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Relax, this property’s paying for itself, and capital value’s looking up! July 25, 2006

Posted by Participant in Uncategorized.

Opinion: Assuming the property price is $620,000; and annual rent is $32,400, the yield is 5%, representing a higher return compared to a similar opportunity cost of leaving an equivalent (unleveraged) sum in the bank on an FD which now pays about 3% or thereabout. Taking a 90% loan (after a 5% cash    downpayment and 5% CPF funds) will lead to a monthly instalment of between $2505.67 at an interest rate of 3.5% to $2584.19; at 3.75% interest rate over 30 years; or to a higher end of $2827.30 if the rate is increased to 4.5%. But have you looked at more property options? Dolf says his recommended pick-up rate is about 100 properties before making a “buy” decision. You may also wish to ensure that the monthly outlay is not more than 40% of household income; and factor in a Plan B for any potential income loss (although the property appears  to be paying for itself now) from your employment, business or tenancy. Having said that, the Singapore property market’s outlook is positive which implies that both rental income and capital values are likely to rise further; so if you’re in for the  long haul, property is still a good investment asset to have in your portfolio. Web Administrator



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