Real-life dos and don'ts of property investing

By EdgeProp Singapore / EdgeProp | February 15, 2018 11:00 AM SGT
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Property ownership is a goal for many Singaporeans. When done properly, investing in real estate can offer a number of benefits for individuals, including the ability to diversify income streams and to capture long-term capital appreciation.
But just because Singaporeans have a love affair with property doesn’t necessarily mean they will be good investors. People lose money all the time. And for every phenomenal home-selling success story you hear, there’s probably a cash-strapped owner sobbing his way to a mortgagee sale.
Based on real-life cases of property gains and losses, below are some property investing dos and don’ts you should keep in mind.
Dos:
1) Understand the market dynamics of where you are buying
Mistakes are made by those who rush and don’t take enough time to study the market. If you’re buying property for investment, be prepared to set aside lots of personal time to property research the sector, check neighbourhoods and delve into research analyses that might point you in the right direction. The highest recorded profit in 2017 was made by this savvy investor, who bagged a cool $5.4 million profit from the sale of his unit at The Balmoral.
The seller, said to be an Indonesian based in Singapore, bought the 7,653 sq ft unit at The Balmoral in 1997, during the Asian financial crisis that gripped much of East Asia from the second quarter of the same year. During this period, the property price index (PPI) of non-landed residential properties plummeted 11.8% in 2H1997 from 2H1996.
Similarly, the median $ psf price for units transacted at this medium-rise project in district 10 fell to $931.5 psf in 3Q1997 from its peak of $1,186.5 psf in 2Q1996. Seizing the opportunity, the discerning buyer bought the first-floor unit in August 1997 at a bargain price-tag of $5.2 million ($679 psf). He sold it in April 2017 at for $10.6 million ($1,385 psf). The profit works out to 104%, or 4% a year over 20 years.
2) Prepare to make a long-term investment
Successful investors have one thing in common – patience. To realise the...