Best Time To Buy Or Invest?
Updated: Jul 3, 2019
When is the best time to buy or invest? Is it possible to time the market? Here I detail some insights on the Singaporean property market from an investor's point of view.
Every property salesperson in Singapore will tell you the best time to buy is "Now" or "Soon" because, like it or not, that is their job. A savvy investor will say "when the price is right, if the numbers make sense and when you are ready".
Price is right?
Prices go up and down, all the time. Even at one particular time point, you can have inter-unit price variation. Let's just say, you can have 3 units on the same level in a condominium sharing the same view with completely identical layout, space utilization and pressure gradients. The only difference is that you have 3 different owners.
Owner A wants to sell to take profits. The aim is maximum profits so the asking price is highest. There is no real urgent need to sell. Owner B wants to sell to move closer to a certain school. The aim is to sell within 6 months at a reasonable price so the asking price is slightly higher than the last transacted price. Owner C needs to sell due to poor cash-flow caused by business expansion. The aim is to sell as soon as possible, even if it is $100,000 below the last transacted price.
Who do you buy from?
Numbers make sense?
When I was looking to buy my first private property, I shopped around and found 3 properties in Simei, Sengkang and Chinatown to have similar size and price. However, the gross rental yield is drastically different at 3.96%, 4.1% and 6.85% respectively.
The property with 6.85% gross rental yield gives net returns of $21,035 per annum after mortgage, maintenance fee, property tax and vacancy cost. The cash-on-cash return is 10.91%
Which property would you buy?
You are ready?
So you found the perfect property to buy and it will cost you $1,000,000. You did your math and you have just enough to pay for the 25% downpayment, stamp duty, lawyer fee, valuation fee. Your bank balance will drop under 4 digits for the first time in your life. You know that you will not be able to be able to pay the mortgage if any of the following happens:
1. loss of job
2. interest rates go up
3. property is vacant
4. major illness in the family
5. car needs to be repaired
Are you ready?
Of these 3 questions, the easiest one that you can control is the last one. Be ever ready, and do the hard work of finding the right place for the right price. Yes, it is hard work. Whoever said that property investing is easy is probably trying to sell you something.