By Property Soul (guest contributor)


The radio is playing Cher’s “If I Could Turn Back Time” when an email from a blog reader popped up on my screen.

“You’ve Got Mail”

It’s another message about a home buyer’s remorse. Every week there are so many messages on disappointment and regret after buying properties. They all go like this:

“I wish I had…before I bought…”

“Why didn’t anyone tell me…”

“If only we knew…,we wouldn’t have…”

“We should have…but we had no idea…”

So many regrets. What’s the use of crying over spilled milk?The sad part is that these messages all end with an inevitable request for advice like “What do you think I should do now?”or “Do you think I should…or …”

How do I know? I am not you.

I have been advocating for prudent investment in private properties in my blog since 2010. I am doing my job as a nutritionist, not a surgeon. I take preventive measures, not remedial actions.

Why don’t buyers do some research on the market? Why can’t they check with the bank first before placing a deposit? Why do people let their impulse and greed take over?

If only they knew the following fourtips on property investment before taking the plunge, there would be less home buyer remorse, and I would receive far fewer regret purchase messages.

Tip #1 – The showflat is for display; the bare unit is for your own stay

You thought the showflat in the sales gallery was so nice. You couldn’t help but imagining yourself staying there too.

There is nothing wrong visiting new launches over the weekends. There is also nothing wrong dreaming about the high life and staying in a posh condominium. But please wake up and get back to life after you step out of the showflat.

“The truth is like an alarm clock. You might not want to hear it … but it will wake you up from your dreams and bring you back to reality.”- Anonymous

Look beyond the bells and whistles. Things that are glamorous on show are often humble in reality.After you collect the key to your bare unit, you suddenly realize that all the nice views and for display only Interior Designs at the showflat were all beautiful misunderstandings. The space constraints, developer defects, poor workmanship, etc. are the reality you have to deal with.

It’s like how lovers show their best side to impress when they first meet. But after they sign on the dotted line, they begin to show their true colors.

You get the picture?

Tip #2 – Properties are not safe investments;fixed deposits are

You wanted to develop a habit of regular compulsory savings by putting your money into a property and paying the monthly mortgage.All adults should put aside money for a rainy day. If you lack that discipline, consider giving a considerable monthly allowance to your parents or better half.

Forget the BS saying that money left in saving accounts will be eroded by inflation. Stop saying how property prices have jumped multiple times in the last few decades. Singapore has long passed the exponential growth stage in its evolution from an emerging to a developed country.

Do your maths: Property prices have fallen 9 percent since September 2013. The inflation rate in Singaporewas 2.4 percent in 2013. After 2013, it has been hovering around 1 percent. Which is eroding faster in value: your property investment or your bank savings?

Just take a look at the performance of currencies in our neighboring countries – who wouldn’t wish that they were holding the strong Singapore dollar?

Remember property prices dropped 44.8 percent from its peak in 1995? Would you rather hold cash in a low interest rate environment or jump on the bandwagon to buy overpriced properties?

An article in the Edge Property pointed out that in the last quarter 1 in 3 sellers of high-end properties incurred losses, with the majority bought in 2007 and 2010. The average loss was $1 million for units purchased in 2007.

In the city fringe, 1 out of 8 resale deals are in the red. In the mass market, 9 percent of secondary market transactions are unprofitable. A majority of the units were purchased in 2011.

It sounds ironic but how many investors can survive a property downturn or a housing bubble burst with profits higher than the interest earned by an average Joe from his fixed deposit?

Tip #3 – Income and appreciation are not guaranteed;but fees and taxes are certain

You said you joined the huge crowd of buyers because it was rare for retail units in centrally-located malls to be on sale.

You bought a unit at Alexandra Central, a 99-year hotel and retail development next to IKEA@Alexandra, during the launch on January 21, 2013. It was just after the government introduced the 7th round of cooling measures on January 11 when Additional Buyer Stamp Duties were raised to 7 percent across the board.

Didn’t you read the signs?

Even though asking prices were a whopping $4,300 to $7,000 psf, all except 2 of the 116 shop units were snapped up on the launch day. One upper floor unit below 200 sq ft even attracted 150 cheques from eager buyers.

How much rent can you fetch from a 200 to 400 sq ft shop in a 3-storey shopping mall? How many bowls of noodles do you need to sell in a day to cover the rent? Are you aware that the mall is not even accessible to any MRT station?

I went there for dinner last month on a weekday evening. A year after the mall was opened in 2015, far more than half of the shops at Alexandra Central are still vacant. There are more shopkeepers than visitors. It is that kind of mall that, after you see how quiet the ground floor is, you don’t bother to go up to the second and third floor.

Suppose you bought a 400 sq ft shop at $1.8 million and are paying a monthly loan of $3,200.If you are lucky to find a tenant to pay a rent of $3,200, your return is close to zero.But wait, you haven’t taken into account the high monthly maintenance fee and property tax, on top of the stamp duties and legal fee you already paid.

In this market, it is also not easy to find a buyer to take over a vacant unit in a quiet mall. Above all, commercial properties are subject to a 5 to 15 percent Seller Stamp Duty in the first three years.

Honestly I don’t think any buyer benefited except Chip Eng Seng Corporation. Because of their best-selling project Alexandra Central, the property developer’s quarterly net profit jumped $167.6 million, a 383.9 percent increase from the preceding year.

Think about generating income and capital appreciation from property investment? Think again.In properties, nothing is certain except fees and taxes.

Tip #4 – No Freehold is not a problem; no holding power is

You said you paid more to buy a freehold property because the value of freehold properties can hold.Have you over-estimated the investment value of freehold properties? Just because developers bought the freehold land at higher prices doesn’t mean it is justified for you to pay a premium too.

Afterall, the property game is all about affordability and holding power. And did I not mention buying the right property at the right time at the right price?

Don’t complain that you can’t finance or refinance your properties because of the restrictive Total Debt Servicing Ratio rules. Before you place a deposit, read my 3-3-5 rule again please.

Both freehold and leasehold properties appreciate in value during good times. The reverse is also true.

Tenants rent a place for its location, quality and value. They don’t give a damn whether your property is freehold or leasehold.No freehold tenure is not a problem – not having a tenant is.

How long can you continue paying the mortgage, maintenance and taxes when you can’t find a tenant? If you have no holding power, you’ve got to cut loss at certain point of time and let it go.

Regardless whether your property is leasehold or freehold, it is not ‘free to hold’.

By guest contributor Property Soul, a successful property investor, blogger, and author of the No B.S. Guide to Property Investment.

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