Singapore SG Property Analyst

How to Negotiate with Desperate Seller

2009-08-10T06:21:00.000+08:00

Before I start talking about negotiation strategy with a desperate seller, firstly how do you find a desperate seller? Usually these sellers advertise their units with phrases like fire sale, must-sell, and urgent sale. Their advertisement may tell you to bring a checque.

When a price is offer by a seller, try to offer a price that is 10-15% lower to see if the seller is willing to sell quickly. Normally, the seller will counter offer, which is probably his reserve price. You will need to decide quickly whether you want or not. If not, then immediately offer a price you are willing to pay.

Everything had to be done in very fast pace. So make sure you had done your hmework and calculations beforehand.

Tips When Considering Purchasing Property

2009-08-09T06:09:00.000+08:00

Following are the questions or tips that you need to think about when considering a purchase of a property :

1. The amenities surrounding the property.
Is it near shops, markets, F&B outlets, MRT?

2. Near local Schools

3. Simple and Easy to Maintain

4. Easy to attract tenants
Is it near university, office buildings, beach?

5. Do you like the neighbourhoods if you live in that location?

6. The condition of property during inspection
What are the repairs needed?

7. Check the unit's past transactions to gauge whether the demand is strong and whether you have bargaining power

Applying for In-Principle Loan Approval from Bank

2009-08-08T06:09:00.000+08:00

Following are the documents needed when applying for in-principle loan approval from bank :

CPF statement for past 12 months

Photocopy of Identity Card

Pay slips for past 3 months

Income Tax Statement for past 2 years

Payments needed when buying property

2009-08-07T12:03:00.003+08:00

Following are the payments that are needed to be paid when buying a property (apart from mortgage loan) :

1. Conveyancing or Legal Fees
Usually about 0.5% - 1% of purchase price

2. Stamp Duty
First $180,000 - $1 for every $100
Next $180,000 - $2 for every $100
Subsequent amount - $3 for every $100

3. Agent Fee
HDB Flat - 1%
Private property - NIL

10 Tips on Buying Property

2009-08-06T10:49:00.002+08:00

Following are 10 valuable tips on buying a property :

1. Be very disciplined and only look at something that you can afford.

2. Never reveal your budget to anyone.

3. If you are not a good negotiator, try NOT to negotiate face to face at the start. Get your agent to do it for you.

4. Never spend more than 30 minutes checking out the property. If not, you will reveal that you are very interested and will never get a lower price.

5. Be brave and decisive. Don't get fickle-minded. Or else good bargain will go away soon. At most, you lose only your 1% option fee if you wanted to get out later.

6. When buying unit with patios or rooftops, remember that they only cost half the per square foot price of the unit (as they are not liveable space).

7. Make sure your option - including any amended copy- is acknowledged by all parties involved.

8. Do not buy properties without viewing.

9. Be careful when buying unit next to a vacant plot of land because of the unblocked view. There is possibility of new development coming out of that plot of land.

10. Do not ONLY look at the last done price or the highest caveat price when you are checking whether your price is a good one. That particular transaction may be manipulated by the seller or that was a very unique unit.

Questions to ask when making a deal

2009-07-17T16:15:00.000+08:00

Following are some questions that we need to ask when we are considering a deal :

1. Who are the partners (eg. developer)? Do I want to be partners with them?

2. What is the financing structure and is it favorable?

3. How competent is the management?

Quote of the Day

2009-07-16T03:45:00.000+08:00

Life can only be understood backwards; but it must be lived forwards.

Singapore Individual Income Tax Bracket calculation

2009-07-15T06:00:00.001+08:00

Following is the Individual Income Tax Calculations in Singapore (based on annual income) :

First $20,000 - free
Next $10,000 - 3.5%
Next $10,000 - 5.5%
$40,001 - $80,000 - 8.5%
above $80,000 - 14%
above $320,000 - 20%

Inflation coming soon in Singapore?

2009-07-14T15:12:00.004+08:00

Following is the news on inflation from Straits Times today.

INFLATION is expected to stage a comeback in Asia by the end of this year, because of the recent rebound in oil and commodity prices.

