A cheque, not cash, is king if you want the best property deal, says entrepreneur Eric Chiew.
He says: "When it comes to negotiating the price, I always issue cheques. People tend to verbally negotiate the price, either through text or on the phone, but I find there is no point in that.
"A cheque shows I am sincere, and if I were to sell a property, I would want a sincere gesture as well. For resale properties, you can issue 1 per cent of the purchase price."
Mr Chiew, 33, runs Credit Savvy, which offers education programmes that teach people about the various tools of investing in property, their risks and benefits, as well as mortgage work.
If the price on the cheque does not work, he simply issues another, and it usually takes two to three tries before he seals the deal.
Mr Chiew, who is married with no children, stresses: "Good properties do not wait for you. These are properties where sellers are asking for a good price - they could be below market value. So in order to be fast, you need to take action by issuing a cheque."
He prepares for such moments in advance, such as making sure that his finances are in order.
"People tend to go into a deal overwhelmed as they have yet to prepare their loan approvals, Central Provident Fund matters and the down payment. You have to be ready any time for a good deal and undervalued property."
Q: Describe your residential property.
A: I bought a three-bedder, 99-year leasehold penthouse in the Bartley area for $1.8 million in 2013.
It has been tenanted - since it obtained its temporary occupation permit last year - by a lovely couple from London. It was rented out within two months.
I liked that it was near my in-laws' place and next to the Bidadari estate, which will develop under the Government's masterplan, and next to Maris Stella High School, which is a good school. It is also a short walk to Bartley MRT station.
Q: Tell us about your property portfolio.
A: I have my 99-year leasehold, 1,260 sq ft office in Tanjong Pagar, which I bought for $2.3 million in 2015.
I specially renovated it so that it has two soundproof seminar rooms. I sourced for an industrial-grade soundproof movable wall. The two rooms can be converted into a larger seminar room when needed. Such flexibility allows for good rental options and more choices for me as well as companies that rent the rooms to use.
I previously rented offices at International Plaza for a few years.
I like (the present office's) sea view, and it has an auspicious unit number on a high floor. It has lift lobby frontage that makes it visible and accessible. This combination of factors is rare, especially as it is in the heart of the Central Business District (CBD). My office is also next to Tanjong Pagar MRT, and there is another upcoming MRT station nearby called Prince Edward.
Most importantly, as Credit Savvy provides property investment education and seminars, being in a centralised location makes it suitable for my business.
I would say it is my best property investment as it saves me from paying high rental and I bought it at a good price.
I also have a 1,184 sq ft freehold office at City Hall that I bought in 2014 for $2.25 million. It is rented out to a mid-sized law firm.
It is rare to have freehold offices in the CBD so I decided to buy it, and it comes with a view of Marina Bay Sands. I bought at a undervalued price, at about $1,900 per sq ft (psf). In comparison, a newer 99-year leasehold office in the central area sells at about $3,200 psf to $3,500 psf. My mortgage loans are covered by rent.
Q: Describe your property investing strategy and market view.
A: I look at the price by psf and purchase price, and study several factors. For instance, when it comes to location, I prefer somewhere central.
I also look at the Government's masterplan for future development, and that helps me identify growth areas. I do prefer shophouses in the CBD as there is limited supply and high demand for those.
No one can predict the market conditions exactly, but people should note several things.
First is the easing of cooling measures for the first time in seven years in March this year, where the seller's stamp duty was reduced from a four- to three-year holding period. This easing shows that the market was slowing in the first quarter and needed sustainable growth. It has turned into stronger property sales in the second and third quarter of this year.
Second, land parcels are being transacted at record highs, such as the $1 billion bid for a Stirling Road site, which came with a break-even price of about $1,550 psf and an estimated selling price of $1,750 psf to $1,950 psf. Or, take the $1.132 billion for land at Bidadari, with a break-even price of about $1,700 psf and an estimated selling price of $1,950 psf to $2,100 psf... and so on.
These numbers translate to a 20 per cent to 50 per cent increase of land cost psf per plot ratio.
A 900 sq ft brand new condominium in these same areas costs around $1.25 million to $1.35 million now. I believe, based on the increased land prices, a condominium of the same size in those areas will cost $1.55 million to $1.7 million.
This means that home buyers will need to pay $250,000 to $350,000 more for a suburban 900 sq ft condo unit. Since prices may rise owing to these reasons, if you want to buy a property in those areas, it is better to start now. It is good to know what is happening in the market.
Also, strong collective sales show positive sentiment among property developers. For example, the sale of Tampines Court is the biggest collective sale since 2007 at $970 million - proof of healthy growth in property demand in Singapore.
Q: What is your overall investing strategy?
A: I have about 20 per cent in fixed deposits, 10 per cent in insurance, 20 per cent in business and the rest in property. I channel profits from my business to property. Having such assets that are being paid down by tenants gives me forced savings in a way, and I am making my savings work harder for me.
I have also learnt over the years that business and investments are "twin engines" in generating different sources of income. Business cycles and investment cycles may differ but complement each other in the long run.
Q: My dream home is...
A: One that has enough room for about six people, which includes my in-laws, preferably a landed property in a quiet, central area in Singapore.