Property Investment for Beginners
Getting Started With Property Investment
For Singaporeans, there is no shortage of information available for property investment for beginners on what they should do to ensure success.
Your investment property is an asset.
An asset is a terminology that covers many things here in Singapore.
According to the dictionary, an asset is an item or property owned by a person or company.
We regard the asset as having value and available to meet debts, commitments, or legacies.
An asset can often generate cash flows and may include personal assets such as
- a family home
- other properties
- a car
Some examples of assets are cash, machinery, inventory, land, and building, amongst many others.
Let’s talk about property investments.
For beginners or a budding investor, there are many factors to consider before investing in multiple low-value properties or just one high-value property.
Let’s first look at the term property investment.
What does the term “property investment” mean?
In layman’s term, it means property purchased intending to earn a return either by renting it out for an income or a future resale of the property when the time is right.
For property investment, there’s no shortage of information out there on the internet.
I’m going to share with you an essential guide to property investment for beginners.
For starters, not everyone knows how to go about investing in properties.
There are investment decisions, but don’t think you never know it all before you begin.
Before you set out to find a property to purchase with hopes of good returns, it is prudent to research this topic.
You can start by speaking to property investment advisors.
Your family, friends who have invested would give you valuable first-hand information in your decision-making process.
You might ask, what are standard terms used in property investment?
For property investing newbies, the real estate industry’s jargon and acronyms can be intimidating at first.
You can read some standard real estate investment terms in a reader-friendly glossary.
What are the typical questions that people ask when it comes to investing in property?
Real estate investing can overwhelm beginners.
Many new investors jump into the business without adequate preparation, knowledge, or even know their investment goal or investment appetite.
Some follow along.
You could have a cousin who invested in properties.
Or you followed recommendations from a buddy who is a real estate agent.
For successful investors, they often have the habit of asking real estate questions.
Property investment for beginners is not about buying some newly launched Fancy Mancy condo.
The developer might promise to build a highway connecting to the development of the condominium project.
Buying apartment units next to an international school expecting to rent to the student community may not work out to your advantage.
A friend found out the harsh reality after her purchase–the international school acquired an entire block to house the students and teaching staff!
For the investors of the condo units, it was an “empty promise” by the developer’s sales staff.
By asking questions, you get to learn from real experienced property investors.
You need the knowledge to be a savvy investor.
You will familiarize yourself with the properties that might give you the best rental yields–not whatever is trendy or speculative.
You will avoid unnecessary mistakes that could be costly.
Of course, it is almost impossible to know everything about real estate investing when you are just getting started.
So, before you jump into the real estate investing field, it is good to familiarize yourself with some industry jargon.
Finding out includes getting the answers to some common real estate questions asked by new investors.
Property investment for beginners – Where do you even start?
After looking at the standard terms or jargon typically used when you are talking property, you will want to know some essential tips to invest in the residential property market.
Step 1: Know Your Budget.
First things first, most investors in Asia are used to investing by borrowing from the bank.
Most start with a say 20% savings set aside.
Then they apply to borrow 80% from the bank.
Say for 30 years.
Most hope to rent out the investment property and use the rental to pay the mortgage.
You’re following so far?
If you take a look at a say, a nice condominium that is seafront facing in Tg. Tokong, Penang.
If you’re getting a mortgage, you will need to ask your bank or a qualified mortgage broker to assist with pre-approval for your investment loan.
The property price point could be a pain point if you can’t afford to purchase when it comes to crunch time.
Step 2: Know Your Cash Flow
Robert Kiyosaki, the author of Rich Dad Poor Dad, inspired me.
You don’t learn this in school.
Sometimes I wished I learned about personal finance education to get a head start in life.
These are the same topic that will help you master your finances;
1. cash flow
2. real estate
4. how to start a business
Before you invest in properties, it’s essential to understand the cost of your investment.
It takes money to make money.
If you think you can get a property with zero down, there will come a day that you need to pay when you start the documentation process.
For investment property, you must know exactly how much rent you expect the investment property will achieve.
You think the neighboring unit will fetch in terms of rental income, and your property is different.
Before you and work out your monthly and yearly cash flow. You need to know the following;
1. expected monthly rental
2. ongoing associated costs for the property maintenance
Step 3: Research Don’t Speculate.
Remember your cousin telling you of the scoop that his colleagues went in together because one of them had an uncle who married the sister of the developer on the Second Board of KLSE?
Everyone believed this to the deal of the century.
And rushed to put in their down payment for a condo unit?
The one sure thing as it’s next to the Mall and connecting to the new North-South highway?
We all know how that story went.
The units were overpriced, under subscribed.
The Federal government did not approve of the connection to the highway, and the Mall was not built.
