first time property buyer friends anyway.

[yowetan]

Build the scenarios.

Take 10% correction factor, apply gradual slope of interest rate increase. Move e ruler for entry period.

Economic opportunity costs means weighing the different opportunity profile.

PM me if anyone needs a stArter excel model for new home buyers. I just constructed it for my first time property buyer friends anyway.

Hi...could you share your excel model to me? Thanks.

[Zile]

Seems like quite a number with multiple properties who have cashed in recently r holding on to a major portion of the profit in cash (earning miserable interest from local banks) and waiting at the sideline because of ABSD.

At the same time we r seeing people borrowing like no tomorrow (if what yowetan is telling us is true!!!) from local banks, passing the risk to our deposit...

Just a silly thought: what would happen if enough of us forgo the lousy interest and withdraw our $!!!

Will the stingy local banks increase the saving interest rate then?

[yowetan]

Seems like quite a number with multiple properties who have cashed in recently r holding on to a major portion of the profit in cash (earning miserable interest from local banks) and waiting at the sideline because of ABSD.

At the same time we r seeing people borrowing like no tomorrow (if what yowetan is telling us is true!!!) from local banks, passing the risk to our deposit...

Just a silly thought: what would happen if enough of us forgo the lousy interest and withdraw our $!!!

Will the stingy local banks increase the saving interest rate then?

Hi...the Chinese, Indians, and many internationals will continuing deposit their money in Singapore banks.

[Cyberknight]

Hi...could you share your excel model to me? Thanks.

Email pls?

[Zile]

Sigh. Ok.


So local banks r lending you and your friends to take unnecessary risks...

Just hate it when part of it is my money too

[Cyberknight]

Sigh. Ok.

So local banks r lending you to take unnecessary risk.

Just hate it when it is part of my $ too.

You should be glad to access a system that provides you an appreciating SGD, a reserve quantum by the garmen that is not known to the world. And near to 1% loan rates..

What unnecessary risk are we talking about when you can borrow at less than 2%, access e market with many options of investing of up to 5% yield. Whilst your neighbors earthlings are paying 5% in Malaysia, 8% in Indonesia for housing loans.. And for the majority of us, we are working individuals and have to rely on debt more than savings to buy our first house,

You should be blessed that the funds are lapping our shores instead of moving elsewhere.

[yowetan]

Sigh. Ok.


So local banks r lending you and your friends to take unnecessary risks...

Just hate it when part of it is my money too

Hi...you could use my method too, if it is still not too late.

I am unsure when will MAS takes action, but act fast before whistleblowers blow.

[狮子王]

Seems like quite a number with multiple properties who have cashed in recently r holding on to a major portion of the profit in cash (earning miserable interest from local banks) and waiting at the sideline because of ABSD.

At the same time we r seeing people borrowing like no tomorrow (if what yowetan is telling us is true!!!) from local banks, passing the risk to our deposit...

Just a silly thought: what would happen if enough of us forgo the lousy interest and withdraw our $!!!

Will the stingy local banks increase the saving interest rate then?

You are correct to say that as I am one of them although I am still vested. The key is like stock, you do not unload everything. Just unload slowly and watch what is happening in the market.

I can share with you quite a number of recent buyers in CCR are "first time " middle income Singaporean buyers , meaning they might have unloaded their one old big unit in OCR and one other investment property in OCR that is not affected by the CMs and are moving into CCR to live. I could tell they are Singaporeans from some CCR projects I owned . And I suspect their strategy is to hope to be able to sit on capital gains instead of rental yields.

In addition, some recently completed CCR projects are seeing quite a handful of empty units. This is a very different scenario from 2-3 years ago.Could be due to the Kow peh Kow bu locals, and foreigners are reduced ?

What is the implication that it will do to the market later is anybody's guess. Just keep in mind the limitations of this group of buyers.

[狮子王]

You are correct to say that as I am one of them although I am still vested. The key is like stock, you do not unload everything. Just unload slowly and watch what is happening in the market.

I can share with you quite a number of recent buyers in CCR are "first time " middle income Singaporean buyers , meaning they might have unloaded their one old big unit in OCR and one other investment property in OCR that is not affected by the CMs and are moving into CCR to live. I could tell they are Singaporeans from some CCR projects I owned . And I suspect their strategy is to hope to be able to sit on capital gains instead of rental yields.

In addition, some recently completed CCR projects are seeing quite a handful of empty units. This is a very different scenario from 2-3 years ago.Could be due to the Kow peh Kow bu locals, and foreigners are reduced ?

What is the implication that it will do to the market later is anybody's guess. Just keep in mind the limitations of this group of buyers.

Mah Bow Tan is correct when he said that " The rich can take care of themselves". His logic is correct, we should have leave this market segment alone.

[yowetan]

You are correct to say that as I am one of them although I am still vested. The key is like stock, you do not unload everything. Just unload slowly and watch what is happening in the market.

I can share with you quite a number of recent buyers in CCR are "first time " middle income Singaporean buyers , meaning they might have unloaded their one old big unit in OCR and one other investment property in OCR that is not affected by the CMs and are moving into CCR to live. I could tell they are Singaporeans from some CCR projects I owned . And I suspect their strategy is to hope to be able to sit on capital gains instead of rental yields.

In addition, some recently completed CCR projects are seeing quite a handful of empty units. This is a very different scenario from 2-3 years ago.Could be due to the Kow peh Kow bu locals, and foreigners are reduced ?

What is the implication that it will do to the market later is anybody's guess. Just keep in mind the limitations of this group of buyers.

This is why I am sitting on Mt Sinai.

[狮子王]

This is why I am sitting on Mt Sinai.

I know where you are coming from. You meant because of the good schools around that Mt. Sinai will be a big selling point, tiobo? And hence you expected the capital gains to be better than rental?

[yowetan]

I know where you are coming from. You meant because of the good schools around that Mt. Sinai will be a big selling point, tiobo? And hence you expected the capital gains to be better than rental?

You are partially right; Mt Sinai is strategically positioned. There is a reason why Pandan Valley was the first condominium to be build in Singapura.

[狮子王]

This is why I am sitting on Mt Sinai.

There is some truth in your logic because over the past 6 years, the capital gains is around S$50,000 per year on the average for a private CCR property How I know, dun ask . WOAHAHAHHAHHEHEHEHHEHEHEH

[狮子王]

You are partially right; Mt Sinai is strategically positioned. There is a reason why Pandan Valley was the first condominium to be build in Singapura.

This I do not understand. Please enlighten why is it a strategic location, good brother?