Investment: Spotting a good investment property

Updated: Nov 18, 2020

How to determine if a property has good upside potential and rental yield

In an era of cooling measures set out by the government, you'll see buyers choose to sit and wait, some waiting for developers to reduce their prices, others probably waiting for market conditions to be in their favour before making a purchase. 

In reality, even with cooling measures such as the increased Additional Buyer Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR), the property market is resilient and still doing relatively well and moving ahead. 

After 8 rounds of cooling measures since 2011, the public now seems to be more receptive of these implementations as they have accepted the fact that these cooling measures will not be removed any time by the government in the foreseeable future. This is now the new norm.

Frankly speaking, there is no one who can say for sure which properties are bound to and will definitely reap in profits. There's basically no guarantee because no one can predict the future. However, there are a handful of opportunities here and there where it is possible to make good profit margins in the property market. This is, of course provided you understand when and what is going on in the market and then take action fast. 

As a property agent myself, I am able to see all the data including past transactions, supply and demand and more. I analyze and understand first hand the different situations happening in the market everyday. Hence, I will be sharing some strategies on how to spot a good investment property with good upside potential and rental yield. So, how to spot a good investment property in the year 2020? For those who have sitting and waiting on the side for awhile now, read on. 

3 Key Factors To Note

Things to look out for when buying your property for investment.

Entry Price

Most people think that their profit comes from their selling price. However, it is the price you bought your property at that determines your potential profit. For example, if your entry price, compared to surrounding projects is cheaper by $200psf, you would have already clocked in a profit for your future selling price. Hence, the right entry price of a property plays a part in how much higher you need to sell your property at to make a profit.

Potential Upside

Before buying your property, do consider the potential value of the property 5 years down the road. Bearing in mind if there are any major development works (e.g. future MRT stations, transformations) as announced by the government. 

When buying a property for investment, chances are you will be renting our your unit to generate passive income. While deciding between a freehold or leasehold property, do note that tenants generally do not rent a unit based on tenure.

Holding Power

Applying the first two strategies right however do not guarantee that the property market will not encounter any headwind like economy downturn, trade war, policy change. Instead, the ability to hold and weather through during this period is crucial. As long as you are able to tide through this crisis, the market will recover (e.g. the global financial crisis in 2007). So, it is important to have prudent financial planning to ensure you have the holding power.

So next, which is the right property?

Let's compare two different properties around the same district.

Say for example Sengkang Grand Residences that was launched in October 2019. This is an integrated development with accessible amenities such as direct access to food and shopping, making it the first lifestyle and community hub in the North-East region. 

As for The Garden Residences, a new development launched in May 2018. It is located within walking distance to Serangoon Gardens, within 1km to reputable schools and minutes walking distance to future MRT and bus interchange. 

Both developments are located Outside Central Region (OCR) in District 19 and both have about 600+ units each. Sengkang Grand Residences has a median price at S$1,741 psf, while The Garden Residences has a median price of S$1,592 psf, as shown in the chart below.

This is a difference of about S$200psf!

When choosing your property do take note of the difference in entry price and future developments in the area.


In conclusion,

There are pockets of opportunities in the market but when it comes to a property for investment, always do enough research to see what this development has to offer now and in the near future (e.g. new MRT lines, shopping malls, transformations etc).  

However, do go through a detailed assessment of your financials with your agent to ensure all the best options are available to you and make your money work hard for you.

#weeproperty #property #investment #singapore

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