Events Calendar
F1 Timetable
2008 FORMULA 1 SINGTEL SINGAPORE GRAND PRIX
Fri 26 September 2008
Friday Practice 1 16:00 - 17:30
Friday Practice 2 20:00 - 21:30
Sat 27 September 2008
Saturday Practice 17:00 - 18:00
Qualifying 20:00
Sun 28 September 2008
Race 20:00
Seven tips for buying a second home
March 27, 2008
There are still pockets of new developments in Singapore that are priced
below $1,000 per sq ft, writes PETER OW
HOUSE hunting can be challenging at a time when sellers are holding
firm despite a quieter property market while buyers are expecting a
steeper discount based on weaker sentiment from the US sub-prime woes.
Best bet: When shopping around do not get the notion that high-end or
luxury properties always give better returns....you may be surprised
to find that an HDB flat near an MRT station will give you a higher
return (possibly 10 per cent) than most private properties. Those on
a strict budget should note, however, that the record prices were achieved
mainly by new launches in the first 10 months of 2007. This is also
true in suburban locations as buyers pay more for new developments under
construction. Nonetheless, there are still pockets of new developments
in selected parts of Singapore that are priced below $1,000 per sq ft
such as Bedok and Jurong.
Well,
it may be the right time to start looking for a second home as an investment.
Given the more cautious economic climate and rising inflation, price
naturally becomes the most significant factor for a property purchase
as that would have an impact on initial cash outlay and the long-term
mortgage financing of the property. Here are seven key tips to note
when shopping for a second residential property for investment. Before
buying, ask yourself the following questions:
Is the price reasonable?
What are the prospects of getting a tenant?
Can you possibly stay there yourself?
Can you get financing and service the monthly instalments?
What is the expected return on the investment?
How long will you hold your investment?
Is the tenure important?
Price:
While price is a key consideration, nobody can predict when prices will
hit rock bottom. Thoroughly research the locations you are interested
in, walk around the area and check out the resale values. This is probably
the best time to negotiate when nobody is interested in buying as there
will be less competition.
Location:
Location, location, location, that's what property is all about. We
have to ask ourselves: Is this a location where expatriates like to
stay? Districts 9, 10 and 11 will readily satisfy the criteria of convenience
and proximity to the CBD. Outside these districts, a development near
an MRT station, suburban shopping centre, or good views of the sea or
waterway have great potential. For such locations, regardless of good
times or bad, one will be able to find a tenant. Getting the wrong location
might result in vacant periods when the economy is not doing well.
Returns:
When buying primarily for investment, yield or return on investment
is the key thing to consider. If the financing cost is low and the returns
are much higher, then the second residential property purchase will,
indeed, be an asset and a financial nest egg. A savvy investor might
find that investing in equities offers higher returns. But equities
are also riskier. Any property that gives you a gross return of 4-5
per cent is considered fair, while 6-7 per cent is good. Rentals are
usually fixed for two years which gives you security of tenure.
Under
current conditions, an investment in property will be better than putting
money into bonds or fixed deposits, where yields are relatively low.
However, when shopping around do not get the notion that high-end or
luxury properties always give better returns. Keep in mind that not
many expatriates have a rental budget of $30,000 to $40,000 a month.
You may be surprised to find that an HDB flat near an MRT station will
give you a higher return (possibly 10 per cent) than most private properties.
Financing:
Look for a financing package that suits your needs. Most banks offer
packages without a lock-in period at higher interest rates while those
with lock-ins have a lower rate. However, early redemption or refinancing
can be costly. If you are an investor with a long-term view, go for
a package that offers the lower interest rate so as to reduce your costs
as much as possible.
You
must also consider how affordable your monthly repayments are. As a
guide, they should not exceed 30 per cent of your disposable income.
Most of us use our CPF to pay part of the purchase price or the monthly
instalments. The prudent approach is not to do that. One should keep
enough money in the CPF to pay instalments for a one-year period. This
is a defensive strategy so that should you be out of work for a year,
the loan can still be serviced.
Time
frame: Property is an illiquid asset - it takes time to get in as well
as to sell out. Thus, we should look at a longer time frame for property
investment, preferably a three- to five-year holding period. Property
prices go up and down, but if you look back over 30 years, the new peak
has always been higher than the previous one. This leads us to the next
consideration.
Can
you stay in the property?: It is good to take this into consideration
because if there is a need you can move into the property, be it for
downgrading or upgrading. So if you have a family of four, it is advisable
to buy a three or four-bedroom apartment. You will also have a choice
of which property to rent out and which to occupy. You may want to rent
out the unit that gives you the better return.
Tenure:
Is a freehold property better than a 99-year leasehold? The answer is
no because the rentals of both will be the same since the tenant will
not bother about the tenure. Leasehold properties, being cheaper, will
give a comparatively higher yield. Every investor has his own criteria
for investment, thus a property suitable for one might not be suitable
for another. However, bear in mind that the less risky the investment,
the lower the likely return. Also, with any property investment, it
is best to take the long-term view.
