property, investment

Most Asians were told to invest in properties for long term returns rather than some other avenues. But most do not know the difference between getting a property for investment and the criteria required for the property to be a worthy investment mechanism. The wrong choice would lead to certain loss in economics profits. For starters, you will need to obtain a property located in prime areas to maximize potential economic gains. Getting a reasonable price for HDB flat in Toa Payoh could be a good start.

What Is A Prime Property For Investment?
Whilst there are many ways of defining a prime property, generally a prime property would be defined as a well constructed newly built property in a convenient, located around safe and environmentally pleasant location, comes with good facilities and a high asset value. You should also look out for a low risk of vacancies or declining rental value. An attractive property such as HDBs in areas like Toa Payoh which offers a stable return because it is easy to find tenants, which in return generates a consistent stream of rental income. Properties that could not attract tenants to rent it out would not be beneficial for the investor. Prospective tenants are attracted to properties that are already in demand, so it is crucial that an investor ascertains the level of demand when selecting a property such as HDB or others for investment.

Demand rests upon the nature of a building and its location. Prospective tenants place a high value on, for example, whether a property is in a convenient location close to a busy MRT station. When it comes to blocks of HDB flats built to attract the singleton and childless couple market, good transport links like buses routes or proximity to MRT stations are important in attracting tenants. In the case of larger HDB flats and single-family houses aimed at the family market, important factors include a tranquil and pleasant environment for raising children, even if this means being a little further away from MRT stations or potential bus routes.

Investors also need to look at whether the architectural structure, amenities, age, room layout, external appearance and size of a property are attractive to prospective tenants, and whether or not there is a good trade-off between these characteristics and the rental charge.

When you find a property you like you need to act quickly before someone else gets in ahead of you, but there is a knack to selecting a good property. Unnecessary delays might cause you to miss the opportunity to own the unit.

Act Quickly Once You Find A Good Property
When you discover the property or HDB that you want, you need to act fast to prevent a prime property getting away from you. But, as they say: act in haste, repent at leisure. If you need to finance your purchase with a loan, you can gauge the amount you need to borrow by consulting a loan provider in advance. Also, you can gain access to information ahead of other investors if you speak to real estate agents about what kind of property you are looking for. Be sure to visit a good property early once you have identified it. Most people make the mistake of not even visiting the potential HDB or property they were targeting to purchase before making the acquisition.

Make A Realistic Assessment Of Rental Market Value, Don’t Be Swayed By The Price Tag
A property with a price below the market rate might look like a good buy, but there is usually a reason why the price is low. At our current economy, it would be naïve to assume that all owners are desperate to relinquish their property in the market today. In addition, it could be a property a real estate agent is using as bait to attract customers. Conversely, a property that is overpriced is a big risk even if it can be expected to generate a good revenue stream. You need to understand the rental market and choose a property on which you can expect a high return.

Check Out The Local Area
The surrounding of your property would also play an important part in its appreciation. You should assess the rental market in the surrounding area and the nature of the local environment. You can estimate the likely volume of prospective tenants by investigating the population flow into and out of the area, and the change in the number of households. It is important that you choose the property that best suits the local demographic – is the area popular with younger people, or more suited to families? Different area might yield different rental returns. Ensure you got the right demographics before proceeding.

Consider The Investment Property Data
It is not easy to find a property that fulfil all the criteria of a prime property. This is the driving factor which all investors are desperate to find, and the reality is that it is hard to get your hands on information about such properties. It is important always to have your head out for a good property, and you should place the emphasis on the following points in sifting through property information.

Investment property information includes the anticipated rental value and the anticipated annual income this will generate. There is no problem with this if the anticipated rental value is the current rental value and if the building is more-or-less fully occupied. However, precautions must be taken if there is a high level of vacancies or if there is no basis for the state anticipated rental value.

You would also need to be on alert to the factors underpinning the anticipated rental value. Take, for example, a high anticipated rental value predicated on the existence of a large commercial facility in the area. There is a substantial risk that the rental value of the property would fall if that large commercial facility disappeared. It is, therefore, generally best to avoid a property whose high rental value is predicated on a single factor. You need to have a thorough understanding of the rental value that generates income when making an investment in property. Failure to do so might result in acquiring a property that does not generate the maximum yield at best or worse case scenario, a property that does not generate sufficient to help offset the cost of acquisition.

You must check out every last detail of the property yourself, including whether it receives the sunlight, what the views are like and the nature of the local environment. The rental value of different properties such as HDB or etc located the same distance from the same station can differ depending on such things as how much sun they receive. Primary sources of information can only give you a rough idea of the neighborhood, so you must visit and ascertain these things yourself. You could not just rely to other’s information about a certain area, Toa Payoh for example when you did not take the effort to research about the HDBs or other types of properties that are available there.

Avoid Property Investment Pitfalls
Property investments tend to fail when the investor cannot put themselves in prospective tenants’ shoes. One way of trying to avoid this pitfall is to choose an investment property in the form of HDB that you would be happy to live in yourself, but relying on this alone can result in failure.

For example, when choosing an investment property on this basis, you are likely to focus on such things as proximity to a station, a south-facing property and a pleasing outlook. But, different prospective tenants have different concerns – a tenant who is not at home during the day may not be that interested in whether the property receives a lot of sunlight, whilst another who travels by car or bicycle may not use the station. Also, whilst the investor buys a building, tenants live there only for a short time, and many may be prepared to put up with less than optimum conditions if the rent is cheap.

If you are fixated on owning a superior property and apply very high standards when it comes to buying an investment property, you are likely to end up choosing a high-class property with a high rental value to match. This entails the risk that it will be harder to find tenants. You need to remember not to become fixated on finding the perfect building for you when you are buying as an an investor.

Take An All-Round View In Property Selection
When choosing an investment property, you need to consider the property from a number of different perspectives. As well as building relationships with real estate agents so that you don’t miss out on information about prime properties, you need to keep your own ear constantly to the ground.