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What's The Deal With Property Investment? | richard tan success resources scam
1. WHAT’S THE DEAL WITH PROPERTY
INVESTMENT
The average person in Singapore, even if they aren’t savvy investors, is very attracted
to the idea of owning property. Many see it as an asset that grows in value over the
long-term and a secure, safe, and reliable investment vehicle.
The problem is a lot of people don’t really understand how the property market works,
where to invest and the best time to invest. So many rush in without thinking things
through or working their numbers correctly. With property being so expensive in
Singapore, this represents a significant investment risk that most people just don’t get.
So to help us out, we asked Tan Yang Po, someone who is very familiar with property
investment having transacted and developed millions of dollars’ worth in property locally
and around the world, to answer some of our burning questions.
1. Why invest in property?
There are many reasons why property is a good investment. First and foremost, it is a
good hedge against inflation. With the global economic uncertainty looming, we are
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2. expected to go into a period of high inflation. Higher inflation means the same dollar we
have right now, won’t be able to buy as as much in future. It’s not that prices rise over
time, it’s that our dollar is worth less. Inflation also means the cost of materials in
property will also increase, resulting in an increase in property prices. So if you own
property, its value will increase with inflation. That’s why it’s a good hedge against it.
Another reason why property is a great investment is leverage. That means you can use
a less money to make more. For example, when you buy a property, you don’t need to
pay full price for it upfront. You only need to come up with 20% of the property price
while the remaining 80% comes from the bank. This allows our money to work more
efficiently.
2. What investment strategy should I use?
A lot of people only know how to make money from property through buying, selling and
renting. If we only rely on property cycles to time the market and buy low and sell high,
we can only buy 3-4 properties in our lifetime. However, if one learns how to use the
right strategy, we can potentially buy more property, even without selling our property.
One good example is capital refinancing.
Let’s say your property price increases from $1 mil to $1.25 mil. At the current value,
you could increase your loan from $800k to $1mil, assuming you take out an 80% loan.
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3. In essence, you could go to the bank and ask to cash out the difference of $200k
without even selling the property. This is known as cash-out equity. Please bear in mind
though; every strategy that has an upside return will have a certain degree of downside
risk. So, to protect yourself and your investment, you need to fully understand this
strategy and know what properties can suitably use the cash-out equity strategy before
you jump right in.
3. When is a good time to invest?
A lot of people ask this question because they’re hoping to buy low and sell high.
Sometimes they mis-time the market and get stuck with a property they bought near the
peak and at market value. They end up having to wait a long time for the next peak to
come around before they can sell the property for a profit.
What you have to understand is that any time is a good time to invest if you know how
to find below market value (BMV) property. Don’t time the market. You can never
accurately predict the market with 100% accuracy because you’re not God. That is why
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4. the safer way to invest is to buy BMV properties. That way, even if the market price
drops, you are already protected to some extent.
4. How do I manage risk?
Investing in BMV properties is a great way to start managing risk. Having the right
protection like insurance is another way. Most of us only know how to buy fire
insurance. However, there are other types like content insurance is just as important to
get so you can protect your asset. Knowing how to plan your finances to ensure you do
not over leverage is another way of protection. Equipping yourself with these basic
fundamentals will help you to protect your investment.
5. Short term vs. long term
Before we ask this, you need to understand that some property is suitable for long term,
some short. More importantly, you must be clear on your goal for investing in property.
Are you looking to flip and sell or are you looking for cash-flow? The type or property
you choose to invest in will depend on your choice. Property is only a tool to achieve
your financial goal. Understand your goal clearly then you will choose the right property.
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5. 6. What is a comfortable amount to start off with?
A lot of people think you need a lot of money to invest in property. But if you learn the
right property investment strategies and are familiar with the property regulations in
different countries, you can even find deals with little or even zero capital down. For the
beginner, however, a minimum amount $10,000 is a good number to start with.
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