10 Years From Now, Don’t Say We Didn’t Tell You To Invest In Property



10 years from now, You will be in your late 40s, some in your 50s. You might still have 1 last chance to have another stake in the real estate arena. But why did you not do it 10 years ago?

But why did you not do it 10 years ago?

Imagine yourself looking back, which of these will be your reasons?

Hesitant to upgrade your property

Unsure about your capability to afford a property

Chasing the bottom during recovery

Didn’t plan for retirement

My friends say to wait for cooling measures to be lifted

If you somehow can foresee yourself 10 years later in such situation, you still have a chance now to change it.

Start now. It is never too late if you start today.



Fine-Tuning Total Debt Servicing Ratio For Home Owners to Enjoy Zero-Interest-Rate-Policy to The Fullest

fine tuning TSDR 2016 09 01

The Monetary Authority of Singapore (MAS) has just announced today that, with immediate effect, owner-occupied residential property owners can now refinance their mortgage without the ceiling of Total Debt Servicing Ratio (TSDR).

As for non-owner-occupied properties, owners can enjoy this exemption only when the following two conditions are met:

  1. Commits to a debt plan with his financial institution to repay at least 3 percent of the outstanding balance over a period of not more than three years; and
  2. Fulfils his financial institutions’ credit assessment

How can I benefit from this change?

Nobody knows how long will the current Zero-Interest-Rate-Policy (ZIRP) last till, so while it is still low, isn’t it the best time to quickly clear your mortgage and fully redeem your property?

Let’s say you are comfortable to service your mortgage at 90% of your monthly income, here is how much time and money you could save if you were to refinance your loan tomorrow.


  • Monthly income – $5,000
  • Property value – $811,645
  • Interest rate – 2.0%
  • Max loan repayment (with TDSR) – $3,000
  • Loan repayment @ 90% (without TDSR) – $4,500

Using a simplistic example, with constant monthly repayment and ceteris paribus, you will cut short your loan by 12 years and avoided paying over $115,000 of interest.

interest avoided for refinancing to shorter tenure.JPG

How will this change impact the property market?

In the short run, there is technically no impact to the property market because this change is targeting at existing owners only.

There is no change in TSDR restriction for new property purchase. You can still only loan up to the ceiling of 60%.

However, in the long run, when more properties are redeemed earlier, owners will be able to buy the next property earlier with the interests cost avoided to pay additional buyer’s stamp duty which is likely to stay for awhile more.

Furthermore, down payment will be low as they would be able to take 80% loan with a debt-free status (instead of 50% loan when they are still serving an existing loan).


All in all, this is a good start from the government to calibrate the market with a long-term perspective allowing property owners the flexibility to service their mortgage at a higher debt ratio in order to take advantage of the current ZIRP.




How Much Should a Property Really Cost You?

how much should a property really cost you

There are generally three approaches to calculate the right price for any property; using historical data, using today’s data, and using future data. Most people use the first two approaches as they are more straightforward and easily understood, but in this post, I will focus more on the third approach – using future data.

Common approach – using historical and today’s data

Using historical transaction data – starting from launch price to the recent transacted prices, one will be able to calculate the average yearly capital appreciation and use that to estimate the reasonable price tag for a particular property at this point in time.

Using today’s data is only possible recently with the help of SRX’s live platform which provides real-time transaction information. However, this real-time information is not available for individual buyers or sellers who are not represented by an agent which put them in a less favourable spot when comes to getting the best deal.

By referencing to historical and present data, the common approach has a goal of validating if the current asking price is the right entry price to buy – entry strategy. In the next section, I will introduce an approach that is closer to an exit strategy.

Less used but powerful approach – using future data


This approach is not new to the financial world, but very under-utilized in the arena of real estate.

It is the discounted cash flow approach.

It looks at bringing the projected future income into today’s monetary equivalent so as to get a meaningful indication if the cost to purchase is worthy or not.

