Here’s the story/scenario that property agents or financial advisors tell you to convince you that investing speculating on a condo in Singapore to get rental income is always a smart thing to do. “If you buy a condo, then rent it to a ready and willing expat tenant, he/she will pay rent that will cover your mortgage payments and even give you some extra pocket money. And after the term of the loan (usually 25 or 30 years), the home will be yours free, paid off with passive rental income.” The story is often followed by the agent giving you a wide-eye/gaping mouth look that suggests, “everyone is doing this, this is the only way to get rich, and you would be a complete fool if you don’t do it too.” Here’s where they’re wrong: (more…)
Category: Housing & Property
Imagine for a moment the Singapore property market without any property agents. Some would argue that this would make the industry disastrous; others would cheer and say that the industry would not only be more efficient but also be more value-driven.
For years now, the internet has disrupted many industries, and the FIRE sector (finance, insurance, real estate) is no exception. Many believe that this sector is parasitic in nature, charging exorbitantly high fees and delivering little in terms of value while producing absolutely nothing. Just as we’ve seen the rise of Direct Purchase Insurance (DPI) through CompareFirst which started last year, now comes DirectHome, a portal in which you can buy, sell, and rent properties directly without the middlemen (i.e., the property agent), potentially saving you both time and money. (more…)
For the first time in decades, the SIBOR rates (these affect your mortgage loans) rose significantly higher than LIBOR rates. This implies that interest rates in Singapore can go up as a result of factors other than what the US Fed does. SIBOR stands for Singapore Interbank Offered Rate. It is a daily reference rate based on the interbank interest rates at which banks lend to one another. At 1.06% (3-month April SIBOR), this key benchmark rate is 2.5 times higher than the 0.4% in 2014.
As mortgage loans are based on SIBOR, many people are wondering if it’s time to refinance to seek a lower (teaser) interest rate. But you don’t get something for nothing (at least not typically in the finance industry). So you need to consider the costs versus the benefits. Lenders, loan officers, and bank advertisements will entice you with interest rates, but what they never advertise is all the fees and restrictions. Here’s a countdown of some things to consider before happily handing over your signed loan documents to an eager loan officer. (more…)
When Prime Minister Lee Hsien Loong listed the various ways in which a “cash poor” senior can get extra income from his/her home in retirement, he said, “It is better if you keep your property. Even if you rent out the whole flat. It does not matter, it is yours. And you can fall back on it for your old age, just in case anything happens.” Here’s why I disagree, and why I think selling then renting is a viable option. (more…)
Singapore versus the United States: How does the cost of housing compare? The housing scene is very different in the US. And it varies greatly depending on the location, and whether you are in a rural, suburban, or urban community. I’ve lived in both nations, as well as in various US communities. But for the purpose of this comparison, let’s just look at urban settings. Here are some thoughts from my own personal (though limited) journey.
Owning versus renting – which should you choose? And what are the costs associated with each choice? Here is a more detailed explanation of the example and various calculations from the previous article. (more…)
Although I own properties overseas, I am a renter here in Singapore. People keep telling me that “renting is just like flushing your money down a toilet”. When I ask these people whether they rent or own, they proudly proclaim “own, of course!” But do they really own their home? Most people who purchase a home, do so with a mortgage. This is the same as renting, but instead of renting from a landlord, you are renting from a bank. And do you know what the word “mortgage” means? (more…)