CAUTIOUS STANCE

'We suspect central banks will be slow in responding because of their experience last year.'

HSBC economist Robert Prior-Wandesforde, who believes central banks are unlikely to raise interest rates to tackle the higher inflation

But consumers worried about soaring prices of the sort seen during last year's skyrocketing inflation can rest easy.

Higher inflation numbers at year end will reflect jumps in oil and food prices that have already taken place, said HSBC economist Robert Prior-Wandesforde at a briefing yesterday on HSBC's macroeconomic outlook for the second half of this year.

After swinging wildly in the first half of the year, oil prices have settled at about US$70 a barrel.

Inflation is likely to hit a low of about 2.5 per cent in September and then jump to 5.5 per cent in March next year for the Asian region, excluding Japan.

Mr Prior-Wandesforde believes central banks are unlikely to raise interest rates to tackle the higher inflation, given that this may endanger any fragile green shoots of recovery.

'We suspect central banks will be slow in responding because of their experience last year,' he said, given the tightening of monetary policies by Asian central banks just before the downturn. 'They have to be confident that growth is on a sustained footing before they make any adjustments.'

For Singapore, which has seen months of gradual deflation, he is tipping a return to positive inflation next year. He predicts year-end inflation at about -0.6 per cent, rising to 1.1 per cent in March. The official government forecast is for full-year inflation this year to come in at between -1 per cent and 0 per cent.

The HSBC economist's projections assume that commodity prices will remain stable for the remainder of the year.

While there is a risk that huge commodity price increases could stunt growth, Mr Prior-Wandesforde said this was unlikely. 'Oil prices will need to rise to US$165 a barrel to offset all the policy easing.'

The lowering of interest rates by governments, to stimulate borrowing and injection of money into their economies to kick-start business activity, has had a positive impact on Asian growth, he added.

Mr Prior-Wandesforde predicted that the region was on its way to a solid and sustainable recovery, which will finally materialise in the third quarter when regional trade begins to rebound strongly. He expects a V-shaped recovery in Singapore - a sharp downturn followed by a speedy upturn - meaning that a second stimulus package is unlikely this year.

Quote of the Day

2009-07-14T05:43:00.000+08:00

Use your ASSETS to generate income like an Investment…
RE-FINANCIAL your property with fixed or variable loan from all banks…
LEGAL advice or documentation from good Lawyer Firm…

Budget Checklist for Buying a HDB flat

2009-07-13T05:34:00.000+08:00

Here is a summary of what you will need to pay between signing the purchase agreement and taking possession of your new HDB flat.

Cash downpayment: From January 1, 2005 onwards, buyers taking a bank loan for their flat have to pay four per cent cash down payment. The remaining 16 per cent can be paid from CPF and CPF housing grant, if any.

Property agent’s commission: If you are buying (and selling off your old flat) through an agent, do not forget to include his fee.

Legal fees: If you are taking a bank loan, you can get HDB to provide legal services or engage your own lawyer to do the legal paperwork. Some banks offer a subsidy for the legal fee as part of their loan package. Legal fees can range between 1 and 1.5 per cent of the property purchase price.

Stamp duty: This is a government tax payable by the property buyer. Stamp duty is calculated on a scale: one per cent on the first $180,000; two per cent on the next $180,000 and three per cent thereafter. CPF funds may be used to pay the stamp duty.

Fire insurance: It is compulsory for HDB homeowners with a mortgage loan to buy a fire insurance policy. Banks also usually require a fire insurance policy to be taken on the property mortgaged.

Service and conservancy charges: This is payable every month to the town council for the maintenance and upkeep of common property and cyclical maintenance work. The bigger the flat, the higher the charges.

Singapore Property Market History

2009-07-11T17:16:00.003+08:00

Following is URA Provate Property Index from 1975 to 2008.

There were 3 distinct periods of contraction and current contraction :
- 1981 to 1986 (the URA index dropped by 27.5pts)
- 1996 to 1998 (the index dropped by 68.5pts)
- 2000 to 2004 (the index dropped by 25.4pts)
- 2008Q3 to ??

