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Singapore Property Investing 101 - How Can You Make Money?
Do you know that half of the top 10 richest people in Singapore gained their wealth from real estate investment?
While many of us may not be born with a silver spoon in our mouth or have a huge capital to invest in buying properties, there are many other ways in which we can gain exposure to this lucrative asset class with a reasonable amount of investment fund.
To help you GET more for your money, we at GET.com will list the 3 ways of how you can make money with property in Singapore:
Rental Income
If you have the capital to purchase your own property, you can always make use of your spare room to earn rental income. The amount you can earn depends on the kind of property you live in - private, condominium, landed, HDB.
Other important factors include location, the available amenities in the home and around the estate, as well as how well furnished the place is.
These factors will impact who your target tenants are and the amount of rent they are able to fork out for your spare room.
Investment Property
If you already own your own place and have extra cash to invest in a property purely for investment, great for you!
This is a great strategy if you are living in a cosmopolitan city like Singapore or Hong Kong, where property prices are more or less guaranteed to increase over the long term.
Besides capital appreciation, you can look forward to good rental income as well, especially if you are able to rent out the entire unit.
Do take note of the kind of costs that you can incur as well, especially the hidden ones, such as taxes on second property or incurring extra costs if you want to dispose of your property within a short period of time.
You are of course not limited to buying an investment property within Singapore.
There could be many opportunities in other cities, especially emerging countries but do your background check properly and engage a reputable agent. These could translate to good capital gains over time and you may even rent them out for long term or use them for vacation rentals.
REITs
REITs are real estate investment trusts and are purchased like stocks or mutual funds.
They are one of the best ways for one to gain exposure to real estate investments without a huge outlay of capital. Besides, you can even diversify your investment within the property sector by choosing what type of Reits you want to focus on.
For instance, the residential property market in Singapore is currently going through a downturn due to the cooling measures implemented. Yet, many property developers and consultancy continue to be pretty bullish on the office rental markets as Singapore is still seen as one of the best places in the region to build an office headquarters. You can then choose to invest in Reits that have a higher weighting in the office market if you are more optimistic about this sector.
REITs are the easiest way to invest in real estate since the trust decides what to invest in and handles all the management.
The returns may be great but because it trades in a similar fashion to the stock markets, it can be influenced by other factors other than the fundamentals of the sector.
Prices of REITs can go down when there is a general bearish mood in the stock markets, or be influenced by macroeconomic sentiments and policies.
Another risk is that government policies can greatly affect REITs prices as well. Other than that, REITs make good investments for the newbie investor, as these funds are less capital-intensive and you get to earn dividends along the way as well.
There are many ways to make money investing in real estate but because of the capital intensive nature of this asset class, you may want to consider investing over a longer time horizon.
The general advice is to do your own research, try not to buy at the top of the cycle and take your time to think and buy!
This article was originally on the GET.com blog at: Singapore Property Investing 101 - How Can You Make Money?.
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