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Ultimate Guide to Property Investing in Singapore

by • July 17, 2017 • Buying a property, Property Launches, Residential Property LoanComments (3)2246

By Angeline C, iCompareLoan.com

How much cash do I need for a condominium downpayment?

This is the question many often asks.

Checklist:

  1. Should you invest in property?
  2. Cost of investing
  3. Which property to invest in?
  4. When is a good time to invest?
  5. When to sell?
  6. Costs of selling
Old buildings - Spiral staircase

A blend of colourful staircases from older preservation buildings.

Image Credits: Paul HO, Geylang Shophouses, iCompareLoan.com

  1. Should you invest in property?

Say you have fully paid up your home and have excess cash, should you buy another property for investment? What are the pros and cons vis-à-vis other forms of investment?

 

Property as an asset is illiquid and unique unlike shares traded in the stock market. As an investor, you will also need to manage the property to ensure it is well maintained and that the property is rented out or fetches a higher value in the market when you sell it. This requires expertise and incurring further costs in managing the property. However, it may pay off with handsome returns with some luck, research and foresight.

 

To read more about how property compares with other investments in the market, please click here.

 

  1. Cost of investing

 One-time Upfront Cost

  • Day 1 – Option to Purchase
    • 1% Cash of price of property
  • Day 14 (week 2) – Exercise Option to Purchase
    • 4% Cash
  • Day 14 (week 2) – Pay Legal conveyancing Fees
    • $2500 to $3000 (Including $500 Mortgage Stamp Fee)
    • $3000 and above for Loan size above $2m.
  • Day 28 (week 4) – Stamp Duty
    • 1% for first $180,000,
    • 2% for second $180,000,
    • 3% thereafter)
  • Day 28 (week 4) – Additional Buyer Stamp Duty (ABSD) –
    • 5% for PR (1st Property),
    • 0% for 1st Property (Citizen),
    • 7% for 2nd Property (Citizen), 10% for 3rd Property (Citizen)
  • Day 84 (week 12) – Completion of Transaction
    • Remainder 15% (Full Cash or Full CPF or combination – for 1st Property)
    • 80% Full loan is disbursed from bank.
    • NOTE: if the Investor has already multiple residential properties, the Loan-to-value drops and hence the CASH Required Increases.

You can get Mr. Property Buyer Report Sample –  20170717 from us before you buy a property.

  • Renovation costs

 

 One-time Upfront Cost

Insurance

  • Fire insurance

Income Tax

  • Tax on rental income varies according to income tax bracket.

Property Tax

IRAS issues a tax assessment and an estimated rental value for your property called the “Annual Value”.

  • Non owner-occupied residential properties:
  • First $30,000 of Annual Value: 10%
  • Next S$15,000: 12%
  • Next $15,000: 14%
  • Next $15,000: 16%
  • Next $15,000: 18%
  • Next $15,000: 20%

Interest On Mortgage

  • Approximately 2% (depends on prevailing Sibor cost. Sibor is the market rate for funds)

Utilities

  • As per tenancy agreement

Repairs

  • As per tenancy agreement

Service and Conservancy charges / maintenance fee

  • HDB – Approximately up to $100 a month.
  • Condos – usually $250 to $600 a month. The smaller condominiums will have higher costs.

Parking

  • E.g. Parking Fee

 

Which property to invest in?

 

Once you have determined your budget and affordability, you can then narrow your search accordingly. If you intend to take up a loan, do ensure that you meet the Total Debt Servicing Ratio (TDSR) limit and gauge the affordability here.

 

Do your research and as with all things related to property, location is an important factor.

 

To read up on key considerations before buying a property in Singapore, click here.

 

To read up on where to buy property for rental in Singapore, click here.

 

To read up on investing in property in Thailand, click here.

 

Investing overseas carry more risks such as foreign exchange and changes in regulations which do not favour foreigners. Do tread carefully.

Of do not forget to learn some basic skills about negotiation to buy a good property.

 

  1. When is a good time to invest?

Understanding the property cycle and current market conditions would help you to determine if it is a good time to invest.

 

To read up more on understanding the underlying factors driving the property market, please click here.

 

 

  1. When to sell?

 

Just as it is important to assess the right time to buy, it is also good to plan for when to exit. While you may hold on to a property for rental, a change in market conditions or regulations or personal factors may make it more attractive for you to capture the capital gain than to hold on to your property.

 

To read up on factors to consider on when to sell, please click here.

 

 

  1. Costs of selling

Before making an investment, you should also take into account all possible costs and fees, including cost of selling such as:

  • Administrative fees
  • Legal fees
  • Property tax
  • Seller Stamp Duty: 4-12% of annual value if held for 3 years and below.

 

www.iCompareLoan.com can guide you as you navigate your way through the property investment process to make it smoother and address your concerns so you feel less stressed. Talk to us today!

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