Property investor Jay Tay knows as well as anyone how pricey it is to buy and sell real estate, so he decided to do something about it.
Two months ago, Mr Tay, 29, who is a bachelor, set up Suite Hut to help owners sell their properties without having to go through an agent. It offers free consultation services and helps to advertise the units on major property portals.
He says the aim is to help owners save on agent commission fees and for owners to have greater bargaining power.
Q What's your property like?
A I bought my first property - a condominium unit at Sennett Residences in Potong Pasir - for investment purposes in May 2013.
Having lived in Potong Pasir most of my life, my familiarity with the estate greatly influenced my decision to invest in property in the area.
Potong Pasir is close to the central part of Singapore, so it is very convenient to travel from there to other parts of the island.
I bought the unit for $700,000 and I have been renting it out for the past six months.
There was a 20 per cent down payment and a 3 per cent stamp duty. It is a 484 sq ft one-bedroom apartment.
I rent out my unit for $2,300 a month, which works out to a 3.95 per cent yield, excluding the mortgage payment. I am paying a mortgage instalment of about $1,700 a month.
I still live with my parents in a four-room Housing Board flat in Potong Pasir. My parents bought the 1,119 sq ft property for $75,000 in 1985.
Q What are the other properties in your portfolio?
A In October 2013, I bought a unit in a mixed development as a second property investment. It's a strata-title unit, run as part of the Hatten Suites hotel in Melaka.
I chose to invest in this development as it was a convenient and hassle-free process. I did not have to find tenants on my own, and there was also no need to take care of maintenance issues or the tenants' needs.
The developer, Hatten Group, is also reputable. I believe the development has high growth potential as it is in the city of Melaka, which means it would not be a problem to operate the development as a hotel.
I bought the 422 sq ft unit for RM420,000 (S$136,000). I was offered a guaranteed per-year rental yield of 6 per cent of my investment amount.
On top of that, there are perks such as free hotel stays and access to facilities.
I rent out this unit for RM6,300 per quarter, excluding the mortgage payment. My quarterly mortgage instalment is only RM4,050 as I paid a 40 per cent down payment when I first bought the unit. Overall, this equates to about 5.1 per cent rental yield.
I accumulated enough capital to invest in property from my previous career in the insurance sector.
Q Describe your property investing strategy and market view.
A I believe in holding my properties for the long term.
I always consider three factors for investment - location, rental yield and rentability.
Location-wise, the development should be close to a current or future MRT station. It should be close to amenities such as childcare centres, schools and malls. It should also be near eateries and supermarkets.
In terms of rental yield, I always analyse the average rental rates of the district I am interested in, and then do a reverse calculation to check if the rental is enough to cover my mortgage instalments.
Rentability refers to how quickly I can rent out my unit. A unit that is popular with tenants would mean it has a good location and amenities nearby.
The market is always about supply and demand. Excluding the cooling measures, there is an oversupply of property but an under-demand of buyers.
Currently, the property market is not doing very well. However, the Government has good foresight and has been decreasing the development of condominiums in recent years, so I believe the property market will start to stabilise in one to two years.
From a demand perspective, it really depends on government policies in future, such as whether more expats will be welcomed into Singapore.
I am not looking to sell my properties any time soon, but I plan to buy a home for myself - the bigger, the better.
I hope to buy a two-bedroom condominium unit, preferably freehold, in Potong Pasir or somewhere in the city fringe within the next two years. My maximum budget is $1.2 million for a unit that is at least 700 sq ft.
Q What's your financing strategy?
A When buying private property, you need to pay refinancing fees and legal fees.
When looking for a mortgage or bank loan, I will choose a bank I trust. I usually compare the three local banks to see which one offers the most affordable package or is the most stable.
I signed up for a package with OCBC Bank when I bought my property in Singapore as I am familiar and comfortable with the bank. The loan has a floating mortgage interest rate of 1.5 per cent.
I recently repriced the loan at OCBC. The bank offered me a competitive rate, even compared with foreign banks.
For the property in Melaka, my choice of bank was limited as the developer restricted buyers from taking loans from banks other than UOB Malaysia. Nonetheless, the mortgage rate given by the bank was reasonable - a consistent floating rate of about 4.1 per cent.
I do not feel the need to switch from one bank to another unless the rates differ significantly, which is rare as bank rates nowadays are similar.
Q What's your overall investing strategy?
A Currently, all my investments are in property as I feel more confident investing in something that is tangible. In 2014, I invested $15,000 in gold when it was at an all-time high. I also invested in stocks, but both were not my cup of tea.
I do not rule out stocks as a form of investment, but I will only invest when I am very confident of making profits, such as during an economic downturn.
Q What insurance coverage do you have?
A I bought a mortgage-reducing term insurance plan for my Malaysian property, which is a single lump-sum premium of RM9,700 that covers the entire tenure of my 30-year loan.
For my Singapore property, I do not have mortgage insurance, but I have term insurance plans that cover an adequate amount of death sum assured.
Q My dream home is...
A I wish to live in a big house that is two- or three-storeys high, somewhere in the city fringe.