Not too long ago, one property agent came to my house doorstep and offered to assess my family financial situation. I was thinking, what is my family financial situation got to do with a property agent? After I asked further, he explained that through his assessment, maybe we are "able" to afford condo instead of staying in HDB. He mentioned that he helped a lot of clients to realize their dream for owning multiple condominiums in Singapore. He only needed a little bit of our time to discuss and "help" us. And of course, he wouldn't share detail unless I've agree to arrange for meet up. Being skeptical, I rejected the "offer" in the end.
I am very curious on how one can sell HDB and buy TWO condo, without using much from saving as mentioned by property agent. So in order to satisfy my curiosity, I decided to search with Google and below is what I got:
After some reading, this can work with certain conditions and risks. Refer below calculator for a case study.
Based on the above calculation, below are the conditions:
i) You own a HDB (crap, else how to sell HDB?)
ii) Your family must consist of 2 persons over 21 years old, commonly one condo under husband name and one under wife name
iii) Your could receive cash from HDB sales proceed, else you would need to use a lot of your saving
iv) Your are able to take up loan amount for condo, or else you would have to pay more down payment with CPF or Cash.
v) You must continue to work so that you are able to pay up the installment with CPF and cash.
And below are the risks that you would have to take:
i) No tenant in which you would have no rental to cover partial portion of installment
ii) Difficult to pay up monthly installment due to loss of job or salary cut.
iii) Margin call from bank to top up the difference should property value drop below loan amount
For me, this would definitely be a NO, as costs like installment, maintenance fee, property tax are certain, but the rental is not. In simple word, money outflow IS 100%; money inflow IS NOT 100%. If you are interested, you could make a copy for above calculator through here. Note that this calculator is only for educational purpose and would not be comprehensive enough. Do look for professionals to assess your situation if you keen to this buy or sell any properties.
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| Hmmm..Maybe I am being too skeptical |
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| Top 5 results from Google |
Based on the above calculation, below are the conditions:
i) You own a HDB (crap, else how to sell HDB?)
ii) Your family must consist of 2 persons over 21 years old, commonly one condo under husband name and one under wife name
iii) Your could receive cash from HDB sales proceed, else you would need to use a lot of your saving
iv) Your are able to take up loan amount for condo, or else you would have to pay more down payment with CPF or Cash.
v) You must continue to work so that you are able to pay up the installment with CPF and cash.
And below are the risks that you would have to take:
i) No tenant in which you would have no rental to cover partial portion of installment
ii) Difficult to pay up monthly installment due to loss of job or salary cut.
iii) Margin call from bank to top up the difference should property value drop below loan amount
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| Do consider both risk and reward when making investment decision |
It is not wise to incur debt. Give up the idea of owning a private property if you are relying on cpf, rental of the unit to service your loan.
ReplyDeleteIn our society, we face pressure from our jobs, family and almost from all aspects of life and it will be prudent not to "invite" anymore troubles via unnecessary investment.
The good days of making money from property is clearly over.
You are right about not wise to incur unnecessary debt, private propety rental yield is simply too low in Singapore to cover those expenses and risks.
DeleteI wouldn't get myself into that, but I believe manys would still go ahead with private.
If you harbour the desire to make money from investments in property, I am afraid you may be in for a disaster.
ReplyDeleteTake heed that the future is uncertain. Enter the market when the downturn comes only when you can afford to buy WITHOUT any loan.
What I noticed is people around me still very keen for private propety. Haha but it would be a no to me.
DeleteEven if is in market down turn, I don think ordinary people including me could buy WITHOUT loan.
I wont even buy when I have cash ex except for dwelling. Cash can be invested else where like Reits and stocks. Property rental yield is horribly low. Dont forget the costs to own 2 properties + the opportunity cost.
ReplyDeleteHaha. We have the same thinking, I also won't sell hdb and buy 2 condo
Delete