4 Important Entry Signals That Will Greatly Improve Your Property Investment Returns (2020)

Professional property wealth planning advice can improve investment returns and lower costs.


4 Important Entry Signals That Will Greatly Improve Your Property Investment Returns
Increase your probability of success by applying these considerations to your next investment.

(This article is an excerpt of my 3 days intensive real estate investment programme - Advisory Sales Masterclass, made for investors and agents to learn how to win big in real estate investments.)

 

Foreword:


Since the beginning of 2017, we have witnessed a robust return of both institutional and retail investors into the Singapore property market.


It is no surprise that after four years of muted action following government cooling efforts and where many investors ventured abroad, that this pent-up appetite has returned with a vengeance.


For a new investor, it is crucial to understand the reasons why you place your hard-earned dollars into property instead of other investments.

With wages, rising costs, GST and inflation piling up over time, there's reason prices do not fall below their last lows historically.
With wages, rising costs, GST and inflation piling up over time, there's reason prices do not fall below their last lows.
The property market, as with any other markets, is cyclical in nature.

But of greater interest to the individual investor is to realise that Singapore’s property market has one of the best long term returns on equity performance out of most investment instruments available.


And that has to do largely with the strength of the Singapore dollar, the availability of high leverage, and the attraction of Singapore to the international audience, not just as a region to invest in, but as an asset class on its own.


As a Singaporean and an avid market observer, I have always stressed to my friends that they must invest and remain vested locally, despite the beckoning of overseas properties.


Chief among the reasons are that they would be better protected against inflation, which is just as certain as death and taxes, and will be able to see their wealth grow steadily over time through the compound effects of inflation (akin to interest) on their real estate.


As Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”

In this article, I will focus on the fundamentals for those who are beginning their journey.


Before you embark on searching for your investment property, it is important to have gone through this checklist below.


1. Finances


Prior to looking at any property, you should speak to a property wealth planner about your finances to understand the initial cash/Central Provident Fund (CPF) outlay required.


Having an experienced third party do an assessment would help you prevent costly beginner mistakes that could seriously hamper your journey to financial freedom.


A responsible property wealth planner will help you assess the minimum cash and CPF required for the down payment, buyer stamp duties, legal fees and miscellaneous costs, as well as advise you on an investment road map for the best acquisition strategy as you progress along and acquire more properties.


2. Loan eligibility


The current Total Debt Servicing Ratio (TDSR) framework makes it especially important for investors to check on their maximum loan eligibility so that there are no nasty surprises after placing a deposit.


In this case, speaking to a property wealth planner or a mortgage banker should be one of your priorities early on.


3. Manner of holding


For investors who already own an HDB flat or private home and are acquiring their second property, a property wealth planner can advise you on the various options available to optimise tax savings (which can be significant) and qualify you for more funding options.


This is especially important for those who intend to grow their portfolio of properties and would require access to higher leverage and lower costs.


4. Investment goal and horizon


Having a clear idea of your investment goal horizon helps you narrow down the segments you should focus on; saving you precious time and energy.


Examples