Are our real estate investments a wise choice? This post will give you my thoughts on investing in real estate as I’ve had some experience with it and also write about it on a property site. This isn’t financial advice, so do your sums (or consult your advisor) before making any investments because every individual’s circumstance is different.
In my opinion, properties like Clavon Clementi are suitable investments for the following reasons:
1) Low-cost borrowing options are available to help you increase your profit.
With property, you may borrow a lot of money at a cheap interest rate to buy a house, and that’s one of the main advantages. If the value of your property increases, you’ll get a more significant return on your investment.
Your equity will deplete even faster if prices fall. However, as long as you don’t get greedy and have some holding power, you should be fine in the long run.
Property investing has the potential to be highly profitable when done correctly. Think about how much money you’ll make if you sell your house for a profit and obtain several years’ worth of extra wages for projects like Dairy Farm Residences.
2) It’s possible to produce passive income from rental properties.
You can earn rental revenue by renting out your property (or a room if you live there). Your mortgage payment, which goes toward principal repayment, might be offset by the rental income, allowing you to accumulate equity in your property. Even after paying off your mortgage and maintenance expenses, you may have a positive cash flow if your return is high enough for condominiums.
3) Possibility to improve
Fix-it-yourselfers will find that renovating or improving the interior design will add value to their home. A simple coat of paint can have a significant impact on the property’s resale value.
4) There is no tax on capital gains.
When your property appreciates, and you decide to sell it for a profit, there is no capital gains tax to pay (unless the IRAS comes after you as a property trader). Compare this to your salary, of which the government takes up to 20% (based on your tax bracket).
5) Investing in real estate is a tried and true way to build wealth.
People who made their money constructing and investing in real estate dominate Singapore’s Forbes 40 wealthiest list. Alternatively, take a look around you the average Singaporean’s wealth is most likely derived from the appreciation of his HDB flat.
However, compared to other types of investments, properties have several drawbacks you should be aware of.
One drawback is the difficulty of purchasing and maintaining real estate. Finding a house may be a time-consuming and labor-intensive process. Once you find it, you’ll have to deal with repairs, tenant complaints, and other hassles.
Properties are an illiquid asset, which means that when you need cash, it will be more complex and take longer to get it. Selling a house can take several months, depending on the market.
It’s also difficult for most people to start investing in real estate because it demands a significant quantity of money. The time it would take to save up enough money to buy just one piece of real estate is anything from three to five years of careful budgeting.
Please be aware that we are not advising you to begin investing in real estate immediately. Prices have now surpassed the peak in 1996 (according to the URA Price Index), so you need to be especially cautious about the proceedings regarding the real estate properties.