This is a very good article, I copy that the conclusion to remind myself not to over leverage.
Conclusion
Ultimately, those who borrowed excessively to buy multiple properties in Singapore need to remember that leverage is a double-edged sword. In a rising market, the net wealth of multiple-property owners will grow significantly, as the wealth is compounded based on the number of properties they own.
On the other hand, in a declining market, the net wealth of this group of owners will be adversely affected due to the drop in value being correspondingly compounded. That is not to say that all multiple property owners are having sleepless nights, as there are definitely a lot of wealthy individuals who have the financial strength to weather the current market uncertainty. However, for those who have over-stretched themselves just so that they can own multiple properties, the day of reckoning could be closer than expected.
At this point, I must emphasize that I am not trying to be a “fear-monger”, and paint a dooms-day scenario of a property market collapse. The calculation is also not to be an exact science and there were numerous assumptions made. Nonetheless, taken in the right context, what I am trying to do is to put some perspective on how the weak property market can impact consumers – specifically those who over-invested. While I have sold most of my properties in Singapore and have urged investors to be prudent, unfortunately not all were able to monetise their assets in time.
Warren Buffett says it aptly with the following comment, “Only when the tide goes out do you discover who’s been swimming naked.” What this means is that those who have over committed in the Singapore property market should be mentally prepared to sit tight. Quite often, people forget that property markets are full of peaks and troughs. Unless there is any government intervention and some of the cooling measures are removed, there is unlikely to be an immediate end to the pain for those who own multiple properties.