Do You Gain or Lose if you bought a Million Dollar Property and sold it at the same price in 5 years time?


Successfully investing in properties is not just about the potential capital appreciation that a property can bring. The essence of successful investments is in finding a stable income stream that safeguards your downside risks and helps you make a consistent profit even when market cycles are not in your favour.


Do You Profit or Lose if you bought a Million Dollar Investment Property and sold it at the same price in 5 years time? 

Before we go any further, spend a few moments to think about the answer to the above.


















Have an answer in mind? Good! Let’s examine whether your understanding of property investment is complete and correct.


First, let’s establish some key factors.

  1. We are talking about a RENTABLE property selected according to the Fundamentals of Good Property Selection (i.e. Right Entry Price, Growth Hotspots, Near Amenities, Transportation Modes, Tenant Catchment areas and Decent Rental Returns)
  2. It IS a rented out property. The following analysis does not apply to a property you live in.
  3. It is rented out for the duration of 5 years at fair market rents. (4% rental yield. (Yes, these aren’t unicorns! Find them at


Now, assuming that a buyer puts down 20% for this property and takes an 80% bank loan, 

Purchase Price: $1,000,000
Cash/CPF downpayment: $200,000
Bank Loan: $800,000
Buyer Stamp Duty: $24,600
Legal Fees: $3,000

Total Outlay: $227,600 in Cash and/or CPF.

Based on 4% rental yield, he would have collected $40,000 per annum in rent. (Purchase Price x 4% = Annual Rent Collected)

Rental collected over the 5 years will be used to pay for these expenses: 
Average Loan Interest: $997/month
Maintenance fees: $250/month
Property Repair costs: $1,000/annum (A more than reasonable figure)
Brokerage Fees: $8915.80 including GST (5 years of brokerage fees)

Total Rent Collected Over 5 years: $40,000 x 5 = $200,000
Less Interest Expenses: $59,820 (Use a mortgage cal. to derive interest over 60 months)
Less Maintenance Fees: $15,000 ($250/mth x 60 months)
Less Annual Property Repairs: $5,000 ($1,000/year x 5 years)
Less Brokerage Fees: $8915.80 (1/2 month fees per year + GST)

Nett Equity/Passive Income = $111,264.


At this point, if the owner sells off the property at his purchase price of $1,000,000, he would have an outstanding loan of $689,955 and incur the following costs:

Selling Price: $1,000,000
Less Outstanding Loan: $689,955
Less Brokerage Fees (2%+GST): $21,400
Less Legal Fees: $3,000

Nett Cash/CPF Proceeds: $285,645 which means he would have made a Return on Equity of 25.5% in 5 years time even if his property had not increased in value by a single dollar. (Remember his starting Cash/CPF used was $227,600)

Not too bad eh?

You may be asking why this happens..

Well, simply put, these are 2 factors that savvy property investors understand and use to their fullest!

  1. OPM (Other People’s Money) – Basically a bank loan helps you own a property sooner with minimal cost of funds. Yes, loans are not necessarily a bad thing!
  2. Positive Carry – Where the returns offset the cost of funds sufficiently to produce a positive yield.

So.. Did you get this right? I certainly hope so!

The Right Real Estate Education is the first step to increasing your wealth building abilities!

Rarely are there investment instruments for the masses with such sturdy safety nets, and generous leverage that enables you to accelerate towards your retirement planning goals.
Do you agree or disagree? Let me know your thoughts in the comments below and remember to share this article with your friends if you have benefited from learning this! 😊🍻



Alternative Financing Strategies for Property Investors

It's always an awesome feeling to see my writings published and read by keen real estate investors and fellow industry agents! A Huge Shoutout and Thank you to the Team (Sandy Goh, Sabrina Tan, Romesh Navaratnarajah, Denise Djong, Agnes Goh!) at PropertyGuru for the coverage! 

Here's the full unabbreviated article below! 


Singaporeans love properties. Let's face it. We love the idea of speculation, of long term capital growth of our savings and dream of one day retiring upon the comfortable monthly rental paychecks that we receive from our tenants. And once our time is up, this dream fulfilling portfolio can be passed down generations after to provide inflation beating income that our loved ones can comfortably rely upon. 

This passion for property might be an understatement for some families i know of who own rows of shophouses and acres of land in downtown Singapore and yet are always suffering the itch of accumulating more. Not that it is a wrong mindset though. After all, these families were first hand eyewitnesses to how, over the course of our 51 years as a nation, their parents and grandparents have seen their wealth skyrocket by buying into our national soil and airspaces early on in their lives. This belief becomes in-built in our culture and property becomes the natural vehicle many of us aspire to put our hard earned wages into. 

The appetite for property investments though can be both a blessing and a curse. While a healthy appetite for properties can stimulate the economy through job creation and infrastructure spending, over consumption can wreak financial havoc upon individuals and spiral easily into a nation wide crisis. Something that we witnessed not too long ago in the Subprime crisis in the US.  

