“My house is not making any profit!”
A few days ago while on Facebook, I saw someone ranting about not profiting when he sold his house.
Everyone thinks that a land-scarce, tiny island like Singapore will be sure to make money.
So why do people lose money on property?
I did a bit of research and below are my findings:
Lack of Understanding of the Property Market
There are many other factors affecting property prices, like location and future developments in the area. These factors will increase the property price.
Property price trends also usually follows the economy. Just like the stock market, there is a cycle in the property market.
Hence, it moves like an upward wave and the one sure way not to profit, is to buy high and sell low.
Letting Emotions Guide Decision-Making
In property investing, following the herd mentality is one of the worst financial mistakes.
Having the herd mentality is when you make investments based on the choices of the masses, without performing your own evaluation of the current situation or information available.
We are all scared of losing out on that opportunity.
Skilful marketers know that scarcity can create demand, hence, they will want you to make a decision quickly and rashly.
However, we should be smarter than them.
We should take a step back and make our decision after careful analysis on our current financial situation.
One way is to use my Dream Home Calculator to check if you can afford your dream home.
Property investing is not a get-rich-quick scheme.
The Government has to make homes affordable to give citizens a tangible asset in the country and a stake in nation-building. Having the property market to be dictated by the free market is against national policy.
Hence, cooling measures were introduced during the high economic period.
Currently, there are duties, such as the Additional Buyer’s Stamp Duty (ABSD) and Seller’s Stamp Duty (SSD), in place.
Minimally, property buyers are expected to hold their property for at least 3 years so not be taxed up to 12% of the selling price or current market value, whichever is higher.
Keep on learning
My advice is to keep on learning about property investing. Do the necessary research on the property. Always try to be at the cautious side and not to over-leverage yourself with debt.
Alternatively, you can work with together an agent who serves you, rather than sells to you.