Ep #39: Old Wives Tales About The Residential Property Market (Part II)


another point all the wealthiest people
in the world made tons of money made their fortune from real estate so we
should all go in the real estate we emulate them right so we should go into
real estate this is a posting by one of my friends who say the region’s 20
wealthiest families are worth 600 billion their fortunes related to
properties so the vision is clear now we chiong because these families
derived the bulk of their fortunes from real estate is it true did they make money
from real estate did real estate make them rich or did they buy real estate after they
become rich again don’t put the cart before the horse let’s look around if wealthiest people really came from real estate our education system has failed
us right because from preschool our children should be playing with Lego
bricks instead of the plasticine and the playdough we must ask them to mix cement
and concrete children should be taught to build and develop properties then
primary and secondary schools must begin teaching real estate finance and
investment so what for you have got the Singapore Institute of Technology it is
not property or Singapore University of Technology and Design we should have SIP Singapore Institute of Property and Singapore University of Property and Design then you combine these two schools together it becomes STUPID Singapore
Technology University Property Institute Development or stupid these are
the top people on the Forbes list in each continent oil and gas minerals and
mining Australia cement sugar flour salt in Africa Jeff Bezos from Amazon
technology then food and beverage and then travel I don’t know why they
classify him under Antarctica but the only person with the real estate word mentioned here
is Mr Ortega who is owner of Zara after he made money from fashion he bought a
few prominent buildings and even bought prominent hotels but it was after he
became a billionaire then the word real estate got attached to
his name the rest of them made money first
then they bought their big houses in Singapore who is Singapore’s richest
Haidilao now right is that real estate before Mr Haidilao who is the richest
one Ng family Far East Organization what’s after them becoming so rich soya sauce
Mr Ng Teng Fong’s father was in the business of sauces food sauces
hey so not everybody and we’ve got many rich families who are in banking who are
also in technology and then after that they started to invest in real estate so
please any property agent friends of mine who are telling you that you can
be rich by buying real estate sorry please show them my chart one more myth better buy than rent if you don’t buy your landlord will evict you US study on
all the fifty states in the US showing how much contribution to monthly mortgage
versus contribution to monthly rent and because the blue bars are longer they
say that the monthly rental payments are higher monthly payments are higher than
the mortgage payments therefore renting is more expensive than buying so is
better to buy they calculated monthly mortgage they didn’t calculate how much
money it takes to own a home property tax not counted monthly maintenance fees
not counted so this type of very skew interpretation the chart looks beautiful
but is it meaningful to you if you did if you sat down and go through a
spreadsheet and be fair with yourself renting and reinvesting your savings
because when you pay rent you didn’t have to pay a down payment that portion
that is your down payment can be reinvested properly when you rent you didn’t have to pay at that time I calculated 3% stamp duty now stamp duty is 4 percent for above a million sing dollars of purchase that 4 percent stamp duty is equal to your two
years of rental so if you understand cash flow you understand time value of
money you understand that money taken out today is more expensive than money
that you take up in two or three or five five years time right but you’re paying
up so much acquisition costs first so this was an article that I jointly
wrote with Mr Paul Ho and we published it in Edgeprop we gave a detailed breakdown comparing a
four year rental of Garden Vista versus the purchase of Garden Vista and
holding it for four years and for the first four years it is still cheaper to
rent because of all these upfront costs and most of us forgot one very important
cost item CPF that you use for your down payment and CPF you use for
your monthly payment fail to earn you 2.5 percent of interest income
from the government you are willing to forgo 2.5 percent of income
in exchange for a bank expense of 2 percent
you really know how to calculate right the final myth I am busting today we can
own multiple properties with no money down Wow
don’t wait to buy real estate buy real estate and wait okay
you try telling that to the Sentosa Cove people buy real estate and wait I have
been waiting for 10 years they all smile smile very happy that yes
there is a secret nobody has told you before you can buy property with no
money this one is an advertisement with no money the next one is an advertisement with Singapore properties so instead of no money they say little to no money
okay so the word little appears whenever they mention that it is Singapore properties so how do you own multiple properties with no money down black borrowers or steal in fact that’s one of the recommended strategies they recommend that you borrow from your
friends and family to invest steady but I’ll show you one method of buying with
no money down zero percent down payment and you can cash back no need you take
zero money out you receive cash in return woo with your deposit cash back
better still use this cash to buy something else okay but never mind
new launch five hundred and fifty thousand ringgit in Bukit Jalil not bad location for 13% rebate 100% loan 0% down payment so I wrote about this and I publish it with Vina on propertysoul on her blog I explain how it is done this example is the one that I gave
in the relatively good location in Johor just after the Woodlands causeway less
than 30 minutes on a good day this one has a traffic jam on a good day will be
20 minutes or 15 minutes late at night when there is no traffic the price of the
purchase for seven hundred seventy two thousand they gave a discount of twenty
thousand even though developer gave me a discount of twenty percent the
bank was willing to loan me eighty percent of the purchase price so I’m
taking one hundred percent bank loan effectively and the bank loan would have
been over 15 years 12 months and so I would have paid 846,000 my loan principal is 618,000 so my interest expenses
are 228,000 okay remember the price of the property at 772,000 this property freehold 2-bedroom 2 baths 1,000
square feet it is on auction because of foreclosure sales
this year in March it was for auction at 307,000 1,000 sq ft 307,000 during auction I think it
couldn’t sell there is an auction in October 262,000 ringgit what was the purchase price auction price at 262,000 no takers and
the previous guy purchased at 722 with a huge discount and now he
has a loan of 618,000 his loan of 618,000 he go and find out this property
at the auction at 262 no taker how deep underwater is underwater deeper and deeper so let’s watch this over the next few months so I just posted this up to
remind you the loan in 618,000 this guy is trying to auction himself same
size same 2 bedroom same development so do you want to own multiple
properties with no money down good one more stone to drag you down deeper
into the water Malaysian government is considering now to because of 51,000 unsold properties in Johor they are considering to cut the 1 million
threshold for foreigners so foreigners if will be allowed to buy at 600,000 a
lot of the properties at 1 million ringgit will be discounted down to
700,000 800,000 those at lower than it will have to be discount themselves further so
many of the buyers from 3 years ago already lost on the ringgit ringgit was
250 now ringgit is 3 and they are going to lose one more round when the government
cuts the 1 million to 600,000 but we got MM2H we open the doors they will all come
Malaysia my second home scheme sorry this one is a bit tight since the first
year in 2002 until last year 2018 a total of 42,000 applicants what was
Singapore’s population growth last year just now I say 31.9 thousand plus 33,000
60 over thousand but of course ours include foreign workers here this is over a period of 17 years and
they had 42,000 over 17 years and it includes renewals of the people from the
first 10 years so on average each year just under 3000 3000
some of them are families so is the MM2H when you open wide your doors
many people will be flooding in a successful scheme are people really flooding in so let’s recall what are the points about the myths in real estate I’m sorry for
calling it old wives tales so the myths in real estate Singapore is land scarce
buy properties sure make if you open the doors they will flood in do they flood in real estate is a hedge against inflation the
wealthiest people made their fortunes from real estate so we must chiong and follow
them is better to buy than to rent and you can own multiple properties with no
money down so I hope I’ve given you enough bullets
to understand that these are really old wives tales but this is not an old wife’s
tale if you are really interested to be invested in real estate
pay a trustworthy agent to advise you ok
please keep in touch with me on Instagram or on my facebook or on my linkedin thank you very much

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