How to Invest in Property Without Owning One

How to Invest in Property Without Owning One

Going Beyond Direct Property Buy-and-Sell

If you’re planning to learn how to invest property without owning one, here are six easy ways to help you easily enter the market by the minimum. Real estate investments go beyond direct property buying and selling; it’s all about understanding market valuations and existing markets.

Why Invest in Singapore’s Real Estate Market?

Singapore’s economy and local jobs market continues to reach a high level, easily attracting foreign investors to take advantage of its friendly multinational terms. A rise in employment enhances Singapore’s real estate market due to the increasing property investments companies and other investors uphold.

  • Stable Rental Income

Truthfully, Singapore’s properties are some of the most expensive worldwide, including its HDB flats whose costs are government-subsidized. However, property acquisition is a streamlined process in the country. While it is an enormous monetary investment, any tangible property you own in Singapore has the best potential for stable rental income.

  • Convenient Mixed-Use Development

In the modern condominium design scheme, mixed-use properties are part condominium and part mall or convenience center. In doing so, both Singaporean professionals and foreigners will find the properties convenient. Furthermore, with a shared value due to its functionality, mixed-use developments justify higher rental fees, too.

  • Low-Priced Prime Location Properties

Thanks to Singapore’s stable prime locations, property owners can purchase pre-built and full-built properties at low prices. While prime location property developments remain in low supply, their prices are relatively much more affordable thanks to Singapore’s stable real estate market.

  • Extensive Capital Appreciation

If you decide to purchase a real estate property in Singapore, you won’t have to fear any red tape during liquidation. Currently, Singapore’s real estate market continues to rise exponentially. Investing today will mean doubling or tripling your property’s value.

With foreign workers making up a significant portion of the country’s workforce, it’s a virtual guarantee that your property will always see capital appreciation annually. High demand for foreign rental properties continues to encourage purchases from Singaporean investors of all levels.

6 Real-Estate Investments That Require Zero Property Purchases

You can explore the vast variety of options the real estate markets offer you. By choosing assets that significantly or completely link themselves to real-estate market growth, you can see enormous returns in your investment portfolio. Here are six assets that require virtually zero property purchases on your end.

  • Real Estate Investment Trusts (REITS)

Imagine mutual funds with tangible property. Instead of investing in a collection of stocks, bonds, and ETFs, you have a mutual fund that invests in properties. The best thing about it: you can start investing by paying the minimum required to “pool” your resources with other investors (like mutual fund investments).

The market calls these companies Real-Estate Investment Trusts or REITs. They have a specialist team of real estate professionals who make property purchases, sales, and evaluations. The funds’ purpose is to generate enough income for all its members. A REIT portfolio can include data centers, condominiums, apartments, hotels, factories, and other tangible assets available in the market.

Pros

Cons

No Corporate Taxes

REITs invest 75% of their earnings for further growth and pay 90% of their taxable income to shareholders and operators. All investors, including the fund, do not pay any form of corporate tax.

Disqualified Dividends

In the U.S. and Singapore, REIT dividends do not fit the definition of “qualified dividends.” Therefore, it does not achieve the low-tax advantage dividends have in the two countries.

Zero Management Responsibilities

Rental properties are excellent income sources. However, they can be a time-consuming responsibility, diverting you from portfolio-building and other essential tasks. REITs allow you to own property shares without having to worry about property management.

Highly Sensitive to Interest Rate Fluctuations

Real-estate has a direct correlation to bank interest rates. Therefore, it’s highly sensitive to interest rate fluctuations. However, it helps diversify your portfolio, especially as a safety net during economic downturns.

Lowest Volatility in the Market

Truthfully, the real-estate bubble can cause massive property devaluation, such as the U.S.’ case during the subprime mortgage crisis. However, real estate and other properties have the lowest market volatility, making them a tremendous but rewarding investment.

Focused on the Long Term

Due to its sensitivity to average interest rates, REIT investors should focus only on long-term investments beyond a time horizon of five years. On average, successful REIT investors have a minimum of 10-year time horizons.

  • Real Estate Investment Platforms

Ready real estate investment platforms and crowdfunding programs have seen enormous backing in the last few years. With the increasing successes of numerous investors, these platforms are becoming widely accessible and capable of delivering a great return on investments.

Furthermore, traditional real estate investors see the appeal of these crowdfunded, democratic platforms because all real-estate information that managers heavily safeguard in the past is open for any investor to access. This transparency makes it a viable and profitable investment.

Pros

Cons

Transparency

Previously withheld data from property managers are readily available from real estate investment platforms. Crowdfunding platforms themselves often require property managers to share the information with all investors openly.

Carries a Higher Risk

Truthfully, risk appetite depends on your time horizon and penchant for liquidity. Investors who need to have short-term gains and immediate liquidity like stocks will find real-estate investment platforms and real-estate markets, a problematic investment. Otherwise, you’ll find them as rewarding and superior investments.

Global Market Access

You can access and have an ownership share of any real estate property across the world. If you’ve previously looked for the best properties with tremendous potential in developing nations, real estate investment platforms will always be an excellent option.

Poor Liquidity

Like real property, the money you invest in real-estate investment platforms may have a discreet lock-in period. While it isn’t on the contract, you’ll need to wait for more than 8-10 years until you see real income from your enormous investment. Plus, if you need to sell, it’s virtually impossible without breaching any contracts.

