5 questions to ask yourself before buying an investment property

The main idea of buying a good investment property would be to earn from the income it generates, and the amount has to be more than its cost. However, investing in a property is not something which can be done in a day. There are certain processes which have to be gone through before one is actually ready to go out and make his or her purchase. There are certain questions which you can ask before actually buying an investment property.

One - Do you know if you're able to afford?  Unless you are able to make the full payment upfront, here's what you could do. By using 40% of your overall monthly income of your family, you can determine what sort of pricing you are able to afford. For example, if overall monthly income is about 10K SGD, setting aside 40%, you would be able to afford a property about 600K SGD during a 30 year mortgage term. With that figure, you'll know what sort of property you're able to invest in.

Two - Do you have an idea of what developments there will be in the future? There are certain factors, such as accessibility and amenities, which are going to affect the value of your property. You will need to research on what developments are ongoing before you make your decision in investing in a property which you have your eyes on. One good way would be to have a look through Singapore's master plans before deciding. Getting to know the developments, such as the Circle Line and the Downtown Line, allows you to have a rough gauge of how much it would fetch, making it a deciding factor in whether it'll be worth to invest in.

Three - Have you taken a look at the recent changes in the interest rates? By taking a look at the changes, it would allow you to know whether it is worth it to invest in a property. If the interest rate experiences an increase, people would invest less in Singapore. This would be the ideal situation when you want to invest in a property, as property pricing would decrease due to lesser demand. Yet any sword would have two edges, high interest means if you are highly leveraged, the mortgage payments would have to be something which you have done proper calculation for.

Four - How much are you willing to spend on renovations? This is important, as knowing such information will allow you to determine what sort of areas you might want to invest in. In some areas, older buildings, even certain newer ones, might be in need of major repair work. Renovations are important, as it would result in better rental. Hence, it is important to know what how much you are willing to spend on renovating your property and whether it would be worth it beforehand.

Five - Have you factored everything into the overall cost of transaction? Startup costs, such as the agent's brokerage, legal fees and furnishing cost, have to be factored in. The overall transaction cost usually falls between 7-8%. The amount of capital appreciation should fall within 30%, if you intend to cash in the property, so as to maximize your profits.

This is not the end of the list of things to take note; it is only to start you off the property investment journey.

Photo Credits:

http://www.buzzle.com/articles/property-investment-seminar-australia-tips-for-finding-the-best-one.html

Kelly is a highly experience and motivated real estate agent in Singapore. Her analytical nature and a sharp sense of market trend in the Singapore prime districts have consistently help her clients profit from their Singapore property investments.

To find out more about the available investment opportunities in Singapore property investment, drop Kelly an enquiry and she will be glad to assist you.