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First time property investment - $4m - Advice needed

  1. #1

    Join Date
    May 2007
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    Question First time property investment - $4m - Advice needed

    Im gearing up to make a first time property purchase. I have saved nearly $1m HKD (life savings!) and want to invest in a buy to let apartment as an investment.

    Previously to HK, I was based in Singapore and London but am now living permanently here so ideally want to make a property investment locally.

    I was hoping someone could help me answer the following questions:

    1) Is now a safe bet to make a purchase?
    2) Will $4m get me something reasonable in SoHo that I can rent out easily?
    3) I have only been in HK for 5 months. Will that cause any issues in securing a mortgage?

    Thanks in advance.


  2. #2

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    Quote Originally Posted by travelfrog
    Im gearing up to make a first time property purchase. I have saved nearly $1m HKD (life savings!) and want to invest in a buy to let apartment as an investment.

    Previously to HK, I was based in Singapore and London but am now living permanently here so ideally want to make a property investment locally.

    I was hoping someone could help me answer the following questions:

    1) Is now a safe bet to make a purchase?
    2) Will $4m get me something reasonable in SoHo that I can rent out easily?
    3) I have only been in HK for 5 months. Will that cause any issues in securing a mortgage?

    Thanks in advance.
    hey there, I have just literally done what you want to do (i.e. I completed on Monday)!

    Maybe its best if you PM me (unless you think my info would also be useful to others, then I'll post on the forum).

  3. #3

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    Pin: Best to post on the forums... lots of folks here looking for good advice on this.


  4. #4

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    I'll take a stab at answering this since I've been active in the property market over the past year.

    **Disclaimer: Follow my advice at your own risk!!

    1) With falling interest rates and rising inflation, we're approaching negative interest territory which means that property in HK will be an excellent hedge against inflation. As long as interest rates keep falling, property prices are bound to rise. So yes, I still think we have some way to go before we peak.

    A lot of pundits are predicting that property prices will rise further - anywhere from 25% to 50% over the next 2 years.

    2) $4M should get you something decent. However, decent is relative but it should buy you anywhere from 400 to 700 square feet of space, depending on the age, quality, and exact location of the building as well as the level of the seller's motivation.

    How easily it can be rented out depends on the quality of the unit and how competitively you price it, in addition to what other units are available in your price range.

    There is a lot for demand for flats in the SoHo Mid-levels area so as long as your flat is priced well and in good condition, you should be able to find a renter quite quickly.

    3) To obtain a mortgage with a HK bank for regular salaried employees, you need to show at least 3 months of bank statements showing your income. For non-regular salaried employees (ie. commission/bonus heavy compensation), at least 6 months of bank statements are necessary.

    Keep in mind that banks will look at your level of income, in addition to how much assets you have, to make sure that you can service the debt properly.

    Quote Originally Posted by travelfrog
    Im gearing up to make a first time property purchase. I have saved nearly $1m HKD (life savings!) and want to invest in a buy to let apartment as an investment.

    Previously to HK, I was based in Singapore and London but am now living permanently here so ideally want to make a property investment locally.

    I was hoping someone could help me answer the following questions:

    1) Is now a safe bet to make a purchase?
    2) Will $4m get me something reasonable in SoHo that I can rent out easily?
    3) I have only been in HK for 5 months. Will that cause any issues in securing a mortgage?

    Thanks in advance.
    Last edited by lionrock88; 17-01-2008 at 12:47 PM.

  5. #5

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    Quote Originally Posted by lionrock88
    I'll take a stab at answering this since I've been active in the property market over the past year.

    **Disclaimer: Follow my advice at your own risk!!

    1) With falling interest rates and rising inflation, we're approaching negative interest territory which means that property in HK will be an excellent hedge against inflation. As long as interest rates keep falling, property prices are bound to rise. So yes, I still think we have some way to go before we peak.

    A lot of pundits are predicting that property prices will rise further - anywhere from 25% to 50% over the next 2 years.

    2) $4M should get you something decent. However, decent is relative but it should buy you anywhere from 400 to 700 square feet of space, depending on the age, quality, and exact location of the building as well as the level of the seller's motivation.

    How easily it can be rented out depends on the quality of the unit and how competitively you price it, in addition to what other units are available in your price range.

    There is a lot for demand for flats in the SoHo Mid-levels area so as long as your flat is priced well and in good condition, you should be able to find a renter quite quickly.

    3) To obtain a mortgage with a HK bank for regular salaried employees, you need to show at least 3 months of bank statements showing your income. For non-regular salaried employees (ie. commission/bonus heavy compensation), at least 6 months of bank statements are necessary.

    Keep in mind that banks will look at your level of income, in addition to how much assets you have, to make sure that you can service the debt properly.
    This is all exacly right. Nothing much to add, other than if you are buying for an investment, you should consider not only apartments that are vanant, but also ones that are presently tenanted. That way, you have income coming in as soon as you purchase.

    I would also add, try to buy quite soon. If you take you time, you will look back in 3 months or whatever, and wish you had gotten in then. I have seen cycles like this before, and that is what happens to people to procrastinate. Also, 4 mil may seem like a lot (and its scary doing that first buy) but in a few years time, you will look back and the investment you made will seem "cheap" based on the current value.

    Good luck!

  6. #6
    bdw
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    Quote Originally Posted by randy1
    I would also add, try to buy quite soon.
    You are telling them to buy soon, but you are 3 years late in giving them the advice. You are replying to a 2008 post

  7. #7

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    Quote Originally Posted by randy1
    I would also add, try to buy quite soon. If you take you time, you will look back in 3 months or whatever, and wish you had gotten in then. I have seen cycles like this before, and that is what happens to people to procrastinate. Also, 4 mil may seem like a lot (and its scary doing that first buy) but in a few years time, you will look back and the investment you made will seem "cheap" based on the current value.
    You are assuming price rises continue whereas the reality is they may not. The pathetic rental yield you can achieve currently might look even worse if your accommodation starts to fall in value. The smart money has already been made, anyone ploughing in now is risking having their faces ripped off in any downturn.

  8. #8

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    But by now we have all figured out that randy1 is infact a real estate agent so he's just spamming every thread encouraging people to buy ...


  9. #9

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    Quote Originally Posted by MovingIn07
    But by now we have all figured out that randy1 is infact a real estate agent so he's just spamming every thread encouraging people to buy ...
    MovingI - Your comment about me being an agent is about as stupid as me suggesting that you might be a person who missed out on buying, and is jealous and wants the market to fall so he can buy, and that you are spamming every thread telling people not to buy.

    Ths forum is about having an open disucssion on issues of interest to ex-pats, property being one of them. Having a view on an investment does not make a person a spammer, nor does it make them a real estate agent.

    Negative and untrue comments like yours on the other hand might make people less keen on using a forum like this to discuss issues, which is a shame for people who want to have a genuine discussion.

    Perhaps if I was a property developer, I might want to encourage people to buy. And if I was a property developer, I doubt I would he here typing messages for a few people to read.

    As for agents, they make money on transaction volume, and thus they could not care less whether prices are falling or rising. All they want is transactions, which they get regardless of whether the market is rising or falling. (And for the record, I am of course not a a property agent!)

    If you are upset at HK prices, or not having invested, that's OK. But don't take it out on those who have invested, or who express positive views on the market.

  10. #10

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    Quote Originally Posted by bdw
    You are telling them to buy soon, but you are 3 years late in giving them the advice. You are replying to a 2008 post
    Yeah - I missed that. The advice though remains vaild, and the original answerer to the poster in 2008 of course has been proven entirely correct. If the original poster followed this advice he is likely to have made a significant amount of money!

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