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08 May 2019  (940 Views) 

Investing in property
A year ago, I wanted to invest some spare cash. I thought of looking at property investment. 

A friend recommended a "reliable" property consultant. He introduced several expensive residential property to me. 

I learned that I am subject to additional buyer stamp duty (ABSD) on top of an inflated property price. I was not interested. 

The consultant then recommended retail units in suburban malls. These are not subject to ABSD. 

He send to me detailed information and analysis on many shop units. They presented an attractive picture of the yield and possible gain. I received "tons" of information that was quite difficult to follow. 

He suggested a "coffee session" where he could explain the details to me. I felt that the retail sector must be weak and many units are vacant. It cannot be a right investment. I declined. 

He continued to send more proposals to me. I have to block the WhatsApp account.

Later, I met a friend who had taken the advice of another property consultant and invested $2 million in two shop units in a suburban mall.

His units were vacant for more than a year. He did not receive any rental income and had to incur the operating expenses. Fortunately, he had paid for the property in full with the gains from his residential property sale, and did not have to make monthly payment towards a mortgage. He had put his units for personal use. 

The shop units are freehold in tenure, so he does not have to worry about a depleting lease.

It can be dangerous to listen to the advise of a "property consultant". Their goal is to make a sale where they can earn 1% or 2% of a the sales proceed. It is a very attractive commission, but the buyer had to worry about getting a tenant. 

Tan Kin Lian

Vote - you have to be careful about getting the advice of a property consultant who makes a commission on a sale.


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