Property Investments

Route to passive income and equity building

With the recent roller coaster ride on the stock market, investing in real estate may seem like a steady investment. But is it? The property market has its own risks, just like any other investment. And the fact is not everyone is cut out to be landlord. However, those who brave these risks do find rental income a good way to obtain regular supplementary income. What’s more, there is also the possibility of capital gains when they sell the property.

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Nevertheless, real estate investment is not something to jump into on a whim. Personal finance columnist Liz Pulliam provides sound advice by saying, “You also should make sure you can save enough for retirement and other goals before investing in rental real estate. While rental income can supplement your retirement kitty, most people shouldn’t count on it to replace other investments or allow themselves to be entirely exposed to the whims of the local real estate market. Rents and property values can fall as well as rise, and those who are adequately diversified with investments in stocks, bonds and cash will be better able to endure the bad times as well as the good.”¹

“There is also the possibility of capital gains when they sell the property.”

Key facts you should know

about Property Investments

One of the key risks in property investment is simply not being able to find suitable tenants for your property. This may be due to the economy, location of your property, etc.

Once you have a tenant, you are also exposed to risks such as non-payment of rental by the tenant, destruction of your property, rise in property maintenance/management costs, theft, increase in your housing loan interest rate, etc. As far as possible do reference checks with previous landlords on your prospective tenant. If you find managing your property cumbersome, you may appoint an agent to handle it.

Your property may also decline in value, due to oversupply, economic downturn, etc.

You are required to declare under the section “Rent, Royalties and Premium” on your income tax form and pay taxes due on any income generated by your investment property. It is recommended that you familiarise yourself on expenses that can be deducted in calculating your tax liability.

Not all home loans are the same. Shop for financing that puts your needs first. Recent years have seen the emergence of flexible home loans. This simply means you can enjoy flexible payment options that allow you to deposit excess cash and withdraw excess payments anytime. HSBC Amanah HomeSmart-i is an example of a flexible, Shariah compliant home financing. You can enjoy a full stamp duty waiver when refinancing or 20% off stamp duty for new home financing.^

For more information on HSBC Amanah HomeSmart-i or our other mortgages: