Property Investing in Singapore: Dos and Don’ts
10 Mar 2022
It is increasingly impossible to depend on just our 9-5 job for income these days while living in Singapore, especially if we have a family to support. Forget savings and leisure. Some days, basic expenses alone demand our entire paycheck.
This led to a lot of Singaporeans now starting to look for other avenues to grow their income, attempting to keep up with the speed of things. And if you're reading this, you're probably one of them.
One of the popular choices now is property investing in Singapore.
One of the most timeless, or should we say "classic", investing instruments there is, is property. To other countries, property investing could sometimes lean towards "a piece of land" or "a building". But because of the nature and size of our little red dot, property in Singapore these days, more often than not, refers to spaces that are several storeys above the ground.
Don't get us wrong though, these spaces are usually in great locations and are great investments if you're looking to increase your wealth.
However, like all investment tools, some properties are more suitable investments for you than others. Hence, investing in the wrong property can cost you more money than you care for.
DON’T do these mistakes
Property investing experts at Proptiply share the top mistakes people make in property investing:
1. Not doing enough research
One of the most dangerous tendencies among investors, not just in property but also for other investment tools, is to not do any research or do their homework before investing.
Whatever their friends or advisor says about it, they will just take their word for it and that's that.
This "shortcut" mentality will certainly cause you to miss out on a lot of crucial information and increase your risks.
2. Buying based on emotions
The green-eyed monster is an ugly one. When you see a friend, relative or even just someone you know on social media doing well and seemingly having it all, it could stir up some emotions, making you want to do better than them.
This is where a lot of people have fallen – buying a property simply because they want to outdo someone.
This is not only rash and irresponsible, but your investment will also have high chances of not working out as you would be investing under clouded judgement.
3. Not seeking expert advice
Out of sheer ego, a lot of people refuse to seek professional advice when it comes to property investing in Singapore. That and the urge to save money... Why pay for advice when you can get it for free on the Internet anyway, right?
See also: Why pay for financial advice when you can get it free?
BUT, it is also this same mindset that has resulted in countless disastrous property investment ventures in history.
Like it or not, you need expert advice from people who know what they're doing, especially in property investing where the investment capital is not exactly a small amount.
4. Speculating
Be it property or stock investing, you cannot run away from speculators, investors who are constantly on the lookout to take advantage of the trend, attempting to time the market and "daredevil" it so they can make money from rapid-fire buying and selling.
Another big mistake often made by shortcut-takers, the act of speculating can land you in hot soup very quickly and your life can go south overnight with a big loan on your hands.
Trust us, when you have a 5-figure down payment on the line and many more payments coming up, you don't want to take part in the guessing game.
5. Not crunching the numbers
Why do we invest? To earn from the returns, of course. So why would you invest in something without first making sure that you will get a good return on investment?
A lot of investors, oddly, did not think of this part before they invest. All they would do is take what the developers or agents say at face value. Only when things did not turn out as expected years later will the finger-pointing begin.
We're aware that at this point, property investing in Singapore might sound a little too much like a risky investment. But hear us out.
With every problem comes a solution, we’ll give you some tips as shared by property investment experts.
Follow these tips
Stick to these three important tips when investing in Singapore property, and you should be golden.
1. Make sure it's an asset, not a liability
We know it sounds counter-intuitive to call a property investment a liability, but believe it or not, that happens more than you think.
A property that has terrible structural integrity and requires constant repair is a liability. A property that is in a terrible location is a liability.
Basically, if it's costing you more to own it than you are earning from it even in the long run, you can consider that property a liability.
2. Make sure the "heart" is "beating"
A truly valuable property will always be in demand, and it will not stay untouched, unsold, or unwanted for long periods. For it to change hands from one owner to another should not take long and there should be constant transactions around it that keeps it "alive", increasing its value every time.
Properties that do not go through the constant transactions will most likely give a lower capital gain when resold as it signals low demand, causing the price to remain flat.
3. Make sure it is rentable
A property is only worth the investment if you can get returns from it.
Therefore, apart from ensuring that it is in a good location, you should also make sure your invested property caters to the main profile in the area to increase your chances of it being picked up, rented, and you earning from it.
Got a place near a business park? You'd better make sure it's suitable for a professional to live in. Got a unit near a university? Be prepared for students to come through.
With the many measures in place around property investing in Singapore, this investment tool, while requiring a bigger capital than a stock investment would call for, is also a relatively safer investment. Unlike stocks, property prices do not nosedive overnight and can give a bigger chunk of capital gains, too.
That said, trouble is never too far away when it comes to any investment, properties included.
So before you take any action in this area, make sure you know what you're doing.
Watch below Money Money Home episode to learn more about investment vehicles in Singapore.
DISCLAIMER
This article and its contents are provided for information purposes only and do not constitute a recommendation to purchase or sell securities of any of the companies or investments herein described. It is not intended to amount to financial advice on which you should rely.
No representations, warranties, or guarantees, whether expressed or implied, made to the contents in the article is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.
We, 8VI Global Pte Ltd, disclaim any responsibility for any liability, loss, or risk or otherwise, which is incurred as a consequence, directly or indirectly, from the use and application of any of the contents of the article.