During upward trend :
- June 2006 to Oct 2008:most district (except Dist 10,25,26,28) saw an average profit of more than $100 per sq ft
-June 2007 to Oct 2008 : average profit more than $100 per sq ft only in Dist 7,13,14,20)

* Prices in Prime Dist (9,10,11,15) have traditionally been higher than other places

Hindsight : Selling Property

2009-07-09T06:39:00.001+08:00

Following are the hindsight on Selling Property :

1. Are you patient enough when selling your property and are you prepared to wait for the right price before selling?

2. Do you apdopt a long term approach in property investing?

3. Are you being too greedy and overpricing your property?

4. Do you spruce up your property before you put it up for sale or rent?

Property Gain Tax in Singapore?

2009-07-08T18:46:00.002+08:00

Read the following from Straits Times. What is your opinion on this new way of taxing property profits, if the proposal of Income Tax amendment goes through?

***********************************************************************************

A PROPOSED change to income tax laws will make clearer to property sellers when they will be taxed on their profits.

TARGET OF CHANGES

'HE WILL have to consider whether he wants to take such a risk and give up a part of the gains as taxes.'

Businessman James Chen, 40, on how the proposed change may make the short-term investor think harder before buying. A property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Anyone who sells only one property in any four-year period will not be taxed on his profit, according to a proposed amendment to the Income Tax Act.

But if he sells another property within four years of the first sale, the profit from the second sale may be taxable.

If the proposal becomes law, it will provide certainty for owners who now cannot be sure if the taxman will come calling after they sell.

Under existing rules, an individual does not pay tax on gains made from selling a property unless the taxman decides that he is trader - someone who buys and sells multiple properties within a short time span. And there is no way for the seller to know in advance if he might be deemed a trader.

The new way of taxing property profits is one of many changes listed in a draft Income Tax (Amendment) Bill 2009 put up for public feedback last month by the Finance Ministry.

If implemented, the change will take effect from January.

A ministry spokesman told The Straits Times yesterday that the proposed change aims to provide certainty of non-taxation to individuals who own property.

Once it takes effect, the individual who sells a property for a profit can be sure that his gains will not be taxed - provided he had not sold any other property in the previous four years.

If he sold other properties within that period, the spokesman said, the Inland Revenue Authority of Singapore (Iras) will decide whether he should be taxed, 'based on the facts and circumstances, no different from the present tax treatment'.

Although Singapore does not have a capital gains tax, profits from selling property can be taxed at the appropriate individual income tax rates if Iras deems the seller to be a trader.

Tax and property market experts contacted by The Straits Times welcomed the move to clear the air over taxes on property sales.

Mr Tan Tiong Cheng, chairman of property consultant Knight Frank, said: 'Since the Government has clarified that the treatment on capital gains would remain the same, it will be business as usual. Genuine investors will not be deterred from buying properties.'

A stockbroking director said that the Government's assurance will calm any jitters investors might have experienced when they first learnt of the proposed tax change.

'There were initial misgivings that this provision might be a roundabout way to introduce a capital gains tax on properties. The misconception has been cleared,' he noted.

But others felt that by raising the issue of taxing property sales gains, the Government is also sending a signal to speculators that they can expect to be taxed if they buy properties to 'flip' for quick money.

During the property boom of 2007, some speculators could have bought and sold as many as half a

dozen properties in the space of a year.

With the change, a property owner juggling several properties cannot sell more than one within a four-year period if he wants to be sure of avoiding a tax bill on his gains.

Since February, sales of new private homes have exceeded 1,000 units a month compared to a monthly average of 330 units last year. Worries are surfacing that speculators might be ramping up sales and driving up prices, as the economy recovers.

Businessman James Chen, 40, said the proposed change may make the short-term investor think harder before buying.

'He will have to consider whether he wants to take such a risk and give up a part of the gains as taxes.'

The draft Bill can be read at the Finance Ministry website www.mof.gov.sg and the public has up to next Tuesday to give feedback.

The Bill is expected to go before Parliament later in the year.

