Asked on 21 Oct 2019
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Property if not used as an asset, becomes a liability. So if I own a property, I will prefer to generate cashflow and future capital gains if possible. The economics point of view.
Home is where our loved ones are and is meant for staying in and creating memories. It need not be tied to a property, though in Singapore, it conventionally is. The people maketh a physical home also 'home' in the emotional and mental sense.
That said, I see HDB primarily as a home then secondarily as a possible investment asset. I won't want to use it as a base asset to flip property though I might explore to rent out some rooms or conduct lessons in the home or use it as a home studio. I will see other properties (the second one, private properties, freehold, overseas) and REITs as an investment instead. In a nutshell, I will only take the risk on what I can afford to lose and not on what I cannot.
One additional reason is that HDB, like CPF, is protected from bankruptcy claims. So the safety net is a draw to me as a good stable foundation, at least for my lifetime.
PS: Stayed in three HDB units owned by my parents. Moved twice, once for downgrade, one for Sers.
Both. For me, a property is only an asset once you can monetize it. If not, you would just stay in it and pass your days doing what you'd like to do in the privacy of your home (I'd just read my books if I had the time)
To view it as an asset class, it needs to generate returns. This could be in the form of rental, or profits due to capital appreciation (but only after I sell it, else it's all paper profits)
If it's rental, then I'd need to deduct the costs involved. E.g. bills, fees, property tax, mortgage etc. If I'm receiving $2000/mth rental but paying $2000/mth mortgage, it probably doesn't cut it for me.
As with REITs, it's about location and timing. I've seen clients unlock tremendous value after an area's valuation skyrocketed, but I have seen some whose housing value stagnated.
Has to be both. Property is an asset like a car is an asset.
Yes, your residence is for personal use but it's an appreciating asset rather than a depreciating asset like the car.
You wouldn't buy a property without considering its resale value in the future if you decide to sell it or even its potential rental yield based on your area and nearby amenities.
My home is NOT an investment. Period.
Even if my home appreciates, and I can sell it for capital gains, I still must buy a new home to stay in, right? So it is totally not able to provide any investment returns, since if I am staying in the same place, with the same convenience and space, I will probably have to fork out more money (and please, most homes in Singapore depreciate by 99 years to $0)
Many people mistakenly think that they are improving their lives, because they sell off their 3bedders home, and then with the extra cash, upgrade to a more expensive home with THE SAME LENGTH OF PROPERTY LOAN.
They are just increasing their loans and liabilities. There are some people who may downgrade their homes to a smaller size or less convenient places for a lower value, and getting the cash values out to live.
That is not really an investment, ain't it? It's more like downgrading your lifestyle.
You have worked 30, 40, 50 years of your life, why must you reduce your home space or reduce the convenience? You should be staying in a better place or a more convenient place with your great returns from investments. You worked hard, you deserve it. =) A home is not an investment, if you want investment, go for 2nd property, go for stocks ETF, go for index funds.
Only a 2nd property can be considered an investment since only a 2nd property can be sold without the need to buy a new one.
And of course, a 3rd, a 4th, 5th etc would be great ;)
1 more comments
21 Nov 2019
As an investment:
To rent out any extra room(s) to generate income.
As a home:
A location that is easily accessible by public transport, has amenities for lifestyle needs and able to meet family needs.
It depends on how you use it.
There are some gains from property especially if you purchase a BTO and eventually sold it. How much gains are those and whether there are remnants for cash (after accrued interest) still depends on how you finance the flat in the first place.
Not to mention if you’re only out to make money for it, your spouse may not share the same sentiments as you.
For me, home is where the heart is. Eventually, it’s the place my boy will mark his height year after year.
I will not give that up just to make a few dollars, I said a few dollars because during my stay I incur utilities, tax, and many other intangibles.
My answer is: it’s more than a place to stay, it’s a house I decided to call home
It's definitely an asset to me. My home is a dual key unit. I rented out the studio to cover my mortgage interest. I planned to sell it for capital gain after 10 years... And I can choose to downgrade to HDB if I want to retire early with the profit from my private pty
Has to be both.
My apartment is where my family stays. If one day I wish to move to a new place, hopefully, the value of this property would increase and help me to upgrade to a better one.
It is both a home as well as an investment for me. This is because I can stay there and the value of the house will appreciate over time (depending on the economic situation).
If the property is bought for hopes for selling when the property appreciates in the future and when there is and sold, it will be considered as an investment.
