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Properties

In properties, there are a few things we have to look into. Research on the general market trend and more specifically the type and location of the property you are looking at will help significantly in getting the property you want.

To find out the general market trend, go to www.ura.gov.sg under property market, property market updates. My rule of thumb is to buy only when the lowest rental yield during the downturn can sustain the total monthly cost of ownership. Hence, I'd buy when rent is just beginning to increase.

To find out latest selling price and rental price, the most updated data would be obtained from the Classified section of the Straits Times, especially on Friday and Saturday. An online way to check would be using www.singaporeexpats.com to find out similar data. Official data is also out on a quarterly at www.ura.gov.sg.

The total monthly cost of ownership of rental properties consists of the items below:-

monthly installment

monthly maintenance

property tax

personal income tax

TV license (tenant can apply for this on his own)

Agent fee(1/2 month per year)

For information, the items listed below is generally paid by the tenant:-

utility bill

telephone bill

internet bill

If the minimum rental can cover the total monthly cost of ownership, I'd place the property on my shortlist. Note that this step is very simple but is tedious and will take much effort. To me, its more than worth it. Anyway, the harder part comes now.

Find out how much money you have on hand that will be available in 12 weeks time, both in terms of cash on hand, CPF Ordinary Account, cash from sales of investment. This will be the total amount you have to pay for:-

downpayment - typically 20% of the loan amount, at least 5% cash, and the rest by CPF. This is true for both private and public housing.

legal fee - typically $1,500 - $2,000.

Stamp duty - 1% of 1st 180k, 2% of next 180k, 3% of remaining of the sales price

Renovation - as a gauge, I spent $5,000 for minimal renovation, including furniture on a 2 bedroom condo sized 958 sqft.

With this info, you would know what kind of property you can afford and how much can you buy them at. This is important in buying properties, as you can easily go overbudget in which case you could either lose your money or lose a deal.

Next, get a pre-approved loan amount, and get an estimate of the installments you can hope to pay. Based on this calculate the monthly maintenance cost of the condominium.

Next look through the papers, the websites for condominiums around that price. Try going for areas with good location. A studio in town is alot better than a 3 bedroom in Woodlands, in my opinion. Once you find a list of the properties selling at the price, look at the rental price. If its equal to or above the total monthly cost, it should be worth the price.

Next, look for potential value adders to the property, be it a nearby MRT station, shopping center, good school, international school. With this in mind, talk to an agent to view the property. Ask about the past rental, the rental population, why the past owner needs/ wants to sell the property, whether furniture is inclusive, whether the place is easy to rent, any amenities nearby, why people want to rent the place, check the view, check the fengshui etc and do your own research and make your own judgement if its a good buy. If it is, dun hesitate and put down the deposit for the option to purchase. If it does not meet your criteria, then give it a miss. There are always other deals.

Thats the way I shop for my properties. There may be a better way, which I did not explore, so if you have a better way, feel free to tell the community about it. Post it in the forum or email it to me, so I can submit it as an article.

The current boom in properties in Singapore has led to very high growth rate to the prices of properties all over the island. Even though I have officially obtained my keys only in Dec 06, due to the sharp increase in price, I've since set my mind to selling the rental property by the time my tenancy expires at the end of the year. I'm currently studying the market to identify the correct sales price and timing. At the same time, I'm researching the best method to buy overseas properties for me, so that I can reach my goal of financial independence in 1 year time.