Hindsight : Renting Property

2009-07-08T06:34:00.001+08:00

Following are the hindsights on Renting Property :

1. Do you know your rights as a landlord?

2. Are you agreeable to all clauses in the rental contract?

3. Do you know how profitable your rental property is?

4. Do you negotiate the commission fees with your property agent?

5. Do you motivate your agent in the right way so that he is willing to give you his best?

Hindsight : Buying Property

2009-07-07T06:24:00.001+08:00

Following are the hindsight on Buying Property :

1. Have you started investing in property to benefit from the longer time horizon?

2. Have you started planning for your property investment?

3. Have you started saving to accumulate money for your property down payment?

4. Do you have a sound selection system to help you identify good investment properties?

5. Do you consider both Cost Price and Unit Price when shopping for properties?

6. Do you work out your budget before you start hunting for an investment property?

7. Do you overspend on renovations and fixtures?

8. Do you based your investment decisions on research and data or do you simply follow the advice of others?

9. Do you thoroughly inspect the property before buying?

10. Do you speculate or invest in properties?

11. Are you prepared to hold them for the long term?

12. Do you protect your interests by always working out the 'worst-case' scenario before entering into a property business partnership?

My Guiding Principles for Property Investment

2009-07-06T09:06:00.003+08:00

GUIDING PRINCIPLE 1

I believe that I can make money from property investment

GUIDING PRINCIPLE 2

I will not give up until I succeed in meeting my financial goals

GUIDING PRINCIPLE 3

I will do all the necessary research before making a decision

GUIDING PRINCIPLE 4

I believe in my research and not be influenced by others or temporary market fluctuations

GUIDING PRINCIPLE 5

I will invest within my means and not over commit in my investments

GUIDING PRINCIPLE 6

I will be prepared to invest over long term and hold on to my investments for the next 5 - 10 years if necessary

GUIDING PRINCIPLE 7

I will remain focused on the long term prospects and not be tempted by short term gains

GUIDING PRINCIPLE 8

I will not let emotions influence my buying or selling decisions

System : Investment Decision Making Process

2009-07-02T16:21:00.007+08:00

To improve the quality of your investment decision making process, you need to take note of the following :

1. RANK PRIORITIES, EXPLORE POSSIBILITIES

a. What is your investment objectives?
b. What are the multiple ways to reach your goal?
c. How would you rank your priorities?
d. Look at all possibilities :
- What can go right?
- What can go wrong?

2. GET YOUR FACTS STRAIGHT

a. Ask smart questions such as :
- What geographic boundaries specifically delineate the area studied?
- How did the researcher gather data? What sampling errors could distort the data?
- What is the differences between property compared to building size, unit mix, price ranges, amenities, features, conditions, locations, etc ? Look at individual market segments and market niche
- What is the trend? Snapshots rarely provide a full, dynamic view.
b. Think, Analyse, Verify

3. USE RULES OF THUMB CAUTIOUSLY
a. Use rules of thumb favorably in negotiations & persuasion but not in decision making.

4. QUESTION ADVICE & RECOMMENDATIONS (even from Experts)
a. Guard against these pitfalls :
- Advice or approval?
- Knowledge or ignorance?
- Your preference or theirs?
- Conflict of interest?
- Public soothsayers or media molls?

5. ORGANIZE YOUR THINKING

Referenced from the following book that I had read :

Trump University Real Estate 101: Building Wealth With Real Estate Investments

Activity Step 1 : Get Information on Real Estate

2009-07-01T16:10:00.003+08:00

In order to get more information on Real Estate in general, I would need to do the following :

1. Read

Will be buying more books on :
Foreclosures
Fixer-Uppers
Condominiums
Small Income Properties
Tax Liens
Creative Financing

2. Attend Seminars and Conferences

3. Take Short Courses

4. Look at Properties

5. Networking and Talking with People

Current Shop Space Rental at Orchard Road (Listed)

2009-06-24T10:30:00.006+08:00

Following is the listed Shop Space rental asking price at this moment along Orchard Road.