Real estate investing is about selecting a market that is desirable for potential home buyers as well as tenants.
In the US, we research to identify a suburb that at least 70% owner-occupied home compared to 30% renters.
Ideally, a healthy suburb to live is in a good school district, have high-paying job growth, good quality amenities, well-maintained parks, and public spaces.
Using comparatives like this illustrates that the market is desirable to homeowners and has a healthy proportion of renters in place.
You can tick off critical existing infrastructure such as
- Public transport and connectivity
- Shopping centers
- Parks and recreation
- Hospitals and medical centers
Step 4: Set Long Term Goals.
All of us have different financial freedom goals. Some prefer a faster way to earn from their property investment; others prefer to make a passive monthly income.
Your plan may be different, but every one of these long-term goals needs financing.
You use the money you earn from your property investment for your list of 100 things you could save up for, and why not?
Some basics, like saving money for retirement, a dream house, a fancy car, and even your dream vacation.
- Family vacation
- Couples vacation
- Anniversary trip
- College fund
- Bucket list travel destination since you were a kid
- Gifting your parents with a family trip
- Trip to see favorite sports’ team play
- A mega trip around the world
- Health expenses when you’re older and need long-term medical care (like a nursing home)
- New car
- Spouse/partner’s new car
Everyone’s financial and property investment goals differ.
However, an important goal is this – all of us want to live comfortably in retirement.
Property investment can be a potent vehicle for creating long term wealth.
Think of the lifestyle you want to have by the time you retire – how much wealth do you think you’ll need to create to live comfortably once the paychecks stop!
For example, your retirement goal could be paying off the home you live in and earning $10,000 a month’s net rental income.
Potentially this could be collecting $1,000 rent per property. You will need ten rental properties to achieve this.
If you say, $5,000 a month’s net rental income is sufficient; then you will need five rental properties.
Most people would be happy with an additional $50,000 gross annual passive income in hand.
Do you need to ask yourself if this is enough to fund your retirement lifestyle?
Let us show you that it is possible to make a recurrent $50,000 gross annual passive income with your $100,000 investment capital.
Strategic advice is essential if you want to optimize return on your property investments.
What if I have $100,000, and I want to grow my wealth?
Many of our investors found that the best way to grow their wealth is through US real estate.
With $100,000 in some cities in Asia, this is not enough as a down payment for a condo unit.
We won this property at a county auction for our investors for $71,000.
As this was “the ugliest house on the prettiest street,” we had to put in some rehab to make it “pretty.”
We sold this in 15 months and netted a profit of $86,500, which worked out to an income of $69,200 per year.
Did the investors rest on their success?
Well, the last we heard, the investors were asking us to find them another deal like this and can’t wait to take part in the next county auction.
We have two SkyFlip Projects with Successful Flip Income.
What if I only a bit more than $50,000, and I want to receive a monthly income?
You can start your property investment projects with under $100,000.
It is a matter of finding you the right property that will achieve an excellent monthly income.
You can purchase a finished property project ready for a Flip without investing in more money for rehab.
A property that works out as a win-win project for our community of investors.
One of our business partners wanted a quick sale after completing a Rehab project – we sold the project to an investor who preferred property for rental.
The results worked out well for two thrilled investors.
What if I have $300,000, and I want to receive a monthly income and grow my equity at the same time?
We call this the “Golden Goose” project.
Our investors were thrilled to find this substantial beautiful property in a quiet suburb that quickly put up Airbnb rental with only $10,000 furnishing cost.
These properties are gems that you will want to get your hands on and keep.
Just like the “Golden Goose” that lays a golden egg every day, this Airbnb lease has a projected income of $45,000 per year.
This one is for keeps, and our investors are to enjoy their monthly earning and looking forward to capital gains in the next few years!
Or they might keep this “Golden Goose” project perpetually, as it is making $45,000 per year.
As you can see from the above, making a $50,000 gross annual passive income with your $100,000 investment capital is possible.
You can choose between a SkyFlip or SkyRent project for your business entity, which we can set up for you from our office in Singapore.
The difference is your choice of a FAT cheque or a cheque EVERY MONTH.
Step 5: Set A Budget To Work Towards Your Plan.
Whether your long-term goal is to own two, three, or even four houses or more–you need to set a budget and work toward your plan to build your wealth.
When you have a plan, it is easier to secure that next investment property faster.
Property investment is a long-term game–if you want to get rich overnight then, we will tell you this is not the RIGHT platform for you.
Capital growth is crucial for long-term success for property investment.
Building equity on the back of capital growth alone takes many years.
While additional savings built up over time can then go towards funding the next property investment, you can book an appointment with NSI’s consultants if you wish to get started.
We have an unconventional leverage method that helps you fund your property investment; it is not like the regular mortgage you are used to.