If the property is used to generate profits, e.g. rental, using as an office space, it will be viewed as an investment.
For me, I will view my parent's home to be somewhere to stay.
If I were own my own house I will consider it somewhere to stay too. Unless if I were to operate a own business from home or renting it out to have rental income, I will view it as an investment.
I don't have a property yet, and while I hope my property will become an investment, at the moment I view my first property as a place to stay. Investment properties such as condos are too pricey for us at the moment and too risky.
For my case, a property is both.
I am staying in my own house now, so it is obviously a place to stay here.
Meanwhile, I see this home as an investment tool too. I will state a few reasons below,
1) Singapore property market is stable. It won't go up and down crazy. That means the capital you invested won't be evaporated in a sudden. (But be aware of recession, it drops a lot in 2008 I could remember)
2) Singapore property has relatively high rental/price ratio, which will give you about 3-5% if you are renting out a condo, or 6-8% if it is an HDB.
3) Singapore has no natural disaster like a tsunami, earthquake, which means the property is relatively safe compared to other markets. (hope we will never be like HK now)
I view my home as a place to live in and not as an investment. Having a home to live in is a need and not a want. Hence, there are many factors which are of higher priority than the potential price appreciation such as but not limited to:
High-floor or low-floor
Flat type (4-room, 3-room, etc.)
Surrounding amenities such as schools, coffee shops and supermarkets
Surrounding public transport
My first property is an investment because I am not staying in. The price I paid for was undervalued and it is purely for passive rental income which I aimed to cover all expenses incurred (instalment, tax, and MISC fee). I set up my mind right from the start when shopping for a property. This is important because I don't end up buying a property I love (might attract premium) but property with good value. Besides, the tenant market for my property is rather simple which doesn't require massive renovation to impress them. So, minimum renovation cost to optimise the return. When the rental income becomes the steady stream of income in cash, I choose to rent a property that suits my style and liking. I am blessed with my choices so far.
Both for me.
Although I don't own my own home right now, I will always think through my purchase of my future home for stay through the lenses of both an Occupier and an Investor.
As such, not only I will look out for common factors for occupiers such as Location, Affordability, Price/Valuation, Financing, but also to consider investment factors such as Volume/Activity in the market (ie: Liquidity of certain property types), Market/Property Cycle at point of purchase and even as macro as my own sentiment of the local property market in the next 10 years, at least. If I have the opinion that the property market at the point I am considering the purchase is not promising, I will even consider not purchasing a home there.
So in short for me, when selecting my own home in the future, it will be determined through the confluence of factors from an Occupier and Investor perspective.
Actually I view our home (wife and mine) as an asset to stay.
I don't think it can be classified as an investment since it's not income producing.
Even if we were to sell it, we would be using the proceeds to get another home to stay in.
While property value might increase and the difference in the purchase and sale price can be counted as a profit, by the time you upgrade to the second property, the PSF of the new place would have increased and the profit from the first property would now be used as the downpayment for the second property.
So while your "property equity value" increases, I can't really turn that equity into cash (you can but that's another topic). So I rather classify my home as just an asset under my balance sheet.
For properties counted as investments, those will be maybe overseas properties being rented out, which are income-generating, and can be sold off and the proceeds can be used for other purposes (and not locked under housing equity).
That's just my thoughts on how I view my current home and it's position on the balance sheet. :)
All concepts are arbitrary, if sound and congruent.
At least a house has a (variable) value, though it is not really short term liquid.
However all for myself I would see also property used by myself clearly as an asset.
It serve both purposes for me as my home generates rental income (dual key) and appreciate in value at the same time. Eventually I hv the option to monetize it by going back to hdb for retirement
When I bought my home, I bought it purely for retirement.
So when I was selecting a place, I chose somewhere that I can tahan staying till I go.
I didn't consider investment value, as in appreciation, but I did consider rental value, in case I need to get extra cash.
I was really glad to find my forever home after 1 year of searching.
I feel that a home is a place you can settle down in forever unless circumstances change. A home should be a place that you can invest emotions into, slow down, take a breather and just enjoy the environment. It should give you a sense of belonging. See a lot of people that sell and move into something bigger nearby, because they can't bear to leave the neighbourhood.
A property bought purely for appreciation before you move on to the next one, is just an investment property, not really a home cause its just a temporary place before you move onto the next one. It is more difficult to invest emotions into the place and get a sense of belonging, once you have it in your mind that you are moving after 5 years. So it might be a stressful place to stay in later on if you are not able to sell it and move on as planned.