Can I really invest in real estate with no money down?

In any form of investment, in order to gain the profits at the end, setting aside a sum of money is a definite must. It isn't really possible to invest in a real estate with no money down. There are a lot of courses and seminars which shows you how the "no money down" method can be made possible. These methods might work in some countries but not in Singapore. It encourages excessive speculation and causes the property bubble phenomenon to occur.

Certain institutions are set up by the Singapore government and the banks in Singapore, in order to account for possible credit risks. One example would be the Credit Bureau Board. It provides information of the customers to credit providers, and it enhances their ability to determine if they are able repay the loan.

Even though it is not possible to invest in real estate with no money down, there are certain methods to work around it instead. One method would be to invest in a particular estate together with another buyer who agrees to come up with the deposit, hence resulting in you investing with "no money down"!

Another method would be to buy something that is dilapidated, renovate it, allow the bank to re-evaluate its value, and then use it to refinance. In this way, you'll actually be profiting from the dilapidated property you got at a lower value through repackaging of the unit!

In Singapore, investing in real estate comes in the ratio of 2:8. 20% of the investment includes 5% from the investor himself, and 15% through his CPF. The rest of the 80% would come as a bank loan. For example if you invest in a 1200sqft property for 2 million dollars, you will only be paying $100000 in cash. Even if the value of the property drops by $100psf, you'll lose only the 5% you invested. And if the value rises, just like how the properties in District 11 increased by 30% in 2009, you stand to gain a whole lot more! In other words, the potential earning definitely outweighs the potential loss by a large margin! This is a case where leverage weighs in on your positive returns.

So, can we really invest in real estate with no money down? Well, it's not possible to invest with no money down, but there have been certain methods which allow us to work things around. Through these methods, you can invest in real estate with "no money down" and yet reap the profits at the end of the day!

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