What is Property Wealth Planning and Is it Suitable for You?
“Property wealth planning” is a hot term that has been popping up all over on the Internet recently.
Whether you’ve heard this term from the random YouTube or Facebook ads or from your circle of friends, you’ll probably have a vague understanding of what it is.
For others, it is about generating passive income so you can achieve financial freedom.
Having heard these misconceptions from potential clients and even friends, as a real estate consultant who provides property wealth planning consultancy services, I felt the need to make some clarifications.
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What Exactly Is Property Wealth Planning & My Take on It?
In simple terms, Property Wealth Planning (also known as Property Asset Progression) is a guide for property owners to either potentially attain capital appreciation or passive income streams through deliberate property reallocation and investments.
Here is my professional take on property wealth planning:
- Yes, there is potential to make incredible returns on an investment property – I have personally witnessed and helped clients do so
- No, it is not a guaranteed win for every investment property that is made. There are many variable factors that can affect the returns on property investments and while we can do the due diligence to mitigate it, it cannot be completely eliminated.
- No, it is not suitable for everyone. Unlike the ads you may have seen that suggest property wealth planning can be done with zero capital upfront or with zero risk, I am here to say that it is not always the case.
People Suitable for Property Wealth Planning
While the potential upsides are enticing, like any other investment, one needs to also be fully aware and comfortable with the potential downsides too.
And when it comes to property investments, due to the larger capital of investments, I always remind my clients to consider their risk appetite.
For example, a high-income individual with no dependents is likely to have a less risky profile than say perhaps a middle-income sole-bread winner of a family of five.
Here are some ideal conditions and characteristics that are suitable to explore property wealth planning:
- High-risk appetite
- In employment (ideally from dual-income family)
- Have sufficient cash savings or CPF funds
- Have no to low debt
- Have a place to stay or existing asset to downgrade /upgrade
- Willingness to plan into the future
In short Property Wealth Planning is ideal for your consideration if you fit into the categories below:
- In employment
- Have a place to stay, can buy 1st property for investment
- First purchase can be part homestay and part investment
- Have cash savings or CPF funds
- Fully paid HDB
- HDB just MOP
- 6 months to MOP
- HDB price reached a stagnant stage
- Fully paid EC
- EC just MOP
- EC 6 months to MOP
- EC price reached a stagnant stage
- Fully paid Condo
- Condo passed Seller Stamp Duty period
- Condo price reached a stagnant stage
How does Property Wealth Planning Work?
Looks like you’ve fulfilled the ideal characteristics and conditions?
Now, let me share a little of how the process of property wealth planning will look like if you choose to proceed.
Step 1: Financial Analysis
Any property wealth planning session will always begin with an in-depth analysis of your financial position and future property needs.
To give a recommendation, your real estate consultant will need to know your starting point.
By understanding your financial situation (e.g. savings, any other assets, cashflows, expenses etc.), they will be able to advise any limitations on property investments you can make.
By understanding your future property needs (e.g. moving into a house with enough space for kids or moving close to a primary school etc.), they can make sure to advise reasonable investment types that fit into your future plans.
These needs can vary widely from person to person, which is why every consultation is incredibly personalized and important as with the recommendations that are given.
Step 2: Funding Requirements
After going through the above, your consultant can advise how you might be able to fund your property investment.
Usually you will have a breakdown on costs involved like stamp duties, legal costs, and miscellaneous fees as well as suggestions on how you can utilize your funds accordingly.
For example, after selling your current place, you can tap on cash profits and CPF funds to upgrade to a condominium.
Step 3: Investment Analysis Method
This is the stage where they will suggest the specific investment properties for you – the process here varies from consultant to consultant.
For me, I use a proven analysis method for my clients to filter the options in the market and determine the right property for you.
Utilizing this data support analysis, I will share my recommendations on profitable properties suitable for you and your individual situation.
Step 4: Investment Road Map
The last step is to help develop an executable plan.
By taking your major life milestones into consideration, I will plan for the next 10 years with actionable steps at each phase.
Usually incorporating an exit plan in next 3 to 5 years or 8 to 10 years – depending on the individual.
Is Property Wealth Planning for You?
Now that you know a whole lot more about property wealth planning, what is your personal take on it?
If you accept that profiting from property choices in the long run requires effort and is not just a quick money gimmick and is interested to learn more about your options, I am happy to hear more from you and I look forward to a productive discussion with you.
Bonus for my readers
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Rick Huang, Associate Deputy Group Director of OrangeTee & Tie, has been in the Real Estate industry for a decade.
He is driven, committed and is enthusiastic about real estate investments.
Today, he leads Team Youhome.sg, and together, he aims to provide his clients with the best experience in their property journey.
The team focuses on understanding the client’s finances and needs and is determined about delivering the best solutions and results for them.
Amidst the hustle and bustle, Rick enjoys quiet time and indulge himself in the intricate art of tea-brewing and teapot appreciation.
He would also take this chance to energize himself and reflect on his personal development and areas of improvement.
He is also a proud fur daddy to 2 rescue kitties and loves spending his free time with his wife and furbabies.
Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)
Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)
Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)
What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)
Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)
Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)
What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)
Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)
Buying EC before selling your HDB? – Read more (Upgrade to EC before selling your HDB)
Should you sell your EC after 5 years? – Read more (Selling EC)
Should you sell your MOP HDB after 5 years? – Read more (Selling HDB after mop)
Property Wealth Planning – Read more (What is property wealth planning?)