According to Robert Kiyosaki, “The problem with real estate is that it’s local. You have to understand the local market”. Investing in real estate requires a hefty amount of money. The property is susceptible to risks that could cause you to lose the entirety of your investment and there are no guarantee that you’ll get a reasonable return on investment once you decide to sell it or lease it.

Lucky for you, Singapore is full of investment opportunities.

Singapore’s Real Estate Property As An Investment Opportunity

Singapore offers many investment opportunities that can be beneficial for you. First and foremost, there are no restrictions as to who can buy or sell a property. Moreover, the procedures involved in the real estate business are straightforward although they are quite lengthy.

Another advantage is that there is a low risk of losing money once the property is sold. This is because the prices of real estate properties in Singapore are ever increasing due to the demand always exceeding the prices offered. If you invest in Singaporean properties, chances are high that you will get to enjoy capital gain.

Property As An Investment: Capital Gain and Capital Loss when Reselling Properties

Capital gain occurs when the value of your real estate is higher than that of its purchase price. However, keep in mind that you can only say you’ve made capital gain once you’ve sold the property at a higher price than what you bought it for; increase in value while you still hold the property isn’t considered capital gain but capital growth or appreciation. Capital gain can be short term (a year or less) or long term (more than a year) depending on how long you hold onto the property. On the other hand, capital loss occurs when the value is lower than the purchase price.

Read: 5 Property Websites In Singapore To Buy, Rent & Sell Houses

Property As An Investment : Choosing to Resell your Property

Reselling the property isn’t the only way you can make money through your investment. You may prefer to have a constant but much smaller revenue stream. Perhaps you prefer to lease the property you invested in and receive rental yield from your tenants. If you choose to lease rather than sell your property, there are certain factors that you must consider when setting your rent; the amount you require from your tenants must be greater than the sum of those factors in order to receive some gain out of leasing. You must first keep in mind that the rent you will ask from your tenants is represented by 100% and then consider the following factors:

  • Insurance premiums

This cost will vary depending on where your property is situated but it should range between 2-3% of the rent. If you wish to cover the furniture, add an extra 1-4% of the rent, depending on the level of furnishing.

  • Replacing fixtures and fittings

Allow 10% to be included with the rent each year. Also, a fund is recommended for redecorating every few years. Save some of the rental yield in order to cover the redecoration.

  • Maintenance

Allow an extra percentage of cost for maintenance and repairs to be added with the annual rent. This can be determined by the age and condition of the property, so you should pay special attention to this aspect of the property.

  • Ground rent and service charges

It may seem strange but under certain conditions you, the landlord, can have a landlord to answer to. This seemingly paradoxical situation is caused when the property is leasehold, meaning that the landlord merely leased the property to you.

There’s one last piece of advice which applies to both who wish to sell their investment or rent it: location. Be on the lookout for Mass Rapid Transit terminals, schools or other projects which will be bound to lead to capital growth as well as a hand-in-hand growth of the rental yield.

This will require networking and some speculations but if you have any reason to believe that these facilities will be made available soon in the area you’re looking into, investing in any of these facilities will skyrocket your profit!

Infographic: Buying Private Property In Singapore

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).