How to identify undervalued property that are poised for growth with smallest possible outlay for investment

Single Singaporean, early 30s own first property investment within 3 months after speaking to us. Something that she had planned for herself in the last 5 years.

Learn how Ms Lai, who has been working hard and saving to invest in her first property purchase in the last 5 years. Little did she realize that while she was waiting for property prices to come down and shaft her savings away monthly, the price of property increases faster than her rate of savings.

Comparing growth of similar 2-bedder units in the surrounding developments

Let's compare how long it takes for similar 2-bedder units gains within surrounding developments. Following is an example of transaction of the same unit in the surrounding developments that owner bought in from developer to the day they sell.

Gain of $115,500 in 5 years.

23 Nov 2019

Possible gain of $117k or more in 1 years & 9 months.

 #1 rule to identify undervalued property: Entry Price vs Emotions

If given a choice, which property would you choose in order to exit at a shorter holding?

$115,500 gain in 5 years

VS

$117K gain in 1 year 9 months

Questions: Is it a good thing if the development is sold out within a weekend?

For example, why certain developments are sold out during launch over a weekend by developer? This is a classic case of people BUYING in EMOTIONS due to the perception that a development is superior if it's surrounded by shopping malls and walking distance to MRT.

With the overwhelming interests during launch, do you think developer will launch at a low or high price tag?

Thus, if these owners enter at a higher price initially and have set a new benchmark price at the surrounding developments, how long does it take to form new ‘high' prices? For example, owners who bought in 2-bedder units at $800k would need to exit at $1M to make $200k profit compared to owners who buy in similar 2 bedder units at $1M and have to exit at $1.2M for a similar gain. Which of the owner has lesser risk to exit in the event of market changes and yet with high potential of making possible profit?

Cost of Opportunity

Assuming typical condo buyer average age is between 35-50 years old, and with seller stamp duty in place today at 3 years to exit upon each purchase, how many chance does a typical buyer has to buy and sell within a lifetime if each purchase is to hold longer than 3 years to exit in order for a decent gain. This will result in possible lost of opportunity cost.

TIME THE MARKET!

As many has choose to time the Market, the investor rides the wave and seize the golden opportunity.

Own a HDB For More Than 5 Years?

Find Out If You Are Eligible To Upgrade Without Touching Your Savings!

Source:  The Smart Singaporean, Infopedia, Giphy
Produced by: Caleb Lim, Yvonne Goh, Chee Wei Zhong and Chen Li Ren