http://az-ra-el.blogspot.com/2018/04...-property.html

So the 4th book, I'm reading to learn more about investing in Residential Properties in Singapore. You can find the previous post here


So off we go:

This book is loads better than his second book in my opinion.

On Buying Properties
Start early, don't procrastinate
Can stretch longer loan duration
Less financial commitments
Following advice of others and thinking one can not go wrong with property is a way to failure
Do as much research as possible before buying
Look for High Quality with High Returns (both are important, but hard to find)
View property to inspect conditions
When viewing old property, get a certified plumber and electrician to accompany you to ascertain plumbing and electrical conditions of the property and find out the repair/replacement costs, so you can factor them in
If tempted to buy without viewing, think of what can go wrong and the regret you feel when you find out
Price per Sq Ft ($psf) is a better unit valuation than total cost price
Low cost price =/= good deal, just means more affordable for you
However, the lower the $psf, the more potential price upside
Know your creditworthiness and budget so you can seize opportunities when they appear
Good deals get grabbed fast
Can call the bank over the phone for a rough estimation
Rental income is considered by banks if it comes from stamped tenancy agreements
Consider the remaining lease of the property before buying
Unlike AEI of REITs, spending a lot on renovations is not worthwhile
sunk cost, so don't overspend
Interior design fads changes. Do renovate to appeal to a broad amount of buyers
Spend little on renovations and fixtures (i.e. lights and curtains). Fixtures are officially part of the property when sold
Instead spend on a good set of furniture, which is probably cheaper but can make the property look stylish. You can bring the furniture to the next property when you exit it.
Look up the URA Masterplan for future hotspots/catalysts
If planning to invest with others (girlfriend, spouse, relatives, friends, etc), must have contingency plans such as a written agreement and even get a lawyer to legalise it
Properties are illiquid, many people lose money due to lack of holding power


On Renting Properties
Leasehold tend to give higher rental yield due to lower price
But limited capital appreciation as potential buyers face financing difficulties as the lease remaining reduces
Know your Rights as a Landlord
Have every right to amend clauses in tenancy agreement contract
Best to raise any objections or disagreements prior to signing the contract as all parties would be legally bound once the document is signed and stamped
Net Rental Income must be Positive
Factor all costs when working out rental amount (including maintenance fees and property tax)
See renting properties as a business, ensure there is positive cashflow
Calculate net property yield and compare Rate of Return with other investments

On Selling Properties
Always clarify terms and conditions, including agent commissions before signing lease agreement
Be aware of Rights of Buyers and Sellers
There is no longer a fee recommendation for agents
You have the right to ask agents to justify fees if you feel the quote is unreasonable or performance is not up to expectations. Do not simply accept the quote as market rate
When negotiating commissions, it can be good to pay higher commissions so the agent can secure you the best deal, rather than bargain to the minimum fees. Agents provide a service and if correctly motivated, can aid you with insights and connections
Do not be impatient and sell asap
Impatience and wanting fast results will lead to losses
Keep head level
After so much time, effort and money, don't shortchange yourself
Look to hold for 5-10 years, with holding power, you can wait to sell on favourable terms
Minimum expected return should be price paid for, plus inflation (how about depreciation?)
If property is self funding, just hold on as long as you like as it provides a source of income even though there might not be much capital appreciation, especially if the mortgage is paid up
If maintenance is an issue overseas, can commission a property management company to upkeep and oversee management of rental
Even though it adds cost, but it would be worthwhile due to price appreciation of property (??? does it mean, negative cashflow?)
For new investors, can accumulate more seed funds by selling for a profit and buying more properties
Once accumulated sufficient cash to own and hold on to a few properties, take a long term approach and profit from rental income plus potential price appreciation
Ultimately, property is only worth as much as how much buyer is willing to pay
Linked to market sentiment and prices of similar properties in the vicinity
When buyers see property on the market for quite awhile, they feel something is amiss and stay away
Look at price trends and rental yield to give an indication how much are people willing to pay
If too high a price, buyer may not be able to secure a loan from the bank because valuation differs too greatly from the bank
Buyers impression is very important in determining a sale, so spruce the property up before selling. Clutter makes it seem smaller. Give a fresh coat of paint and routine maintenance to your property. Remove any odors by airing the unit or using air fresheners.

Remember:
Focus on investing in your sphere of competence.
Lack of patience and self discipline are killers


And that's it for the post.

Probably 2 more books to go.

Hope you enjoyed it.