Many will tell you that profiting from your investment property in Singapore is as simple as renting it out for passive income or selling it when the the house appreciates in value ("flipping"). The truth is, making money off your property is not as clear-cut. Housing prices do not always appreciate and finding a suitable tenant may prove to be a challenge.
"Flipping" Your House (Buying and Selling)
First of all, buying a property in Singapore requires a large downpayment. Such payments can range from from 10% to 30% of the property's total cost. This means that you need to have $200K to $600K cash for a $2M condominium.
Thus, if you do not have a large sum of liquid cash or the patience to wait for 10 years, "flipping" houses will be a challenge.
Secondly, not all properties in Singapore are bound to appreciate. Some properties appreciate at different rates and some diminish in value over time. Some of the reason for property depreciation can be due to: lack of demand, leasehold properties, and other uncontrollable market forces. Therefore, the huge capital laid out in investment property is not risk-free.
Renting out your investment property
The idea is that as long as your rental income exceeds your mortgage, you will make a proft. In addition, your investment property will also eventually appreciate in value for you to "flip".
However, for this method to work, your rental fees, property value, and other uncertainties associated with renting out your property have to be considered.
Firstly, acheiving a rental income greater than the monthly mortgage helps you to hold your investment property debt-free. So, it is important for a property investor to know how to identify a good investment property that can achieve a high rental income.
Secondly, in addition to the market uncertainties as mentioned above, there many uncontrollable forces that affect the value of properties. Knowing how to identify and pre-empt for these factors is vital to making the most out of your invesments.
Lastly, the challenge also lies with finding the right tenants. Coomon issues to address include: What is the rental demand of a property in this area? Who is demanding and why? Are you finding the suitable tenants?
Just like you, tenants are looking for the perfect match. The ability to connect a willing tenant to their ideal property will be crucial for both the landlord and the tenant.
Making money out of your invesment properties requiries a lot of homework to be done. Although there are many uncontrollable forces that drive the property space, we can still turn the situation into our favour if we understand: the property market space, the true value of your properties, and how to find the right buyers and/or tenants.