After I shared that I was looking to buy a second property in 2021, quite a few of you have reached out with queries and to share your stories. Amazing stuff btw – do keep them coming.
Given that there was so much interest in Singapore residential property, I decided to reach out to Adam, co-founder of Stacked Homes.
I’m a big fan of the content from Stacked Homes, and I was eager to get his views on residential property in Singapore (in 2021), and his advice on home buying.
And boy, he did not disappoint. I hope you find enjoy the interview as much as I did!
Where it all started…
Before Stacked Homes…
Before Stacked Homes, my fellow co-founder and I were doing a messenger start-up. Unfortunately, it didn’t work out.
I’ve always been interested in property, so in 2017, we decided to venture into something property related.
We were looking for a better way for buyers, sellers and renters to conduct their real estate transactions. We took a lot of inspiration from online portals, particularly in the US.
So we started Stacked Homes, and we built a portal to connect buyers and sellers – to bring people together.
Over time, we realized that our editorials were actually more popular than the portal we had built.
We started to get a ton of questions asking about what should I look for when I’m buying a property, which property has potential etc. So we evolved and starting focusing on our editorials. Today, we’ve got hundreds of articles.
Why Stacked Homes is unique…
There are very few sites out there with an objective view on real estate.
A lot of agents, they are only trying to sell their unit, so the advice may be biased in that way.
Our writers come from a diverse range of backgrounds. Some have done property investments, others advise people on properties, and several are licensed in real estate.
This gives them an advantage because they have seen many homes and dealt with clients with different needs.
And also… they’re not trying to close a deal. This allows them to be more objective.
What do Singaporeans love?
New launch reviews and property stories.
New launch reviews – When you go down to the showflat, you can’t really expect a developer agent to provide you with comprehensive or unbiased advice. It’s just the same sales pitch. So people are really interested to see a third party take on it.
Property stories – Reading other people’s sharing on why they bought a property or their experience living in it is timeless. It’s a human connection.
BTW – At Financial Horse we share commentary on financial markets every week, so do sign up for our mailing list, its absolutely free (goes out every Sunday).
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Advice to Singapore property buyers
Advice to first time home buyers…
It’s important to not get emotionally attached to what you view at the beginning, and instead, have a high-level overview of the market. You don’t know what you’re missing out there (FH Sidenote: sounds like dating).
This is even more important for condos because they are so many different types.
Find an agent who has experience – this can really help. A good agent has seen multiple units in the development, knows the pricing in the area, knows which is the better facing, the facilities etc.
These are things you don’t spot immediately but may regret not looking closer at, later on.
Finding a trustworthy agent…
Find someone who can give you a straight answer to your questions.
So if you ask an agent “what do you think of this unit” and they don’t give any negative comments, you should be quite wary.
Find the right agent that you have rapport with and trust.
There are agents who are very good at closing and are good at deploying sales tactics, so avoid those!
Why the seller agent never gives straight answers…
If you ask “Why is the seller selling”, “How are the neighbours like” – the seller’s agent will tend to give you prepared answers.
There’s no easy way to fish for the information you actually want.
If you want to know whether the unit is hot at a certain time of day, whether the neighbour is nasty – you need to walk around.
Or when the owner is there, you can ask questions and see what their facial expressions are like, that’ll probably give you a clue.
Pro tip: Take a look at whether the unit has any new paint on the walls, because this could mean they were being harassed by loan sharks (!)
On deceptive showflats…
With resale condos, you can get an actual sense of what the unit is like.
For new launches, you really have to be wary of showflats.
There is 24/7 air conditioning, everything is displayed perfectly. Sometimes the walls aren’t even there! (they just put a line on the ground demarcating the wall)
Especially the dining area, many showflats just put a bench, because the normal chairs will block the walkway.
This is especially important as the new units are getting smaller and smaller.
Does the developer matter?
For new condos, don’t forget to consider:
- the developer
- their reputation
- their financial status and track record
- whether they are good about rectifying defects.
Ultimately though, it’s one factor out of many.
Equally important is the location and whether the unit meets your needs.
Know your priorities…
At the end of the day, you have to know your priorities.
You can only pick one or two priorities (size, price, location, tenure etc.), so decide which is most important to you.
Property is not so straightforward like freehold versus 99 year lease.
Some leasehold may do better than freehold properties. For example, newer leasehold properties, and it also depends on your holding period.
If you plan to stay for five to 10 years, then perhaps a nice new leasehold in a good location may be better than a freehold in a less developed area.
Paying for renovations…
Renovation of condos can be shockingly expensive.
If you’re not staying long term, it may not make a lot of sense to pay for the renovation.
The key is whether the renovation will increase the value of the property.
For a $3.7 million penthouse, that extra renovation may push it up to $4 million when you sell.
But cheaper units? Really tough to say.
Is Property a good investment?
BTO vs. resale
When you are young (early or mid 20s), BTO is a good option.
But once you hit your 30s, you have to weigh the time factor.
A BTO takes 4 years to build, then a 5 year MOP. By the time you’re ready to sell you’re almost 40.