Time Efficiency

Owning traditional real estate requires you to sign numerous paperwork to own your property. After paying, you’ll need to wait a few more months until you can finally start managing it. With real-estate investment platforms, you do everything, including paperwork, online.

Long Term ROI

It takes decades for real-estate to start turning a profit. However, planting your seeds early and being patient can give you the best future income source even if the ROI isn’t immediate.

  • Rental Property Investment

Rental property investment is a broad term. In this section, we’ll focus on ride-on rental property investments.

Ride-on rental property investment is a direct regular or stakeholder share a property developer can choose from investors. It functions similar to REITs but only exclusive to a single property. In most ride-on rental property investments, investors can purchase the property’s equity that earns them a particular profitable sum.

Pros

Cons

Direct Purchasing Contracts

A developer approaches you to purchase property shares. You receive profits directly as co-developer or benefactor.

Rigid Investments

You can’t liquidate your investments. Plus, it takes much time until you can see income from your investment.

No Management

Regular equity shares do not need to participate in property management. Stakeholder equity shareholders can choose to be part of the property management board.

Risk of Discontinuation

If the property developer has no major investor, the project’s stall or discontinuation risk will remain high. This can mean enormous losses if you’re not careful.

  • Consider House Flipping

House flipping came with the “upcycling” movement of the last half-decade. The concept is simple: renovators purchase an old flat, house, apartment, or condominium for a significantly lower-than-market price. They’ll then ask investors to fund the renovation ventures, giving them profits in proportion to the amounts they’ve invested.

Pros

Cons

Faster Construction Time

House flipping isn’t demolishing a house from the ground up. Instead, talented designers and renovation teams refurbish and re-design the property to increase its value.

Requires Working With Experienced Renovators

It’s easy to find a house renovation team online. However, unscrupulous characters can easily rip you off. House flipping requires decades of experience in the field, making experienced renovators a better investment.

The Most Liquid Real-Estate InvestmentIt only takes a month or three to finish a house-flipping project. If all goes well, you can see your investment quickly return along with impressive renovation project photos.

Always Carries an Enormous Risk

Investors have virtually zero say on the house flippers’ next projects. Therefore, you must trust the house flipping team to do their due diligence of community and market research accordingly.

  • Real Estate Investment Groups (REIG)

In a club, you work with different members with a single goal. A real estate investment group (REIG) functions the same way. You pool your resources with other members, learn together, and split tasks to make the best real-estate investment management.

Pros

Cons

Pool Resources

In an REIG, you can pay for the membership fee and sink only a small investment amount. You’ll get returns without worrying about property management because a group member who is much better at the task will handle it.

Group Mentality

Working as a single cell is a democratic process. With everyone capable of expressing an opinion, heated discussions and tensions may affect group investment decisions.

 

Learning Opportunities

Most clubs have seminars and classes to build a powerful knowledge base capable of enhancing their collective property investment decisions and profitability potential.

High Membership Fees

Sometimes, you can have better profits by going through real-estate investment on your own, especially if you’re made to contend with exorbitant membership fees.

Splitting Tasks

If you’re not so good with property management, a member can do this for the group. Alternatively, you can contribute your own skills to help the group make better financial decisions in the future.

The Lack of Liquidity

Embracing the lack of liquidity is essential when joining an REIG. With everyone’s resources pooled together, you’ll receive your profits even if it takes a while.

  • Room Rentals

This investment is like rental property shares but only on a smaller scale. Investors will receive offers from a condominium, apartment, or flat owner to share an expense portion for an equivalent sum of rental income.

Pros

Cons

Greatly Accessible and Liquid

An investor with low capital can quickly invest their resources through the offering party. In doing so, they can rapidly get their returns if purchasing an already-built property.

Good Potential to Increase in Value

The real estate market in Singapore will likely increase in value in the coming years. Even room-level property investments can see major increases over time.

Unscrupulous Offers

Without a central market and mostly sending offers online, you’ll likely see unscrupulous room rental offers with returns too good to be true. Be wary when finalizing your investments.

Often Lacks a Proper Contract

Scammers will never present a proper, notarized contract for room rental shares. Beware of trusting strangers. Room rental ventures often give great returns by working with friends or family.

Should You Invest Everything in Real Estate?

Truthfully, no ideal investment portfolio exists if the investor cannot identify their risk appetite and initial capital. You can invest a significant portfolio portion in real estate, but you can end up waiting for your income after a decade. However, your long waiting time pays off because you reap the benefits of your purchases consistently within a stable, non-artificial market.

Therefore, the real estate market is only for long-term focused investors, leaving nothing for short-term investors.

No Investment Is As Tangible as Real Estate

Real estate investment property virtually guarantees a near-invincible, high-value asset capable of providing enormous income returns. While they might take a while to achieve it, your patience and diligence will always have rewarding investment incomes.

Instant Loan’s loan comparison facility remains helpful for Singaporean investors looking to invest in property. With friendly terms and conditions, a fixed 4% maximum interest rate, and a loan of up to six times your monthly salary with quick release, you can get started on your real estate venture.

Visit us today to get the best personal loan terms for your investment property venture!

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