Discover the TRUE REASON why people invest in Real Estate!
Articles

Discover the TRUE REASON why people invest in Real Estate!


Why invest in Real Estate? The Power of Leverage The main reason why many people invest in
real estate, is because of the power of leverage. Simply put, it is about using OPM, or Other
People’s Money, to make more money and multiply them. Assuming your purchase price of a real estate
is $1million. And you can borrow up to 75% or $750,000 for
30-year at 2.25% per annum. Your downpayment is 25% or $250,000. Buyer’s stamp duty is $24,600. Additional buyer’s stamp duty or ABSD for
foreigner is 20% or $200,000. For 30-year loan at 2.25% interest rate, your
monthy instalment is $2,867. Assuming you can rent out your real estate
at a worst case scenario of just $2,000 per month, that is, you have a negative cashflow
of $867. After 30 years, you paid $312,120. Total amount you paid is $786,720. After 30 years, assuming there is no capital
appreciation, and you sell at $1million same price. Your return is $213,280 or 27%. You still don’t make a loss even with 20%
ABSD. If assuming there is 20% capital appreciation,
your return is $413,280 or 52%! If assuming there is 50% capital appreciation,
your return is $713,280 or 90%! If assuming there is 100% capital appreciation,
your return is $1,213,280 or 154%! Can you see the power of leverage? In the last 30 years, Singapore private property
price index has increased about 300%. For a global city like Singapore with good
traffic and population, over the next 30 years, question is, what would be the capital appreciation. If you enjoy my video, give me a like, click
on the subscribe button, turn on the notification, and comment below. If I see any interesting questions, I may
answer them in my next video. If you need more personal advice, click on
the whatsapp link below.

Leave a Reply

Your email address will not be published. Required fields are marked *