And if you want to upgrade to a condo, this affects your loan tenure. Someone in their 40s can’t take a 30 year loan anymore.
So for someone in their 30s, a resale flat may not necessarily be a terrible option. You can also look at sale of balance flats.
Upgrading to condo… worth it?
If you’re upgrading for status, there’s really no point. Nobody cares where you stay.
It does come down to personal use. For a family with young kids, living in a big condo with facilities can make a difference.
At the same time, a lot of people think they want the facilities, and end up only using them in the first year. You have to realistic about your lifestyle.
If you really like the development, or if your HDB only has 30 – 40 years left and you want to put your money somewhere to preserve wealth, a condo may not be a bad idea.
Buying real estate vs stocks…
The real benefit of property investing is leverage.
Property prices don’t fluctuate as much as stocks. If you leverage with stocks, there’s real risk of a margin call. Much less so with property.
However, the property you choose to buy really matters.
If you buy a very old leasehold property, it depreciates over time. You need to have an exit strategy, and counting on an en bloc is not a reliable exit plan.
Leasehold property – yes or no?
The depreciation is not a straight line, it’s a curve.
From what we observe – the 21 year mark is where you need to think twice, as depreciation tends to kick in after.
But of course for older leasehold properties, you tend to get a bigger space for the price.
Really boils down to your priorities – space, location, capital appreciation etc.
Cluster homes – yes or no?
Cluster homes are a very niche property.
You can ask anyone who’s trying to sell their cluster home, there’s not a lot of people who are looking to buy.
Really depends on whether it’s for your own stay. For example, if you have a large family, with kids, grandparents all staying together, and you also want access to amenities, a cluster house can work well.
But otherwise, generally I would stay away from properties that are very niche.
Property investing in 2021
Where’s the market headed in 2021?
That’s a tough one.
Even within the team at Stacked Homes, we have differing views.
Personally, I didn’t think the market would have been this strong.
Going forward, I don’t think the government will let it appreciate too much. They are very wary of the inequalities this can create, when prices are not in line with Singaporeans’ income.
So if there’s any strong uptick in property prices, it may be dampened quite quickly with cooling measures.
Jackpot HDBs – good or bad?
It’s like asking a lottery winner.
For the people who win, they’ll say it’s an excellent idea, but those that don’t win will have a different opinion.
The other thing is that everyone makes this comment in hindsight.
When Pinnacle@Duxton launched, a lot of people thought it was very expensive. It wasn’t so obvious that prices would have gone up this much. So it’s a little unfair to penalise the winners too.
Opportunities in the market right now?
I like the Core Central Region (CCR).
The Core Central Region has been quite beaten down the last 10 years. So I would say that if one is to speculate, looking at a five to 10 year horizon, CCR could be interesting.
What home is good enough for you?
What kind of property would you consider for yourself?
For me, I’m quite content with a HDB in a good location.
I am in a stage right now where Stacked Homes is growing, and this means that my investment goes into the business. If I take a lot of risk in my business, I should take less risk elsewhere. My risk tolerance is not so high for where I am right now in life.
Advice for your 18 year old self…
It would be to make better use of my university time.
I went overseas to study and at that point I was just having fun.
I would say to read up more on real estate, and to better make use of my time.
Advice for younger investors?
For younger millennials, I don’t think they have to think so much about real estate at that age, until they are looking to settle down.
For the amount of capital that they have, it may be better to invest in something which has a lower barrier to entry.
So at that age, read Financial Horse and invest in shares, and when you are older and want to go into property, read Stacked Homes.
No. 1 Tip!
For real estate investing, I think you need to be a very long-term thinker. You can’t expect to get rich quick from property.
Anyone who thought so in the last 5 – 7 years will still be feeling the effects of stagnant property returns.
There are a lot of costs that are unseen which eat into your profits as well – interest costs, maintenance, property tax etc.
So I think having a long term view, is really the key.
Back by POPULAR DEMAND – We’re running a Chinese New Year promotion for all investing courses.
Why not use your Angpow money and learn to invest? 2021 will be a volatile year – with lots of opportunities for investors.
Learn to invest here! Promo ends on 21 February!
Hi Adam, thanks for sharing. There are many useful points that will benefit home buyers. For discussion, I hope you’re able to share more about your point:
“From what we observe – the 21 year mark is where you need to think twice, as depreciation tends to kick in after.”
Are there any data to show this observation? Because it seems to contradict the NUS research mentioned in the following CNA article. The article suggests depreciation is faster for younger HDB flats than older ones (see graph in article, depreciation slows after 20 years)
https://www.channelnewsasia.com/news/singapore/hdb-flats-depreciate-better-private-non-landed-housing-nus-study-11237604
Hi Derrick,
To clarify, this is Financial Horse, and we interviewed Adam for this piece! 🙂
I can’t speak on behalf of Adam, but from what I see your sourcee is talking about HDBs, while Adam is referring to private resale condo. The 2 are very different asset classes, with diff characteristics.
Cheers.