Hence that is in part, the reason for the current climate of cooling measures we all face today. 

With the various restrictions imposed on us by the Monetary Authority of Singapore for the purchase of properties, alternatives have been commonly sought by investors keen to get started on their investing journey.


In this article, we will examine 3 common alternative property financing strategies that different types of investors can ponder upon to aid in building their own dream fulfilling portfolios. 


Co-Investment Strategy

Many singles may have insufficient funds to buy their first property, and so one potential strategy is to jointly co-invest with another single friend. They can combine their cash and Central Provident Fund (CPF) savings to start investing immediately, instead of waiting several years to accumulate more savings while facing the prospect of a shorter loan tenure.

The main issue with co-investing is that if either party were to get married, they would not be able to apply for a Build-To-Order flat or executive condominium unit, unless they dispose of their investment property at least 30 months beforehand.

If they were to buy a private property as a matrimonial home, they would have to set aside half of the Full Retirement Sum ($83,000 at the time of writing) in their CPF Ordinary and Special Accounts before the excess savings can be utilised, and will not qualify for an 80 percent mortgage loan if they have an outstanding loan. They will also be liable for Additional Buyer’s Stamp Duty.

Also, this method is only suitable for life-long good friends whom have been through much ups and downs with you as you would require their consent and blessing too should you need to sell the property in the future. Take special note that in the event you were to settle down within the next 3 years and need to offload this investment property, you will also be liable for Seller Stamp Duty and not to mention, a potentially very upset buddy. So tread carefully if you decide to do so.


Equity Loans

Equity loans, sometimes called Term Loans or Gearing Up, are commonly used forms of financing that allows a property owner to withdraw equity that has built up over time from his property and use it for his short term cash flow needs such as acquiring of inventory or upgrading of machinery. Some would use it as a low interest credit line (Rates are similar to mortgage loan rates) to pay off higher interest loans such as credit card and car loans. 

The official stance on Equity Loans is that they are not allowed to be used for property investments. However, it is commonly known among savvy investors and without a doubt, the authorities themselves, that this is not actively enforced. 

Individuals and families with property portfolios with low or no leverage typically employ this strategy in order to free up equity and recycle them into other investments. This helps them to optimize their Return on Equity (It's a REALLY Important factor. Discussed in another post. Go read), take advantage of low interest rates and redeploy the funds into higher yielding assets. 

The caveat of using Equity Loans as an alternative financing approach is present and investors do face a risk from breaching the terms of the loan agreement. Apart from that, it is important to highlight that CPF cannot be used to finance the monthly mortgage of the term loan and that the purchaser would need to do so entirely in cash (Yes, no CPF can be used in this case.). 


Assets Pledging

In the past, asset based lending were rife and investors who could show a couple of hundred thousands in the bank were eligible for multi-million dollar loans. All without the need for ascertaining their loan servicing ability. All these were put to a halt with the introduction of the TDSR measures in June 2013. The days of easy credit were over and investors griefed. Assets pledging are categorized into 2 types. Liquid assets such as Sing Dollar deposits and savings and others such as stocks, bonds, foreign currency deposits and gold. 

This strategy of property financing works when the buyer has no or insufficient income to support his loan application. In such scenarios, although he may be cash rich, the lack of an income proves to be an obstacle for banks to grant him a loan. Hence, asset pledging helps to augment his income to levels that are acceptable by TDSR criteria and qualify him for purchasing a property which he otherwise might not be able to. 

Assets that are pledged for at least 4 years are taken at 100% of its value while if it is pledged for any less than 4 years, an immediate haircut of 70% of its value is applied. 

As a guideline, for an unemployed person, for every $100,000 loan applied for, $36,000 in liquid assets has to be pledged for 4 years or $120,000 if it is pledged for less than 4 years. 

Hence, to employ this strategy, a buyer would have to have a significant amount of savings, assets or financial support. 

To summarize, optimizing use of funds and structuring of financing strategies is an area that investors should continually explore to put their savings to work as early as possible. There are various creative methods that are shared at investment networking events that would be too intricate to be described in detail in this short article. Property Investment is a life long journey of learning and fine-tuning of strategies which pays huge dividends for the avid investor. I wish you all the best in your journey and may your investment portfolio prove lucrative and sustainable.


CPF Vs Bank Loan Vs HDB Loan. If you’re buying a property, which should you use more of and why?

When we buy a private property or HDB in Singapore, we have a choice between using Cash, CPF and Banks/HDB loans.

Since time unknown, there has been debates between different camps about whether it is financially wiser to take a higher bank loan, HDB loan or to maximise CPF usage when buying a property.


ROE vs ROI – A Critical Factor that Serious Property Investors need to Know

When it comes to property investments, one of the critical things you have to understand is the difference between ROI (Returns on Investment) and ROE (Returns on Equity). That’s because property investments allow you to borrow money from the bank which increases your returns dramatically.