It is not hard to see advertisements on Facebook that shows how ordinary Singaporeans own multiple properties with no or little cash. While this may sound like a scam to you, it is not a scam but actually a form of creative financing.
The most common creative financing method is the idea of co-investing with other investors. Someone who intends to purchase a property may rope in other people – family, friends or other investors, to finance the deal together.
For example, a $500,000 property will incur a $100,000 down payment (20%) which equates $20,000 per investor if the deal is shared between 5 individuals. However, if you can attain a discount which lowers the purchase price to $400,000, the main investor could pass on the $80,000 down payment to the other 4 co-investors, where each individual pays $20,000 again. Otherwise, he can choose to share the burden with co-investors which helps to further lower the payment by each person.
Written by: Melvin Ho, CEO & Co-Founder for Bizsquare.
BizSquare is a one-stop business consultancy firm providing Loan Consultancy Services, Accounting and Corporate Secretarial Services, Branding and Marketing Consultancy, Strategy Management and Start-up Mentorship.