Many people has jump into the property
investment bandwagon. Back then, buying a property for the purpose of selling
in short term was definitely tempting and possible. As of today, buying a
property and selling it in a short time is definitely harder as compared to
decades ago, as the property market has slowed down significantly and property
prices no longer rise as much due to government’s measure to cool down the
market.
However, the insiders from the property
industry think that property market is recovering. Moreover, government has let
loose of the measure as well. Therefore, if you are looking for the right time
to jump into the property market and earn from property investment, you should
know more about property flipping. Furthermore, there are many condominiums in Paya Lebar that are for sale.
A.
Flipping versus long term investment
First of all, it is essential to
understand the term flipping. Flipping is method of making profit by buying a
property and reselling it within the shortest time possible. Property flippers
could flip a property within a short time (weeks or months) whereas property
investors would normally wait for a few years for capital appreciation.
There are various ways to do property
flipping if you are interested in. You can either take multiple smaller home
loans if you are able to afford, or opt for a higher priced property that has
great investment value.
- Factors to consider
- Timing
Timing plays an important role when it
comes to flipping. There is no reason to buy another property for the sake of
flipping when the property market is already in its peak or has been stagnant.
Due to the global economy condition currently, it is quite implausible that the
property market will have a raise in property prices.
In addition, government will most likely
step in when they are aware of speculative property purchases. However, this
does not mean the it is impossible to do property flipping, as long as you are
getting the right target property with good location, good accessibility and
size.
2.
Seller’s Stamp Duty (SSD)
You should also be aware of the Seller’s Stamp Duty (SSD) that the government has imposed. This SSD is announced to discourage
people from short term buying and selling the property. In addition, SSD is
accounted for when it comes to weighing the net profit you expect from the sale
of the property. However, the government has waived the SSD after 3 years
instead of 4 years.
Moderate term flipping is still possible
if you consider buying a new property with a TOP date of over 3 years, then
sell it without stamp duty payable. In addition, most of the home loans come
with low interest rate for the first two years.
3.
Total Debt Servicing Ratio (TDSR)
Currently, the total debt servicing ratio is 60%. That being said, your debt obligations including the credit
card debt and personal loans should not exceed more than 60% of your monthly
income.
This will then make property investment
more difficult than it already is, however, still possible. It is still wise to
think thoroughly before taking up on another loan to make it easier to apply
for another loan. You definitely do not want to find yourself occupied with
mortgage debts that cause you to lose a chance on flipping and make a profit
out of it.
4.
Scarcity of property
You might think that the property that you
are targeting has a good location with great amenities, and will definitely be
able to flip to make a profit. But might want to think twice about it. There
might be many property developments going on in the area that you are interested
in and are to be launched soon. Therefore, your chance of getting your property
flipped at higher priced might be affected.
5.
Long term potential
If you happen to have a property that is
considered highly desirable with good location, good accessibility and right
size that will provide you a good rental income every month, it might be a good
idea holding on to the property instead of selling it within short period, even
though the profit you gain will be tempting.
If you are looking at property that is
located in developing area, you will be able to see substantial gains when the
area has matured into a prime estate. It is good to be patient when it comes to
this situation.
In conclusion, it is good to do your
research and get yourself educated before you venture in the property investment industry. The journey to property investment might not be easy but it will
definitely be worth the efforts if done right.
