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The following are excerpts from the new book, Secrets of Singapore Property Gurus, which features the rich experiences of the above 'gurus'. The author's interview with Getty Goh, Director of Ascendant Assets, threw up the following insights:

 

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Reflections at Keppel Bay - Photo by Leong Chan Teik

BASED ON THE research my company has done, we found that buyers will have a higher chance of getting value-for-money deals by buying resale properties. It is actually quite intuitive. After all, developers are in the business of selling properties for profits. With many of them having ample financial reserves, how cheaply do you think they will sell their new units for?

Resale properties on the other hand are bought from other owners, who can be selling for a variety of reasons. While some of the homeowners may be savvy investors, there will definitely be others who need to dispose their property urgently and are prepared to sell their unit at a discount.

It is possible to get a good deal on a resale property

I have personally come across numerous value-for-money deals. Let me share one such deal that my company helped a client secure. In late 2009, I was helping a client find an investment property.

As he did not want to over-stretch himself, the investment budget was set at $700,000. After several weeks of searching, we eventually found a suitable unit that was going for $650,000.

Based on my company’s research, we knew that it was a good deal as the asking price of similar sized units in the same development was about $100,000 more. In addition, we found out that the seller was parting with his property for a loss of more the $50,000. All these were indications of a value-for-money unit and we were confident that my client would have easily made a tidy profit had he decided to flip the unit.

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Getty Goh, director of Ascendant Assets.

We later found out that the owners were willing to let the unit go at a discount because they were going through a divorce and wanted to quickly divide the assets. From this experience, it reaffirmed my belief that there are plenty of good resale deals. It is just a matter of how diligent we are in our search to find them.

The benefits of buying directly from the developer

That said, I am not implying that buyers should totally avoid new sales as there are advantages to buying properties direct from developers.

Firstly, when someone buys a property directly from developers, they will be entitled to a one year Defects Liability Period (DLP) that starts when the development receives its Temporary Occupancy Permit (TOP). During the DLP, any defects found will be rectified by the developer. Resale units do not have such liability periods and buyers will have to rectify any defects at their own expense.

Another advantage in new sale purchases is that buyers generally are able to choose the unit they want. However this is dependent on how buoyant the property market is at that point in time. Nonetheless, under normal market conditions, buyers are able to select the units they desire.

Lastly, payment schemes for new and resale purchases are different. New sale buyers can opt for a progressive payment method, while resale buyers will have to start serving their mortgage based on the full loan amount after the sale is completed. While there are pros and cons for new and resale properties, I feel that resale properties will be a better bet for those who are looking for value-for-money deals.

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In Secrets of Singapore Property Gurus, Getty also shares:

* Two key trends that will drive the property market

* Is property investment a good idea in today’s market?

* Is there a right way to structure a property deal?

* Do residential or non-residential properties make better investments?

* How interest rates affect property prices

* Are leasehold or freehold properties better investments?

* His personal investment philosophy

* His thoughts on finding good investment opportunities

To get your copy (at S$28.00 only), pay through PayPal (button below) and we will send it to you by ordinary mail free of charge (only for Singapore addresses) and absorb the Paypal transaction fee.


 
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Comments  

#3 S8 2012-06-26 17:23
I got my property from a distressed sale, at about $100,000 cheaper than otherwise. After this experience, I know what Getty is saying -- and if the market goes into a slump, I am gonna go hunting for resale. Any one desperate to sell, call me, hor?
#2 MacGyver 2012-06-26 04:16
I guess Getty is coming from a perspective that you intend to buy the old properties with a primary intention to stay or rent. If the price is good, then the investor may consider to flip the unit.

There is nothing magic about buying second-hand properties. The reason for its cheaper price, is that there are too many variable factors to consider in the pricing of the property. Some got it right, others got it wrong.

But when you buy a new property, the developers have narrowed down these variable factors and you are probably only considering the location, the interest rate, the monthly instalments etc.

The good thing about new property which Getty did not mention, is that you only pay a small amount (1-5%) for the initial downpayment.

You have a period of 20-30 months to attempt to sell the apartment for a profit. If you are successful, your returns may well be in excess of 100% (Remember your capital is only 1-5%)

You cannot do that with old properties.
#1 Investor 2011-06-04 04:06
Beware old properties -- too many things need to be fixed. When pipes leak, it's a nightmare, especially when they they are hidden behind false ceilings, or hard to access places. Old props are ok when you want to renovate them completely or substantially.
 

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