How to Get Great Investment Deal on Singapore Property
There are a few different ways in which you can strike a great property in Singapore. In this article we will look at how to get the best deals on second hand, new, and off-plan properties.
• Buying Off-Plan .When you buy off-plan in Singapore, you are buying an uncompleted property that is commonly known as “New Launch”. This type of property is commonly invested in by both foreign and local investors.
• Resale or Subsale. Resale or subsale of Singapore properties
You can find some great property deals in Singapore when you buy off-plan and invest in properties that are yet to be completed. This type of sale is common in Singapore for residential properties, the properties being under construction and being sold for residential use by the developer. When there are more than 4 units in the development, a Housing Developer’s license is required before the developer can start the construction.
Once this license has been granted, a sale license is required before the units can be sold. The sale license is subject to conditions laid down by the government and is intended to protect the buyer. After this two licenses have been obtained, the development can be launched publicly the properties usually being advertised in the major newspapers as well as through other campaigns; large developments may even have a media campaign. Previews generally take place in show homes.
How to Get the Best Deal
• Developers generally offer “early bird” prices that are very attractive; these entice take-up of the properties.
• Choice unit. Buyers generally get to select the best unit.
• Less upfront capital is required, as progressive payment schemes are generally in place
• Many units will even be cheaper than resale and second hand units you find on the market
• When the market is hot, balloting is involved
• Some of these properties are being sold at future prices
• You will not be able to enjoy an instant rental income from your property
• To get the best property, experience is necessary
VIP Preview Sales Procedures
Before a new development is launched officially, it will often be launched by the developer in what is called a preview or VIP launch. Here, buyers are invited to have the chance to buy the very first units. There are advantages of buying at this point, including:
• You have the pick of the units
• At this points, lower prices are generally offered in order to stimulate interest
• Early bird discounts of around 10 or 11 % are generally available, this discounts being subsequently removed
• These launches are generally attended by experienced property investors and savvy property buyers who will pick up the very best value for money homes
• Generally, a down payment of around 20% is required, within 3 or 4 months. After such time, no further payments are generally required for another 12 to 18 months.
• Guaranteed period for developers
• All monies paid will go into a project account as opposed to the account of the developer. Monies will only be withdrawn from the account for matters that are project-related
• In the case that the buyer decides not to go ahead with the sale, 75% of the down-payment will be returned.
As soon as the discount is removed by the developer, the unit increases in price and is worth up to 10% more. Some investors use this opportunity for flipping and selling properties in order to make a quick profit by sub-sale. If the unit is worth 1 million dollars, and the investor puts down $200,000, he could make a profit of $100,000 in just a few months if he decides to flip his property once the discount is removed. Previews are therefore a great place to be if you are interested in buying off-plan properties in Singapore.
Resale and Sub-Sale Properties
If you prefer to invest in a second hand home in Singapore, we suggest you do the following in order to get the very best deal:
• Register with a realtor
• Tell them the property you would like to buy and how much you are willing to spend
• The realtor will therefore keep you updated on any potential deals
• Potentially difficult to agree on a price
• You may not be able to acquire the best property
• With age, capital appreciation diminishes
Procedure for Buying Re-Sale Homes
When the investor wishes to buy a property, he will give the owner a cheque to the value of 1% of the property price. Once this has been done, the seller will issue the buyer with an Option to Purchase, this OTP giving the buyer 14 days to go ahead with the purchase before he loses his deposit.
The seller cannot issue another OPT for 14 days, regardless, and cannot sell the property to another buyer. If the buyer decides to proceed, he will then pay another 9% of the property price. This is paid to the lawyer of the seller, after which time the buyer will need to get a loan, find a solicitor, and pay stamp duty, etc…
The general procedure for resale of condos is therefore as follows:
• 1% is paid as an “option fee”, the OTP document then being drawn up by the seller or his agent
• The OTP is valid for 14 days, this ensuring that the seller cannot consider other options during this time
• The buyer will then need to pay a 9% “Option exercising fee” within the 14 day period, normally in front of the solicitor of the seller. The 1% option fee will be lost if he fails to do so.
• The balance that amounts to 90% will be due on completion of the sale. The sales process generally takes somewhere between 8 and 10 weeks to complete.
Advantages of investing in property using this method include:
• Running a profit on your property if you invest wisely
• Less up-front commitment
• Repayments will be made on forced savings via a loan or mortgage, meaning the more you pay, the more of the home you own.
• As long as the value of your property is maintained or grows, you will be growing equity in your property. Equity from your property can be used at a later date for securing a loan or for your retirement.
• In Singapore there is no estate duty tax, all your investment being free from capital gains tax.
• If you choose to become a landlord and rent out the property, the interest on your mortgage then becomes tax deductible.
• Home ownership brings stability, security, and a sense of satisfaction
• You won’t have lease conditions to worry about and you won’t have a landlord who has control over how long you can live in your property.
• Home ownership is gratifying, as you will be joining a selected few.
• Your home will be yours for a long as you want it, ensuring you can alter it in any way you wish that will enhance the property.