Are You Making This Fatal Mistake in Your Property Investment?

When it comes to property investment, we tend to be caught up with what to buy & when to buy. However. many people fail to consider their rental and exit strategy, i.e., their property’s future potential tenant and buyer pool.

While a good deal at the time of purchase is important, rental income and capital appreciation gains can only be achieved if there are available tenant and buyer pools for the property. Failing to identify these before making the purchase can lead to problems capturing your desired rental cash flow and capital gains!

Well fret not, as there are ways you can determine who your potential tenants and buyers would be. Read on to find out!

Which Region is Your Property Situated In?

Singapore is divided into three regions – the Core Central Region (CCR), Rest of Central Region (RCR), and the Outside Central Region (OCR) – which comprise 28 districts. Each region and district has its own unique characteristics and caters to different demographics. Understanding the demographic makeup of the region and district can provide valuable information about the life stage and preferences of potential tenants and buyers.

For example, certain districts such as Districts 04, 09, and 10 are popular among expatriates due to their proximity to the city centre and the Central Business District (CBD), where many of them work. This creates rental demand in these districts, which may favor investors who are looking for rental yields. On the other hand, as you move towards the suburban areas of RCR and OCR where most of Singapore’s public housing flats are located, you may find that there are more locals. Residents there tend to be looking to buy for own-stay purposes. This could favor investors looking for capital growth.

Another example is: if you know that most residents in the area are families, they will very likely prefer larger units. On the contrary, singles and young couples may be fine with smaller unit types. You can utilize this knowledge to guide you in selecting the appropriate size and type of property to invest in, thus maximizing your gains.

Look At The Surrounding Amenities

The amenities around your property can more or less determine the profile of your future buyers and tenants.

For instance, in Singapore, those residing within a 1km-2km radius of the school are given priority admission during balloting. Thus, if your property is in the proximity of primary schools, it is likely that your potential tenants and buyers would be young families looking to secure their children a spot in these schools. For these families who will be looking for a place for own-stay, practical unit layouts and family-friendly facilities like playgrounds, swimming pools, and 24/7 security are of priority. Therefore, one strategy you may adopt is to invest in an unit with functional layouts (with spacious living areas, yard area for laundry, and a household shelter for storage).

A property located near to commercial and industrial spaces can give you a reliable tenant pool with stable demand from those working in those spaces. In light of this, you may want to consider investing in units that offer sufficient living and study areas, such as a 2-bedder or 2+study unit so as to maximise your rental yield. This is particularly important if you plan to rely on your property as a source of consistent cash flow and rental income.

Study the Historical Trends of the Area

Studying past transaction data is a useful way to gain insights into the unit types that have been highly sought-after in an area. By analyzing the unit size(s) and/or type(s) that have had high rental or buyer demand over the years, it can help you develop a sound investment strategy. This is because you will be able to get an idea of the units that are most likely to sell easily and generate healthy returns for you.

Final Words

It cannot be stressed enough that the ultimate goal of investing in property is to rent out or sell the property to capture returns. While it’s important to consider entry criteria when selecting properties to invest in, it’s also crucial not to overlook the future target audience as a crucial aspect of your investment strategy.

We hope that this article has provided you with valuable insights on how to identify your target audience and use that information to guide your selection of ideal developments and units for investment. If you require further guidance and professional advice, feel free to reach out to us!