Thinking about diving into the world of property investment? Whether it's residential or commercial, there are some key factors you need to consider. Lucky for you, I recently had a chat with my fellow realtors from SRI, Jackie and Rama, and we put our heads together to share our clients' property investment strategies.
With over 50 years of experience between us, we're here to give you the inside scoop and help you navigate the exciting yet sometimes daunting path of property investment.
PROPERTY INVESTMENT STRATEGIES
Residential
Transforming old HDB flats into "dual-key" units
Whoever said dual-key units were only reserved for condos clearly hasn't explored the hidden gems in Tampines, Yishun, and Bishan estates. Back in the day, these unique units were affectionately known as "granny units”. Fusing a 5-room flat and a cosy studio, they were initially conceived as multigenerational homes in a pilot project.
Fast forward to today, and we have the magnificent jumbo flats in Woodlands, born from 3- to 4-room flats that once struggled to attract buyers. Now, these jumbo flats have transformed into the crème de la crème of HDB dwellings, offering sprawling living spaces of up to a whopping 191 sqm or 2000 square feet. The best part? With some strategic renovation work, savvy homeowners can occupy one part of the unit while turning the other half into a rentable "room." This property investment strategy is a win-win situation, providing ample living space for the owner and an additional income stream from the rented portion. Of course, we must always keep in mind the occupancy limit of 6 persons to stay within the bounds of regulations.
Buying a dual-key unit in a resale condominium
When it comes to resale condominiums, early adopters of dual-key units are now sitting pretty with an extra source of income. How, you ask? Well, these ingenious individuals are effortlessly leasing out their studio apartments within these units for a cool S$2,000. It's a sweet deal, no doubt.
This whole craze has sparked a wave of creativity among homeowners who are adopting similar property investment strategies. They're rolling up their sleeves, grabbing their toolkits, and turning into DIY experts to create their very own dual-key setups. Imagine dividing the space, revamping the foyer, and even crafting separate entrances for each unit. It's like a puzzle, putting the pieces together to unlock the full potential of your property. And trust us, with some careful planning and the right renovations, it's absolutely doable.
(Now, you might have heard about these fancy masterclasses that promise to reveal all the secrets of crafting the perfect dual-key unit. They charge a pretty penny, ranging from S$3,000 to S$5,000 for their wisdom. But let us tell you something: a stand-up realtor worth their salt should go the extra mile for you.)
Square footage may be king, but there’s more to the story. Sure, you want that unit on a high floor with a view that doesn't get roasted by the scorching west sun. But here's a make-or-break factor most people overlook: activity. Before you take the plunge, keep your property investment strategies sound and take a good hard look at the condo as a whole. How's the buzz? How many transactions are happening? Investing your hard-earned money in a property with a healthy level of movement indicates potential future growth, whereas a lack of activity suggests stagnant development.
Commercial
Due to the increased Additional Buyer's Stamp Duty (ABSD), investors are turning their attention to the industrial sector, which presents lucrative opportunities. Even industrial spaces with 30-40 years left on their lease remain popular among investors. Not only do they provide an ABSD-free investment option, but they also require low initial capital.
With the Additional Buyer's Stamp Duty (ABSD) on the rise, savvy investors are shifting their focus to the industrial sector. Even industrial spaces with 30-40 years left on their lease are causing a stir among them, not least because they require a surprisingly low initial capital.
Let us share a recent success story of a buyer who recently scored big in Ubi. Picture this: S$520,000 for a prime location near the MRT with 50 years of lease remaining. But that's not all. Our buyer didn't stop there. They rolled up their sleeves, spent S$30,000 on renovations, and collaborated with contractors to transform the unit into a co-working space. Today, it comprises four individual rooms each spanning a generous 200 square feet, complete with a pantry, meeting room, and attached bathrooms.
And guess what? Each of those rooms is now being rented out for $1.5k a month. That's a total rental income of $6,000 every month and a rental yield exceeding 10%. But here's the icing on the cake. With this kind of tenancy arrangement, you don't have to put all your eggs in one basket. If one tenant decides to pack their bags and move on, finding a replacement is a breeze. This property investment strategy means no dreaded empty periods and a steady stream of income flowing your way.
Now, I know what you're thinking. How on earth can you go head-to-head with those colossal coworking spaces nestled in prime central locations, without the same location, amenities, and facilities? Well, it’s all about marketing.
Tailor your offerings specifically to smaller businesses and fresh-faced startups that prefer shorter lease tenures. That, and shorter commutes from their homes, since many of these industrial spaces are located in the city’s fringes.
Get to know your audience like the back of your hand, and design the workspace in a way that appeals to them. For example, tenants in the media industry may appreciate a studio under the same roof, while those in e-commerce may be swayed by the promise of storage space.
Foster a community where businesses with shared synergies come together. If your potential tenants are faced with the alternative of operating in a space where they have no clue who their neighbours are, you've got the upper hand.
If you're just hearing about these ideas for the first time, you're definitely not alone in that boat. A lot of folks out there think residential properties are the be-all and end-all when it comes to investments, but there's a small group of savvy HDB residents who are playing the long game while patiently waiting out the 5-year Minimum Occupation Period (MOP). Rather than keeping your funds stagnant in a bank account for five years, why not seize the potential of this emerging trend?
When it comes to property investment strategies, the golden advice is to "buy big and buy young." As you grow older, it becomes tougher to secure those loans and financial opportunities. So, instead of simply squirrelling away your hard-earned cash or holding onto properties because they hold a special place in your heart, it's time to wear the investor hat. Those five years of MOP (or maybe even ten if you're eyeing prime locations) will whiz by before you know it, and the opportunity to maximise your investments during that time will have slipped away. If you're not sure how to get started and secure a slice of the pie, reach out to me (Harvey Chia) at 9199 9141.
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