Property Investing: doing the Math (Part 4)

The fact is most wealthy people in Singapore made their money from this market segment. (one of the super friends actually make a fortune out of it)

To invest in property, you must have a substantial amount of capital. At least 50% of the property price so that you are not highly leverage. Leverage is a double-edged sword and can kill. So if you have that kind of capital, it is not a bad idea to invest in property.

What if capital not enough? Then gang up for Tenancy-in-common.

This is where each co-owner holds a separate and definite share in the property.

This arrangement is more common where the owners are not related to each other, eg. friends buying a property together for investment.

There is no right of survivorship in a tenancy-in-common. In other words, unlike a joint-tenancy, the deceased's interest does not pass automatically to the remaining co-owners.

Upon the death of a tenant-in-common, the deceased's interest can be distributed in accordance with his will (if any) or under the provisions of the Intestate Succession Act

Choice of like minded partners is important in any TIC agreement. The best is that everybody is in it purely for the money. Set clear financial goals and unwind on cue. Make sure that none of the TIC members occupy the key asset for any purpose eg residential or commercial use. Rent out to only independent tenants. Most important. Don’t fall in love with your investment.

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What happens when a property is owned by two or more persons, and one person passes away? What’s the difference between “joint tenancy” and “tenancy-in-common”?

The law provides for two forms of ownership: “joint tenancy” and “tenancy-in-common”. The form of ownership is stated on the title document for the property.

Joint tenancy

This is where all the owners have an equal interest in the property regardless of the amount of money each co-owner had contributed towards the purchase of the property.
Married couples usually opt for joint tenancy when they buy a property. A joint tenancy overrides any will, and the survivor always gets the automatic right to assume ownership of the deceased’s share.

Thus, if a husband passes away first, then the wife as the survivor automatically takes over the husband’s share of the property. Even if the husband had made a will which stated how his share of the property should be distributed, his wife will automatically get to inherit his share.

Tenancy-in-common

This is where each co-owner holds a separate and definite share in the property.

This arrangement is more common where the owners are not related to each other, eg. friends buying a property together for investment.

There is no right of survivorship in a tenancy-in-common. In other words, unlike a joint-tenancy, the deceased's interest does not pass automatically to the remaining co-owners.

Upon the death of a tenant-in-common, the deceased's interest can be distributed in accordance with his will (if any) or under the provisions of the Intestate Succession Act.