The Best Countries to Invest in Property in 2021 Part 1

Is Singapore the best place to invest for properties? When we talk about properties, we are referring to "residential properties". Each asset class is different. For example, office space is dependent on new business creation minus destruction, plus other factors such as up coming supply, structural changes such as co-working spaces. Retail is adversely affected by e-commerce, but also dependent on surrounding population growth and wages to support a mall's business. Industrial is dependent on demand from new business creation, economic growth, but structurally challenged by co-working spaces and better located office spaces. 

The best way to be financially free in a safe and fast way is to find countries where you can do the "BRRR" strategy. What is BRRR? It's "Buy, Refurbish, Rent, Refinance". You cannot achieve financial freedom from zero to S$5 million in 10 years by buying two residential properties and hope they double or triple in value in 10 years. The best chance of doing that is by collective sale in Singapore. However, this requires deep knowledge in property development to calculate construction costs, learning the lease top up table, development charges etc. Moreover, it relies on the element of luck as some projects that are old but have owners that are wealthy will resist collective sale. 

Why is it NOT possible to exercise BRRR from residential properties? Take for example the table below. Most Singaporeans can only afford one or at most two properties. For the second property under personal name, the Additional Buyer's Stamp Duty and deposit rises astronomically. 

https://www.dbs.com.sg/personal/articles/nav/my-home/considerations-before-buying-a-second-property

The greater the cash outlay, the lower the internal rate of return. As a result, most Singaporeans own one and their spouse owns another. If you buy two properties at $500k, after 10 years, you may end up with $860k x 2 = $1.72m of assets.



With the BRRR strategy, you can extract equity once there is capital appreciation, tax free. On year three, you buy the second property with some savings and equity released. In year six, you buy the third and fourth using the equity released from the first two, plus some savings. By year nine, you can own eight. At the end of year 10, you can have $8.6m of assets. 

The BRRR strategy only works when you have capital gains of 5% and above, and rental yield that is at least 3 percentage points higher than the mortgage interest. Any of these two criteria is not met, the recycling of capital fails. In Singapore, if you buy properties with over 65% LTV, chances are you will end up with negative cashflow which is unsustainable.

The next part, I shall dwell on which countries enable you to practice the BRRR strategy. 

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