CENTREPOINT

#03
- 735 sf
- $7.45 psf
- $5,500 rental
- 99 years from 17/08/1979
- near escalator
- near mrt
- listing from 25/05/2009

LUCKY PLAZA

#??
- 355 sf
- $23.1 psf
- $8,200 rental
- Freehold
- listing from 23/06/2009
61,000,300

#1-#5
- ??? sf
- $??? psf
- $2,800 rental
- Freehold
- listing from 19/05/2009
61,000,300

#??
- 150 sf
- $66.67 psf
- $10,000 rental
- Freehold
- listing from 22/05/2009
- Heavy Crowd
61,000,300

#Basement
- ??? sf
- $??? psf
- $10,500 rental
- Freehold
- listing from 03/06/2009
- Heavy Crowd
61,000,300

#03
- 200 sf
- $15 psf
- $3,000 rental
- Freehold
- listing from 13/06/2009
61,000,300

#01 / #03
- 200 sf
- $15 psf
- $3,000 rental
- Freehold
- listing from 19/06/2009
61,000,300

MIDPOINT ORCHARD

#02
- ??? sf
- $?? psf
- $3,500 rental
- Freehold
- listing from 18/04/2009
61,000,300

#02
- ??? sf
- $?? psf
- $3,500 rental
- Freehold
- listing from 02/05/2009
61,000,300

#02
- 300 sf
- $10.33 psf
- $3,100 rental
- Freehold
- listing from 30/05/2009
- near Somerset MRT
61,000,300

ORCHARD PLAZA

#01
- 220 sf
- $15.91 psf
- $3,500+ rental
- 99 years from 02/06/1977
- listing from 13/12/2008.
61,000,300

#??
- ??? sf
- $?? psf
- $3,000+ rental
- 99 years from 02/06/1977
- listing from 11/04/2009.
61,000,300

#??
- ??? sf
- $?? psf
- $3,000+ rental
- 99 years from 02/06/1977
- listing from 02/05/2009.
61,000,300

#01
- 170 sf
- $18.82 psf
- $3,200 rental
- 99 years from 02/06/1977
- listing from 16/05/2009.
- Heavy human traffic, suits retail, good facing
61,000,300

#??
- 172 sf
- $?? psf
- $2,700 rental
- 99 years from 02/06/1977
- listing from 28/03/2008
61,000,300

#??
- 40 sf
- $1,125 psf
- $45,000 takeover
- 99 years from 02/06/1977
- listing from 23/06/2009
- Food stall in Food Court, newly renovated
91,872,244

Location of Property : Factors to consider

2009-06-02T06:17:00.000+08:00

Factors that improve a property's value include :

* Best school in the vicinity (may increase 19%-34% of price)
* Near MRT / Expressway to go to work
* Near shops and or other leisure facilities

Factors that reduce a property’s value include:

* Near busy road
* Being located near a pylon or a substation.
* Located near/next to a railway line.
* Backing onto an industrial estate.
* Neighbouring noisy pubs, shops or commercial properties.
* Being next door to a rundown property.
* Proximity to a sewerage treatment plant or other ‘undesirable smell’!

10 Tips for Getting a Good Bargain during Housing Price Crash

2009-06-01T06:49:00.000+08:00

Following is 10 Tips for Getting a Good Bargain during Housing Price Crash :

1. NEGOTIATE

Haggling is expected.
Start with 10% below asking price / recent transaction price in the neighbourhood.
If unsuccessful, then 5%.
If fail again, just ask the seller what is acceptable to them and then negotiate from there.

2. RESEARCH ON RECENT TRANSACTED PRICES

Research on recent sales price often resulted in 5-10% discount.
Speak to real estate agents to understand the situation of the sellers. The keener they are to move, the more discounts you might get.

3. MARKET YOURSELF

If you are an buying, you stand a good chance of knocking a significant amount off the asking price.
Show your readiness to move in such as phrases like:

we are ready to move
we've got all our inances inj place and we are renting now

Let the seller's agent know of this prior to you putting in offer.

4. HOW LONG IS THE PROPERTY ON THE MARKET

The longer it is on the market, the more the seller is prepared to accept lower offer.
Find out if the property had been on the market previously, then taken off and put into market again at lower price. Real estate agents do this quite often. Doing this could help a lot during negotiation (as there is possibility the seller might drop the price later).

