Singapore Economy: What we want for Budget 2009

WATCH VIDEO ON SUPPLY AND DEMAND (VERY EASY TO UNDERSTAND)
http://www.propertybuyer.com.sg/viewnews.php?article=74

WHAT WE WANT FOR BUDGET 2009


LOOSEN CREDIT ON LENDING FOR SME and FOR PROPERTIES, ETC.

We have an opinion, CREDIT if already existed in the past, should not be

taken away at a time when people most need it. The government needs to

step in to legislate that banks must lend as per normal. (They can tighten

in the next boom cycle to rectify the problems)

DON'T REDUCE CORPORATE TAX

Only companies that make money pay tax. Don't reduce tax indiscriminately

as it reduces the government's total revenues. Companies in need of help

are not making money, so reducing tax is giving away money

indiscriminately.


RICH PEOPLE DON'T SPEND

It's okay to reduce the top bracket of Income tax, but give that as a tax

rebate on consumption. I.e. if they buy something. The rich do not need the

money as much as others. If you just cut their income taxes, they may not

spend more.


JOB CREDITS BOOST MORALE

Schemes such as Job credits though gives a boost to morale, it is not

money well spent. There could be some net good coming out of such "Job

Credits" Scheme, but it is NOT targeted and very expensive. For example,

the jobs credit scheme gives credit to companies that keeps their employees

for 3 months to lower their costs. But it is demand that has fallen through the

floor, between keeping an employee where there is NO demand and jobs

credit, most companies will choose to FIRE the employee. The savings is

obvious. In other words, it benefits those industries that are already

profitable and does not much to keeping employee's employability where

demand has fallen off.


GIVE DIRECT AID - LOAN

People that have fallen on hard times need a hand. Government should

structure something to give aid to these people so that they live in a dignified

way. This however should NOT be FREE money and a plan must be

made on how such people can pay it back or pay back in-kind.


CO-OPT Industries in Long term investments

Many downturns are cyclical. During a recession, things are much cheaper.

Many industries are faced with a crunch of credit. This is probably the best

time to consider and use money to co-opt or co-invest with the industry

in infrastructure investments or other long-term projects. This will keep our

core skills intact and people employed at a time when companies are starve

of cash. This is what will make the country strong, not indiscriminate tax

cuts.

CREATE A FUND TO SUPPORT THE SHARE MARKET

Just like Hong Kong did in the 1997 financial crisis, it put it's funds behind

Hong Kong's share market and stopped the fall. People needing money are

unwinding from the market. If the government further dithers, the market will

further gets decimated and more jobs may be lost. This is by no means

FREE-MONEY, markets do recover and when they do, the government

stands to make huge profits when the market recovers. These profits can

then go back into the coffers.


MORATORIUM ON BANK SEIZURE OF PROPERTIES

Create an emergency Law to stop the banks from foreclosing on properties.

This stops fire-sale from happening in an extremely soft market condition. As

the transaction volumes are very little, distressed assets cause the market to

panic further depressing prices of assets and putting more banks under the

danger of bankruptcy.

BUYING A PROPERTY IN GEYLANG

"Success is a thought process"

Recently in 2007, a friend of mine bought a property in Geylang. The property is in decent condition, it's Freehold and it is about 1000 square feet. With all the promises of KALLANG Expansion and being near to the city, etc. It seemed too good to be true at S$400,000. She was planning to lease it out for S$1500/- per month.

So here is the calculation: -

Rental revenue --- S$1500 x 12 months = S$18,000
Downpayment 20% --- S$80,000
Cost of Financing S$320,000 @ 2.5% --- S$8,000
So the Return of Investment --- (18,000 - 8,000) / 80,000 = 12.5%

So 12.5% gains is quite OKAY right?

So she went to the bank and tried to borrow money, the banks told her, sorry you have to pay 30% to 35% downpayment.

NOW, new calculation: -

Rental revenue --- S$1500 x 12 months = S$18,000

Down payment 30% of 400k --- S$120,000

Cost of Financing S$320,000 @ 2.5% = S$8,000

So the Return of Investment = (18,000 - 8,000) / 120,000 = 8.3%

Where are you going to get that extra S$40,000 all of a sudden.

People can avoid these pains if they get a PRE-APPROVED LOAN. Just provide the unit number, development name, the banks can usually reply to you in 1-2 days to give you a YES/NO answer. Do bear in mind that some banks may say NO and you have to go check with some other banks and wait some more days. So it is a tedious process. A Independent mortgage consultant such as

http://www.propertybuyer.com.sg
can quickly help you get a loan pre-approval (and subsequently get you the best fit loan). So you can put your heart at ease to buy the investment property/home of your dreams.

This is just a simple calculation which does not YET include the Rental property tax of 10% p/a. Conservancy charges, maintenance and depreciation of property as most tenants will want you to re-furbish it, and it can cost $$$. Don't forget stamp duty, lawyer's fees, fire insurance, surveying cost, etc.

DON'T RISK IT, get pre-approved loans first before signing the option to purchase.