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I think to put in simple terms. the worse scenario would be a family stretching their financial means to buy the dream house and cannot afford a slight increase in repayment. The most prudent way is always to buy a house with a repayment plan based on the other half not working.

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Just like to contribute from a small property investor point of view. At least for my investment property, it is easily profitable. Even at 3.5% interest rate, my profit margin is still $500, at 80% LTV, 32 years loan.

The key idea is that investment property is very very easily profitable but whether it can give you the most effective rate of returns of your money is another story.
(19-12-2015, 04:03 PM)ValueMushroom Wrote: [ -> ]Just like to contribute from a small property investor point of view. At least for my investment property, it is easily profitable. Even at 3.5% interest rate, my profit margin is still $500, at 80% LTV, 32 years loan.

The key idea is that investment property is very very easily profitable but whether it can give you the most effective rate of returns of your money is another story.

Once opportunity cost is included into the calculation, the investment profitability might be in red, I guess.
I agree if investment horizon is short term, when opportunity cost is included, profitability might be in the red during current market condition.

However I usually treat property investment with a long term horizon. With long term horizon, property investment is as safe as fixed deposit and can give you handsome returns.

Time is your friend for property investment. The longer you hold, the greater the rewards at the end of the day.
(19-12-2015, 04:03 PM)ValueMushroom Wrote: [ -> ]Just like to contribute from a small property investor point of view. At least for my investment property, it is easily profitable. Even at 3.5% interest rate, my profit margin is still $500, at 80% LTV, 32 years loan.

The key idea is that investment property is very very easily profitable but whether it can give you the most effective rate of returns of your money is another story.

Interesting viewpoint. Effectively, you are similar to a REIT. Taking on leverage, using rental income to pay the amortized interest while keeping a profit.

However like a REIT, the individual is subjected to market condition; there may be times where rental of the unit plummets below interest expense (leveraged rental yield < loan interest) or that no renters are staying due to poor market conditions. These is when the investment property is not profitable.

One example I am following is a recent Sunday times article where a family bought a second property at geylang (likely Rezi 32) and hope to use the rental income to pay off interest. They hope to eventually own a freehold shoebox condo. It is an interesting case study to follow.

http://www.straitstimes.com/business/inv...d-property
^^^ income and property taxes how?no need to pay?
(19-12-2015, 06:08 PM)opmi Wrote: [ -> ]^^^ income and property taxes how?no need to pay?

I am taking 15-20% of rental, as expenses, which include
- property tax and income tax
- maintenance cost
- depreciation of furniture/facilities if provided
- insurance
- vacancy cost / tenant damages
- agent fee
- misc

IMO, we should factor in all expenses, before the "net profit" to allow us to compare apple-to-apple with other investments.

How about others? How much % is your expenses?
For my case the $500 profit I mentioned above is net profit, after subtracting agent commision, maintenance fee, property tax, income tax on rental, insurance etc.

Renovation and furnitures expenses are added to capital invested.

Downtime is usually 0 to 1 month if you plan ahead.

ROI is about 5 to 10% per year. This does not include the final capital gain if the property is sold during bull market.

This return may not be very fantastic but like I said before it is pretty safe.
Just to add to ensure unit to be highly rentable, one impt thing is location.

To be "safe" and to prevent premature sale of your property, it is impt to have x month of reserve to service the loan.
99 leasehold tenure I realised is a low ball concept here... quite a number of overseas jurisdictions have no 99 years but freehold mainly