Context
We are answering these questions with investment as the paramount objective, i.e. specific personal needs in terms of space and location will not be considered here.
Short answers here only. Reach out to us if you’d like further elaboration on them.
1. Should I wait until 35 years old to buy a resale HDB?
If affordability for private properties is not an issue, then no.
There are other entry-level options like 1 bedroom units in resale condos and resale ECs that would have far better potential for capital appreciation.
At this age, what we need to do is to make our money work harder for us. Remember: this home is a stepping stone to your next (better) one.
2. Should I buy a 1 bedder in CCR/RCR or a 2 bedder in OCR?
Assuming the 2 options are both resale, the rule of thumb is that the bigger the better— for ease of exit and more sizeable quantum gains at a similar psf increase.
Of course, we need to ensure that the 2 bedroom unit fulfils the criteria set out in the HausLife Investment Framework before saying with certainty that it is better than a CCR/RCR 1 bedder of equivalent value.
3. Should I buy a 1 bedder new launch or a 2 bedder resale?
This is a big question which cannot be answered simplistically; the answer depends on the buyer’s time horizon and entry prices.
But long story short, a new launch property would typically give you faster gains i.e. you are more likely to be able to exit with gains with a shorter holding period.
4. What is the minimum budget to buy a private property?
Rule of thumb is to buy whatever you can afford currently. But if we were to put a number to it, you would likely need a $800,000 budget to get a decently sized 1 bedder.
This would be around $220,000 of cash and CPF (incl Buyers’ Stamp Duty and legal fees).
5. If the rental does not fully cover my mortgage, does it still make sense?
Mortgage payments are made up of principal and interest. Your true expense is only the interest portion, and principal payments are “savings” which will come back to you after you sell the property, in the form of your sales proceeds.
Even if your rental does not cover the full mortgage, your tenant is still paying your interest AND part of your principal payments.
6. When should I sell my property?
When your property makes money, or when it hits your target psf.
Holding period is very important.
You should not buy a property if you have a fixed deadline by which you need to sell it. This would be very risky because no one can predict the market.
