I had a chat with one rich friend of mine recently. Her family run businesses and properties are part of their small investment. The conversation flip my mind and made me realised that instead of aiming for 2nd residential property, I could also consider 1st commercial property.
She introduced me the idea of commercial property after I shared that it is unlikely that low/middle income people like me will be able to pay the downpayment of 40% for a 2nd residential property if I did not fully paid up my first HDB loan for my first flat.
I did a search online and discover that at current prices, a typical 220sqft/21sqm shophouse/shop cost around 600k to 700k (around $2700psf). For the loan, one typically needs to pay 20% downpayment with loan period of 15-25 years (Financing margin of up to 80% of the purchase or valuation price, whichever is lower). Thus 20%*650k = 130k upfront payment is needed. This is actually much more affordable than 40% downpayment for a residential property which may cost around 200-300k for a studio condo. Rental income for this kind of commercial propery could hit around $3-4k per month and hopefully this should be able to cover the monthly installment amount and provide some minimum cashflow.
It is always good to know more and learn more and not restrict our knowledge to what one already know. Guess now I have another area to explore and learn more.
Any expert has anything to share on commerical property? Please correct me if you feel that any of my calculations or research or assumptions are wrong above.
Thanks in advance!
(Disclaimer: Personally, I think current price is too ex but I am noob in property investment. Thus, don't trust me.)