5. IS THE PROPERTY ALREADY AT A REDUCED PRICING?

If yes, it means the seller is keen to sell. Then you may try getting further discount.
However, you have to be "ready to go". Do not hang around longer as this will be a disadvantage later on.

6. LOCATION, LOCATION, LOCATION

REMEMBER, this is most important factor in buying a property. Do not just look at price. You might be getting something at a real bargain but then at a poor location. There is possibility that you may not be able to sell it at a good price too in future.

7. SEARCH INTERNET FOR PROPERTY NEWS

Internet provide a very good sources of information on property news. Types of information to look out for included :

what are available in the area where the property you are interested in
housing market prediction
which property had recently dropped its price and by how much

8. SEARCH FOR BARGAIN

Following are where you can find good bargains :

Distressed seller who need to sell quickly - could get huge discounts.
Property auctions - however need to have 10% downpayment ready on hand and the rest of money ready within the next 28 days.

9. CHECK OUT THE BEST MORTGAGE DEALS

It pays to do research on different mortgage deals available so that you are prepared and informed when you need to act.

10. MAKE FRIENDS WITH YOUR REAL ESTATE AGENTS

Make an effort to have a professional relationship with your local real estate agent. Some of the ways to do this is by popping into the offices or send emails to them regularly. If you also let them know what type of property you are looking for and how quickly you can move the deal forward, they will more likely to think of you first when new property comes up for sale.

What Causes the Rise and Fall of Property Prices?

2009-05-29T06:22:00.000+08:00

There are a few factors that causes the rise and fall of property prices.

1. The main factor is Supply and Demand

And when looking into the supply and demand of a property in the market, there are few considerations.

Type of Property

Certain property may be rising while others are falling as there are more demand.
My Forecast : 1-room and 2-room bedroom flat / apartment will be in demand in near future.

Property Development Activities

There are times when only a of few properties being built and other times when huge housing estates were added to our property stock.
My Forecast : Check this out

Location

Properties in better locations worth more.
My Forecast : Check this out

2. The second factor is Affordability of Property

And the considerations are :

Availability of Disposable Income

My Forecast : Check this out. However for these few months, the stock market is starting to be in bull trend and there are some who had already earn a lot from there. So there is some extra cash around.

Mortgage Interest Rate

My Forecast : Check this out

Amount of Deposit

My Forecast : Property Prices are low at this moment, also is the amount of deposit.

3. The last factor is Market Confidence

Unemployment or Fear of Unemployment

As the rate of unemployment increase (and also fear of unemployment), people to start to refrain from buying new property in case they are jobless in in near future. And those who are unemployed may need to sell of their houses. This will lead to more supply than demand in the market.
My Forecast : Unemployment in Singapore is expected to last till mid 2010 - early 2011.

Current economic and property news

Most people will avoid buying property when the economic news and forecasts are gloom. This will lead to the fall of property prices.
My Forecast : Currently the Singapore Economic data is showing a gloom economy.

Free Online Property Game : Mansion Impossible

2009-05-28T06:12:00.000+08:00

I saw this free online game on property investment called Mansion Impossible.

The goal of the game is to have enough money to buy a 10 million pound mansion with initial investment money of 100,000 pound.

Initially I tried a few games by setting the timeline limit to 20 years (that's my actual timeline in real world) and try to see what I can achieve. And I was so surprised that I can achieve very little, with highest gain of around 20% by end of 20 years simulation!

I'll definitely try again this game so that I can understand the basic principles behind this game, which I believe should be able to help improve on my knowledge in property investment ...

Free Resources on Generating Passive Income

2009-05-27T07:49:00.003+08:00

As I am aiming to create passive income, I am now starting to read up more materials on this subject matter. There are a lot passive income resources out there that I could find. So I would need to be discreet in choosing the good ones. Following are some that is highly recommended :

E-Books

Articles - General

Articles - Internet Marketing

Articles - Miscellanous

Audio

Recommended Books

Here is a list of several books which are often mentioned regarding passive income. These books are not free, but I add them here in case you want to learn more about the subject :