Quote:
Originally Posted by whizzard
Hi JSO,
All my property investments have always been under my personal name or on a joint name basis with my wife as the other owner. Whilst there could be some advantages in terms of incorporating a company to hold your property investments e.g. claiming certain expenses agst your rental income for tax deduction, I did not do so as there are also some obligations to comply with if I were to have a pte ltd company owning the properties.
The other factor to consider, in your case where you are sharing the property with some friends, is that if you were to hold the property under a pte ltd company, you would only own shares in that property owning company. What if you want to sell off later? You would be selling shares of the company ..... don't know about the marketability of that. Of course, you could always structure a shareholders' agreement at the onset which states out what would happen if one or more partners decide to sell, what is the expected "quorom" that will be required to make certain decisions on the property (instead of a consensual vote all the time), etc. In short, it's not a good idea to share the investment because it could potentially lead to quite a fair bit of complications later on.
Why are so many people fixated with the idea of owning properties to finance their lifestyle or retirement? When the property market undergoes a cyclical downturn eventually, I dread to think of the consequences.
Property is just one of many asset classes out there. Don't put all your eggs in one basket. Yes, properties are expensive in Singapore and therefore it accounts for a substantial portion of most people's portfolio and when you are starting out, your investments would always be in one basket due to relatively low savings at that point in time. That being the case, you should be even more careful to plan for a scenario where it does not pan out as you expect it to. Furthermore, the net yields on investing in physical properties in Singapore is actually very low. You may be better off investing in well managed REITs if you are looking at it from a cashflow perspective.
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Hi whizzard,
I did consider that we'd all be owning shares in the company, and not directly in the property itself. I did plan for some details for this, thanks for sharing though. I ran through several scenarios with regards to the divestment of the stakeholder / shareholders in the company, divestment of the company's property, as well as purchase of new property and management of the property. Though, admittedly, I haven't planned out all the complications that might arise.
For me, I guess I'm heavily influenced by Robert Kiyosaki's Rich Dad Poor Dad, though I'd not be buying property on as high margins as him. Not planning to get into the market currently, prices are quite high. I've considered REITS, but still don't understand fully how the gearing / interest / SIBOR / LIBOR affects every single price movement, so I'd not be investing in it at the current moment. I'm looking at both a comfortable cashflow, as well as capital appreciation. Also, a little background on me, I'm working in an IT firm, so the tenants could become a new source of leads for me too.
Quote:
Originally Posted by Unregistered
What is EDMW and HWZ ?
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Eat-Drink-Man-Woman, a subforum of HardWareZone forum. EDMW has quite childish posts / threads, I'm not a member, but just silently read some of the threads for entertainment.
Quote:
Originally Posted by dives
Hi,
I have some structure as you mentioned but its only managed by myself. I did think of creating a such a vehicle for the purpose of getting people to invest with me but decided it too troublesome. Anyway here are some things you need to note from my observations
Buying Commercial property
1. Recently prices have shot thru the roof, rental yield is quite low compared to previously so you have consider if this investment is worth your while
2. Pte Ltd company would probably be best to hold the investment. (share division etc)
3. Commercial properties charge GST on top of purchase price, if you have a GST registered company you can claim back on this. However it means you also need to charge GST to your tenant (Won't be an issue if your tenant is GST registered also)
4. As Whizzard said there will bound to be lots of conflicts, hence there must be an anchor investor to call the shots. For example if someone wants to cash out the contract must clearly state the terms of cashing out (i.e can only sell to anchor investor or existing investors, time frame of completion and notification, more importantly valuation of property i.e liquidated value or market value etc)
5. Someone will need to take active management in terms of finding tenants submitting GST, account. MCST, prop tax etc. This can be the anchor investor and perhaps work out a fee as part of the "management package"
6. When investing in commercial you have to know the market, i.e ceiling height, floor load, industrial permission B1, B2 etc. Target tenants, Ramp up unit etc. Don't buy a unit no one wants to rent just because the Feng Shui aint good
7. The advantages of commercial is generally the unit is bare and the tenant has to sort out everything themselves (Reno etc)
8. Company property loans are a hassale, best if you and your investors can do upfront cash. If not the directors of the company will have to come in as personal gurantors.
That's the high level in a nutshell, its viable but pending on your foresight for undervalued property. I can tell you compared to what I bought my industrial units at the market is flying high now.
Good luck |
Hi dives!
Thanks for the tips / observations. Currently, my cash isn't enough to buy a commercial property outright, plus, valuations are on the high side. I'm just setting out plans for market corrections, if any.
2. Yep, it'd be a Pte Ltd company.
3. I see, thanks for this. The current company I'm renting from is charging
GST for rent, so thanks for notifying me.
4. Planning to set myself as the anchor investor. I did set out the terms already, but the valuation of the property will be a hard thing to do. Mostly, sales will only be done to other investors who are already in, subject to veto from management (if the outgoing investor only want to sell to one investor and not the rest)
5. Yep.
6. Thanks for this! Will do more research on this..
7. I only plan to pain the walls, and have false walls to partition the office, with power / internet and phone lines set up. No renovation by the tenants, only removable furniture to be used.
8. Didn't check out on this yet. Can you clarify more on this if possible(meaning, how are they more of a hassle than say, private property?) Thanks!
Thank you very much for you insights, not planning to enter the market at the moment. Just waiting for correction, if there is, good, else, no problem, just wait for a while lor.