How to Avoid the Common Mistakes done by Property Owners and Buyers?

How to Avoid the Common Mistakes done by Property Owners and Buyers?

Kumar Properties

How to avoid the common mistakes of Property owners and buyers?

Over the years, I have met many property buyers and owners who made many common mistakes when it comes to property. Therefore, I would like to take this opportunity to share my insights with you. At the end of the day, my objective is to help everyone to avoid making costly mistakes which can sometimes amount to hundreds of thousand dollars.

The above is one of the most common mistakes which I have witnessed in my real estate career.  Most people follow the herd mentality and rush to buy when everyone is buying. On the opposite, when market is quiet, people then to hold back.
 
Let’s wait for the market to drop further before we decide to go in. Does this sound familiar to you? Do we buy the property based on emotion or logic?
 
As for me, I always look at property based on research instead of hearing from others. I observe the facts and figures before making any decision. I am sure that you agree with me too. Property purchase is a big-ticket item, we should never rely on emotion buying.
 
Today’s market has changed. Despite the current endemic situation, prices of properties in Singapore are still very resilient. Why is it so? Does this means good or bad if you are reading this article now?

If you can afford the property today and are willing to hold for long term, there will not be any big drop in prices even when the market adjusts in future. The main reason why the prices are holding so strong is because of the effective government cooling measures that were put in place. The intention of the government is very clear – they aiming for gradual growth in the property market instead of crashing the market. This is something good for all homeowners and investors out there to take note.
 
Hence, if you are trying to time the market, there is no point in doing so. Once you observe the market, you will realise that many new plots of lands (government land sales) and en-bloc are setting new record prices. As a result, prices will eventually go higher in the future too. Refer to the chart below. With the new land bids, Ang Mo Kio/ Lentor development are expected to sell at minimum $2000psf and above in the future.

Many buyers usually end up paying more because they realised they could not afford to wait further as the prices have gone up. Just look at the chart below. For a 1,200 – 1,500sqft unit at the Outside Core Central Region (outskirt properties), the buyer only pay $693,000 in 2005. Today, they need to pay an average of $2 million dollar for the same unit.
 
Can you see how fast the prices have gone up?  This is the problem of waiting game, and how people pay more by waiting. Do not fall into this trap anymore as waiting is not the right move. It is crucial for you to learn how to look at facts to make the right decision.

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How to Identify Right Property at the Right Price Tag?

How to Identify Right Property at the Right Price Tag?

Kumar Properties

how to identify the right property at the right price tag?

I will be sharing with you on some investment tips that you must take note of when buying a property. How to determine freehold property with the right price tag? And how to determine the exit strategy? What should be the exit price for your property?
 
How do I determine which property to select? I have always stand by my Number 1 Rule – to look for the Correct Entry Price. Let me share with you in detail by using a Jervois Mansion as a case study. This project happens to be a FH located at a super good location, near to MRT station and Orchard Road.

ENTRY PRICE

How are we going to determine the
POTENTIAL UPSIDE
and
RISK
of buying this property?

With reference from the above chart, we can see that the existing resale properties that are near to this development are already transacted between $25xxpsf to $27xxpsf on average. Being a brand-new development, the price of Jervois Mansion is starting from $22xxpsf. Do you think is there a potential? Or is it risky? Will you consider to buy based on this?
 
Important to take note: Before any purchase, remember to remind yourself that the price has to be what others are willing to pay. If you are buying way above (for instance) more than $3xxx psf, you might consider to do more research.
Look at the above research, the other 99 years LH in this vicinity are already transacted above $23xxpsf to even $27xx psf. This will provide an assurance to yourself. Referring to the bar chart below, the existing FH new launches are also transacting above $26xxpsf to even $36xxpsf. This will provide further assurance to this purchase.

EXIT STRATEGY

How do I determine my exit? Based on this entry price, if I am adding $300,000 profit into the purchase price, how much should be my exit psf?

The table above shows that after adding the profit, the selling price will be $2507psf.  The question you need to ask now is, do you think this price is acceptable for the future new buyer after 3 years when you can sell?