Step 1: List down all yearly income and expenses

  • Multiply recurring monthly income and expenses by twelve to get the yearly amount
  • Include all cost of buying and selling such as legal fee, agent’s fee and etc.
  • Set aside some expenses for some minor repair work


Step 2: Discount net cash flow for each year to present value

  • For each year, sum up all the income and minus all expenses to get the net cash flow for the year
  • Calculate the present value for each year by using the formula in the diagram below


Step 3: Sum up all discounted present value

  • Add up all discounted present value
  • You will get the net present value of this property
  • This is how much it should cost you to buy today


Should cost method is always wrong

Just like any estimate or projection, this should cost method will always be wrong. It can never be entirely correct.

Due to the assumption made on interest rate either constant for the entire time period or varies as per your subjective interpretation of the future and the inflation effects on future income and expenses, these uncertainty makes it only an estimate.

So why use this method?

Because we all have an interpretation of the future whenever we buy any investment product (consciously or subconsciously), and this method will allow you to quantify them into numbers.

Should cost method will allow you to quantify interpretation of the future into numbers.

Hence, by using these numbers will bring objectivity in when you are comparing a few properties based on the same assumptions.

This is how you should shortlist and find the right property to invest.

Are you already using this method?


When ABSD becomes basic BSD


when absd becomes bbsd

We have heard countless times from different ministers on being too early to lift or even relax the property cooling measures, particularly the additional buyer’s stamp duty (ABSD) introduced in Jan 2013. What if the ABSD is here to stay and to merge with the existing buyer’s stamp duty (BSD)?

Perhaps when it is not an “additional” tax, buyers currently holding back will be more willing to embrace the new norm?

With the ever increasing sums needed for nation building, a steady stream of taxes is important to sustain Singapore’s growth as a nation. Social development has always been a big chunk of the nation’s spending at 52.9% in 2015, and as our population ages, more funds will be needed to cater for these social needs. Where do you think the money comes from?


Tax spending fy2014_2015.JPG
Source: IRAS – The Singapore tax system 


Furthermore, in order to remain competitive in attracting foreign businesses and high net worth individuals to Singapore, corporate and income tax have always been kept low and it will most likely to stay like this.

So where do you think the money have to come from? Road tax, cars COE, Property taxes, stamp duties.

Okay you see the point.

Let’s say only 15% of citizens have paid 7% for their second property after the introduction of ABSD. Within the next two years, another 30% – 50% will accept the fate to pay the 7%.

Sooner or later,  when half of Singaporeans have already paid the ABSD for their second property, it would somehow be seen as the new norm.

When the time comes, would it be easy to merge ABSD to the existing BSD?

And will there still be a mental barrier for buyers to wait further?




3 Habits of Highly Successful Property Investors Everyone Must Know

3 Habits of Highly Successful Property Investors

After meeting a handful of successful real estate investors, I see similar traits in all of them and I have picked out three to share with you such that you and I can learn from them.

1.Ever expanding network

They have a good network of investors, bankers and real estate agents.
They hang out frequently with other like-minded investors and make friends with estate agents and bankers etc.
Being in such network, there is active sharing of exclusive first-hand information leading to collaboration focusing on mutual growth in wealth, for example; undervalued property from distressed sellers whom they know .
Furthermore, such strong bond comes with many fun-filled gathering sessions and celebration of their successes together.

larger network equal larger networth.jpg

2. Very well read and critically insightful

They read and talk about real estate and other financial products every day.
They watch the market and knows which districts are showing a buy signal.
They understand how to critically view the property price index (PPI) and look at specific district (and estate) to hunt for opportunities.

They are watching other financial products for a good portfolio mix. Although a few of my clients are cashing out their already profitable property investment to channel the proceeds to other investment products, real estate is undoubtedly still viewed as a safe haven with high potential growth in current times of global uncertainty.


3. High financial awareness

They always know how much In-Principle Approval (IPA) they can command at their finger tip.
They do projections and make plans for future cash flow needs so as to fully utilise their cash to work for them because being under-leveraged is actually a kind of liability.
They may not know the technical calculation of time value of money, mortgage and debt ratios but they understand the difference between good debt (leverage) and bad debts (liability).


Well, these are just three simple habits that anyone can practise and become the next successful real estate investor.

Let me know your views!