Is it Still Possible to Make a Tidy Profit from Flipping Properties Now?

13 Sep 2022

We’re sure you’ve heard stories of older Singaporeans who are living very comfortably now, thanks to shrewd property flipping in their heydays. Now you’re wondering if you could emulate these uncles and aunties, and set yourself up for life as they did.

Well, you could, but with a lot more capital and certainly a lot more understanding of current property laws. Simply because: times have changed. Property prices aren’t what they were before, and the rules now are a whole lot stricter too.

Flipping properties just ain’t that easy anymore
Credit: www.tenor.com

How it was then

Back in those days (80s, 90s and even the 2000s), property flippers can make a tidy sum simply by buying and then selling their properties as soon as possible. How’s the idea of earning close to $300k simply by holding the property for all of 21 days?

We kid you not. Just look at the table below for some examples. These are 3-bedroom units in Spring Grove in District 10’s Grange Road. It is a 99-year leasehold project that was completed in 1996.

Sold On
Unit Size (sq ft)
Sale Price (psf)
Bought On
Purchase Price (psf)
Profit
Holding Period (days )
24 Oct 1995
1,389
$994
9 Oct 1995
$965
$40,000
15
23 Feb 1996
1,389
$1,188
24 Jan 1996
$1,041
$205,000
30
5 Jul 2007
1,389
$1,620
23 Jun 2007
$1,426
$270,000
12
15 Feb 2007
1,389
$1,210
25 Jan 2007
$1,001
$290,000
21

Life was simpler then. The government hadn’t introduced property-cooling measures, which only kicked in in the early 2010s.

Just imagine if these lucky investors took their profits to buy even more properties and flipped successfully. They could have joined the million-dollar club in no time without having to toil away in the workforce.

How it is now

Fast forward to today and how much can you profit from flipping? Let’s take a look.

The first table below shows a 3-bedder transaction in Urban Treasures, a freehold condo in Jalan Eunos (District 14). The development is as yet uncompleted. As you can see, the holding period is much longer and the profit much less. When you add in the various taxes (discussed below), do you think this seller really reaped a profit at all?

Sold On
Unit Size (sq ft)
Sale Price (psf)
Bought On
Purchase Price (psf)
Profit
Holding Period (days )
3 Sep 2022
1,012
$1,988
22 Jun 2022
$1,967
$20,800
73

Next is a 99-year leasehold property at Martin Place called Martin Modern (District 9). It was completed just last year but the countdown timer for its lease started in 2016. The top transaction is a 2-bedder while the two below are 3-bedders.

Just like the property in Urban Treasures, you will notice that the holding periods were much longer, and the profit not that much if you factor in the losses through stamp duties and various fees.

Sold On
Unit Size (sq ft)
Sale Price (psf)
Bought On
Purchase Price (psf)
Profit
Holding Period (days )
10 Sep 2018
850
$2,446
18 Aug 2017
$2,340
$90,320
388
1 Nov 2019
1,399
$2,430
18 Aug 2017
$2,138
$407,890
805
6 Jan 2021
1,399
$2,435
15 Oct 2017
$2,182
$355,055
1,179

Finally, let’s look at another development in Dundee Road (District 3) called Queens Peak. This 99-year leasehold (from 2015) property was completed in 2020. What conclusion can you draw from here? Do you think the owners flipped well?

Sold On
Unit Size (sq ft)
Sale Price (psf)
Bought On
Purchase Price (psf)
Profit
Holding Period (days )
13 Dec 2017
441 (1-bedder)
$1,858
5 Nov 2016
$1,770
$39,000
403
29 Jul 2020
936 sqft (3-bedder)
$1,965
26 May 2018
$1,857
$100,999
795
10 Mar 2021
1,507 sqft (4-bedder)
$1,739
19 Feb 2018
$1,634
$157,000
1,115

BSD and ABSD

As mentioned above, besides property prices, today’s property flippers need to take into account many other taxes and fees into their property transaction. Precisely for the purpose of discouraging property flipping, the government has introduced a slew of property cooling measures that didn’t exist back in those days.

Today, whether you’re a citizen or foreigner, you will be subject to the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) albeit at different rates.

BSD applies to all properties (residential, commercial, industrial) and everyone pays the same BSD in accordance to the table below:

Price of property
Buyer’s Stamp Duty (BSD)
On the first $180,000
1%
On the next $180,000
2%
Next $640,000
3%
Remaining amount
4%
Note: Based on figures given after Budget 2018

ABSD applies to only residential properties and it is applicable to everyone, but at different percentages. Here are the latest ABSD rates effective 16 December 2021:

Nationality
Order of property purchase
Additional Buyer’s Stamp Duty (ABSD)
Singaporean
1st
0%
Singaporean
2nd
17%
Singaporean
3rd and subsequent
25%
SPR
1st
5%
SPR
2nd
25%
SPR
3rd and subsequent
30%
Foreigner
All
30%

SPRs are subject to the above rates regardless if they own the properties by themselves or co-buy with others.

However if you’re a citizen and permanent resident of Iceland, Lichtenstein, Norway, Switzerland and the USA, you’re in luck. Thanks to certain free trade agreements signed by your governments and Singapore, you’re not considered a foreigner when it comes to buying properties here. For instance, the European Free Trade Association (EFTA) gives those from Europe similar property ownership privileges as Singaporeans.

Besides the BSD and ABSD, property buyers have to take heed of the following fees too:

  • Legal fees (from a few hundred up to a few thousand)
  • Real estate agent’s commission
  • Registration fees
  • Maintenance fees

While these fees were in place in the 80’s and 90’s, they’re certainly not in the same quantum as what you’ll be paying now. Let’s say you’re a foreigner eyeing a million-dollar condo. The sum that you pay in terms of taxes and fees alone would set you back at least an eye-watering $341,800! Maybe you’re already pretty turned off by the idea of flipping properties by now. But wait, here’s more bad news 😥

Mortgage duty and home loan

On top of BSD, ABSD and the rest of the fees, chances are you’ll be taking up a home loan to buy the property. So, don’t forget that there’s the Mortgage Duty of 0.2% to 0.4% (subject to a maximum duty of $500) payable on the loan amount too.

But the mortgage loan isn’t the clincher; it’s the home loan, considering today’s rates.

SSD

If you’re thinking of flipping your property – which means selling it off quickly -you’ll have to pay the Seller’s Stamp Duty (SSD) if you sell your property before the 3-year holding period. Technically, it won’t be considered as flipping if you hold the property for a good number of years before selling it.

SSD is effective to both citizens and foreigners for residential properties purchased on or after 11 March 2017 and here are the rates:

Years of owning the property
Seller’s stamp duty (SSD)
Up to 1 year
12%
Above 1 year and up to 2 years
8%
Above 2 years and up to 3 years
4%
Above 3 years
0

The above SSD rates apply to private properties such as condos and landed houses. If you own an HDB flat, your Minimum Occupation Period (MOP) is 5 years.

As much as those cooling measures have tamed a red-hot market, it may have blown off your enthusiasm to flip properties as well, eh?

So, what say you? Are you still gung-ho about jumping on that property-flipping bandwagon now that you know the score? We’ll leave you to make that decision.

In this article, we’ve given you the lowdown on what to expect if you want to flip properties now for profit. If you want to know more, schedule a visit with us or book a free consultation with our trusted and renowned representatives.

Lastly, don’t forget to like, subscribe and share our articles with your friends if you think our content is useful to you. And if you would like us to write a review for any property projects, have a blast in the comment section below.

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