CCR Average Transacted Price

Let’s take a further look at this chart below. The average transaction price in the Core Central Region (CCR) is $2704psf for all the new launches. Given this comparison, we are confident that Jervois Mansion is priced rightly and there is potential upside. Most importantly, the risk is very low. At the end day, the investment has to be safe with future upside.
After reading so much, do you agree with me that this is a property that is priced rightly for safe entry? Not only that, it is FH with good location, right in the town. With sufficient research, we can invest in Right Entry Price property.
 
Hope you have enjoyed the article on how I determine the right entry price property. If you are keen to further explore for other similar property in the market, drop me a WhatsApp so that we can meet up for a further discussion.
 
As this is a million-dollar investment, I hope you can understand that my strategies are not fully explained via an article. There is no obligation at all. It is always my pleasure to share my knowledge with you. Thank you for reading my article.

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Are you not taking action due to fear of losing?

Are you not taking action due to fear of losing?

Kumar Properties

Are you not taking action due to fear of  losing?

Buying or selling a property is a big decision for many of us because everyone is fearful of losing our hard-earned money especially when we are making the first move.
 
For those who have purchased your first property in the past, I am very sure you faced many fears and uncertainties when you are penning down your signature. I can still recall the stress when I was making that decision.
 
Why do we feel so fearful to make this move? I would say it is mainly because of the lack of knowledge. FEAR has been one emotion that stops many people from advancing to get their private property.  This is also the reason why I decided to write about this topic because I believe many people are aware that property investment is the way to build our wealth and to provide the best for our loved ones. You must read on to understand so that you can overcome this inner fear.

For me, I always believe in logic, instead of letting emotion rule me. Many people who have not bought their private property will tell you that investing in private property is stressful, having the need to pay off the high mortgage. Another school of people will say that the property prices will drop with the current pandemic situation.
 
Don’t buy, it will drop further – I believe you have heard such a statement many times from people around you. 
 
Have you ever wondered what is this judgement based on? What knowledge do these people possess to make this conclusion? This is a very important question and we should not fall into such an emotional trap. Here we learned that many people are working hard for money rather than using their hard-earned money to work hard for them. As you already know, working hard will not make you richer
 
You might want to compare it to how the bank works. After people deposit their money into the bank, the bank does not only safekeep the amount. Instead, they increase the amount by multiple folds, by making further investments. The same theory can be applied to your investment logic.
 
As you are reading now, I really hope that you can seriously think about what I have mentioned. I am not here to tell you to speculate and take high risks. This is the last thing we should do. Before buying a property, we can do a stress test to ensure that we are comfortable to pay off. A professional property advisor will be able to help you on this matter. In fact, over here in PropNex, we have our own proprietary software called Risk Assessment Management System (R.A.M) that can help clients to make a better decision by inputting various figures and ensuring Risks are reduced to the minimum before every purchase.
 
I always believe financial planning is crucial when it comes to buying an asset.

Looking at this article, you will realize that many people make money via property, but the truth is there are people who lose money too. Why is it so? I can tell you that the main reason lies in the lack of financial planning.

Therefore, it is always important to do proper financial planning via the RAM system. Let me share with you a case study on buying a resale property. If you intend to buy a property, check out your loan eligibility first. Based on the person’s income, if he/she can borrow up to $1.278M, how do he/her determine what price he/she should spend on buying? Should this person max out the loan? What are the considerations?
 
As I would advise – look at your balance in your cash saving or CPF after purchase. Work out the numbers to see whether you have sufficient funds to tie over if you are going to be self-employed or running your business one day. Do you have the spare fund to pay your property mortgage?

Refer above for an idea of the reserved funds after the purchase. In fact, our RAM system allows you to toggle the purchase price and work out the balance fund based on your comfort.
 
