Let’s say you’ve squirrelled away a hefty sum of money and have been thinking of plonking it down on a property investment. Uncles at your local coffeeshop have been filling your head with all manner of praises for property investment, and how it appreciates over time and the monthly payments for the loan are more than taken care off by renting out the unit.
Yet the fears of property market instability have kept your trigger happy fingers at bay due to fears of property devaluation, soaring interest rates and various party pooping taxes that the government has “lovingly” put in place.
Here’s 5 interesting reasons why dumping your investment money into a commercial property could be a viable alternative to the usual practice of buying a condo and renting it out. We spoke with real estate sales person Mr Stanley Tan of Principium, who had this to say:
1) You could actually afford to buy one on your own
“Usually, you’d have to buy the entire office building, which isn’t possible for most people. Strata – titled units however, can be bought individually and prices are reachable. You’re looking at units that can start from 400sqft or about $1.2m.”
2) Less or no taxes are applied on commercial property
“Commercial property is not subjected to Additional Buyers Stamp Duty (ABSD) or Seller’s Stamp Duty (SSD). This means you don’t get taxed with ABSD when you buy and there’s also no SSD when you sell, making it much easier to invest or divest when you want to.”
3) Landlords have the upper hand
An owner or landlord of a Strata – titled commercial property in the CBD area usually has the upper hand as supply of such properties is limited. So if you manage to get one, you shouldn’t have a problem renting it out or selling it when you deem fit.
4) The value should hold up quite well
“The inability to add large amounts of supply, as well as Singapore’s emerging significance as a regional hub and headquarters for a growing number of service-oriented sectors should contribute to sustainable growth in rental rates and capital values of CBD office properties.”
5) Get the price right, and rental income takes care of your monthly costs
“The location’s higher yield of up to 5% could result in you having the mortgage paid off every month by the rental income – depending on whether you secure good interest rates and how much you loan from the bank.”
This is definitely something worth considering if you have investment funds ready to be deployed, but comparing commercial mortgage rates and seeking professional consultation on property prices is key to making a good call.
You may also want to do it sooner than later, before “you know who” decides to tax the pants of this segment as well.
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