The Ultimate Guide for First-Time Homebuyers

You’ve probably heard the old saying: “location, location, location!” This has become the go-to advice for property hunters for the longest time. But is it really all about where the property is?

Imagine a place right next to an MRT station, within 1Km of top schools, smack dab in central Singapore, close to all the amenities you could dream of, and freehold to boot. Sounds like a jackpot, right? But surprisingly, it might not be the goldmine you'd expect.

Location is definitely important, but there’s more to it. Picking the right property requires a bit of savvy. Some folks can spot a hidden gem in a rundown alleyway, while others, despite all the data in the world, end up with properties that are just meh.

So, if you're gearing up to buy your first home, here are some must-know basics to get you started:

Know Your Purpose

First things first, figure out why you're buying. A property that's great for investment might be terrible to live in. For example, living in a noisy development with a mall might not be fun, even if it promises good returns.

Are you looking for:

• A place to call home?

• Downsizing?

• Upgrading (like moving from an HDB to a condo)

• Investment (looking for capital gains or rental income)

Your purpose will shape what you look for. If it's a home, you might not care about rental yield. But if you're planning to sell in a few years, you might overlook a less-than-ideal location if it’s likely to appreciate.

What to Look For

1. Accessibility
Properties near MRT stations usually perform better, but the returns can vary. Developers often price in the proximity to MRTs well in advance. However, being close to an MRT usually means it's easier to rent out. Tenants love good accessibility and tend to stay longer. Check actual walking distances, especially if you have kids or elderly family members. A "five-minute walk" might be a stretch.

Also, with cars getting more expensive (thanks to crazy COE prices), being close to an MRT station can save you money. The general rule is that most healthy adults are comfortable walking about one kilometer, which is roughly 10 to 13 minutes. Anything farther might be considered “too far”.

Remember, accessibility on a map can be different from reality. Walking times on Google Maps don't account for hills, dangerous pathways, or other obstacles. So, check it out in person if you can.

2. Amenities and Disamenities
Look for essentials within a kilometer: groceries, clinics, malls, schools, offices, entertainment spots, and parks. But remember, some places can be both a blessing and a curse. For instance, living near a hospital means easy access to healthcare but might also mean dealing with ambulance noise at night.

Within one kilometer, look for:

• Grocery stores

• Clinics

• Malls

• Schools

• Offices (especially business parks or tech hubs)

• Entertainment options like cinemas or sports complexes

• Parks and nature walks

Keep an eye out for places that can be both pros and cons, like:

• Places of worship

• Hospitals

• Airports

• Nightlife spots

• Malls and offices (Great but some of them can be very noisy)

For example, living near a Hospital could be great for easy access to healthcare, but the ambulance sirens might be a dealbreaker for some. Also, consider Fengshui aspects if that’s important to you.

3. Remaining Lease
Older leasehold properties can be risky for new investors. They might seem like a bargain, but they come with risks. Investors often count on rental yield from these properties, trying to buy low and rent at market value. However, it’s risky since selling such properties later can be tough. Stick to properties that are less than 30 years old if at all possible. This helps to keep your options open for future resale or downsizing.

4. Transaction History
Check the property's transaction history to understand its market performance. Regular transactions suggest stability. Look for properties where units are consistently bought and sold, giving you a fair idea of its value. A property’s transaction history can give you a good idea of what to expect. Regular transactions suggest a stability and sporadic sales suggest instability.

Need help with checking past transaction data? Contact Super GaoLat Aaron Teo Here.

5. Rentability and Rental Yield
Rentability is about how easily you can find tenants, while rental yield measures the income you generate from the property. Gross rental yield is calculated by dividing annual rental income by the property's total cost. Net yield accounts for expenses like taxes and maintenance.

In Singapore, typical gross rental yield ranges from 2-3% for condos, higher for compact units. If you find a property with higher yields, it could be a great investment, but be wary of potential issues like lease decay or poor location.

6. Layout
A good layout can make a huge difference. Consider current living trends and future needs. Efficient layouts, renovation potential and functional space are key factors. For example, older 2-bedroom units were once as large as 1,000 sq. ft., including a yard and utility space. Today, there’s less demand for such features, and a more modern, compact layout might be easier to sell in the future. Also consider the usage of the space based on your purpose. For example, a 2 Bedder with a Dumbbell Layout which has the common bath attached to the common room could potentially prove to be a worthy investment as the owner could rent out both rooms as “master rooms” for higher rental yield since they both have attached bathrooms.

Too Troublesome to Do it Yourself? Call Super GaoLat Aaron Here