I would emphasize again – One of the main reasons why people lose money is due to the lack of financial planning. All these can be solved when one works out the numbers. Do not let emotion affect you. Let logic work out the numbers before you make the decision to buy a property.  Our RAM system below will even show you the best scenario and worst scenario after purchase. It calculated how long it can last you when you are employed or self-employed. With all this planning, your fear can be greatly reduced.

To all the readers, work out your finance first and I strongly believe your fear will be eliminated too. In fact, to me, property purchase is a form of forced saving. The bigger the investment, the more you save. Why do I say that? Refer to the example below.

If your property is rented out, your tenant is paying the interest for you. On top of that, they are saving $2,642 to your principal every month. If you look at the one-year figure, it will total up to $31,704. If you put your money in the bank, will you be getting this amount yearly from the bank via your fixed deposit? Even if you are staying in this property, you only pay less than $1,000 to stay in a condominium. Every month, you are forcing yourself to save $2,642 for your house. As I mentioned, all risks can be calculated when you have the right property advisors, using our RAM system.
 
There are many mistakes when it comes to buying and selling a property. For today, I will be ending here as I do not want to overload you with so many things to read. If you need anything else or wanted a non-obligatory RAM analysis, please whatsapp me +6582828214. I will be very happy to share with you.

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Is It Better To Buy a Freehold (FH) or Leasehold (LH) Property in Today’s Market?

Is It Better To Buy a Freehold (FH) or Leasehold (LH) Property in Today’s Market?

Kumar Properties

Is it better to buy a Freehold (FH) or Leasehold (LH) property in today’s market?

Many people always ask me – Is it better to buy a freehold property or leasehold property in today’s market? Therefore, I decided to write this article to share my thoughts with you so that you can have a better understanding when it comes to selecting your choice Singapore property.

If given a choice, I believe most people will prefer for a freehold property, but does it mean that all the freehold property will definitely make profit at the end of the day? We have witnessed many leasehold properties which made good profit margin too. Hence, it is always good to know how to determine the right property.

Do not always assume that freehold property will make profit. For me, I have never believed in emotion purchase. I prefer to do research and use that to make the right judgement when comes to buying a property.

At the end of the day, it is all about the entry price when it comes to deciding a FH or LH property to purchase.

I would like to share with you 3 important factors when choosing a freehold property and they are:

a. Legacy
b. Location
c. School

Why Legacy?

Here’s the scenario – A buyer took a 20 years loan, paid a 25% down payment and subsequently rented the property out. The tenant continued to pay for the rental and mortgage. Even as the buyer topped up the shortfall in the mortgage, the amount paid by the tenant will still reduce the principal at the end day.
 
I always take this approach as a form of forced saving into the property. Just looking at the chart below. After 20 years, all the rental proceed that you have collected will go to the next generation. This is why so many savvy investors choose to buy a freehold property as they are leaving it as a legacy for their children.

Location, Location, Location 

The second point will be location. If you can find a Singapore property that is freehold and near to MRT, it will be a super plus point as there are only 13% of such properties in the whole of Singapore. Using the law of demand vs supply, freehold property near MRT always hold its value and appreciate more too.

Near to Good/ Renowned school 

If you are a parent, will you also prefer to buy a Singapore property that is near to the good schools? I am sure that you will reply “YES” because we want the best for our children. Now, imagine if there is this freehold property that is near to good schools, isn’t that a bonus?
 
As a general rule of thumb, the profit margin of freehold which is near good schools is very high. Take a look at the chart below and you will realise that one of the owners actually made about $800,000 in profit. Do you ever wish that you own this Singapore property?

Hope you have enjoyed this article that I have prepared for you.
 
I did not create a long article on purpose as I am unsure if you will be keen to read more. In fact, I have another article which is extremely crucial where I will be sharing a case study on how I analyze whether the property is priced right. I have used one of the most important fundamental principles on how to determine the potential upside of the asset, similar as the Singapore property mentioned above.
 
I have seen people choosing the wrong asset and making very little profit. Therefore, it is important to do research to ensure that your purchase will be a safe one (as you can see from the chart below). Of course, there is no promise in making your desired profit, but we can minimise your risk to the lowest possible.

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