Sell 1 HDB Buy 2 Condo 3 Examples

Disclaimer: Everyone’s financial situation is different. Before deciding on which of the following options to take, please consult your property agent, financial advisor and mortgage broker. There are some assumptions made in this calculation. For example, husband and wife need to be both employed.

Sell the HDB flat and buy a 3 bedroom condominium in Mr Lee’s name and a 1 bedroom in Mrs Lee’s name
Let us consider the following scenario to facilitate the explanation.
The family in question is Mr and Mrs Lee and they have 2 children.
They live in a 4 room premium apartment in Sengkang and the flat is valued at about $550,000.
The flat has been fully paid and now they wish to upgrade and rebalance their property portfolio.
They used a combination of cash and CPF to fund their Sengkang flat.
They have a combined income of about $10,000 per month. Mr Lee earns $6,000 and Mrs Lee earns $4000.
This seems to be a typical household in Singapore.
Assumption 1: They are looking for a 2 bedroom condominium which will cost them $900,000.
Assumption 2: They have $200,000 in their CPF ordinary accounts. $100,000 in each of their accounts.
Assumption 3: They have $150,000 cash in their savings.
3 bedroom condominium is for the family’s use and the 1 bedroom condominium is for investment purpose.
Sale of 4 room flat
Sale price: $550,000
Total cash from sales proceeds = $250,000
CPF Refund for Mr Lee = $150,000
CPF Refund for Mrs Lee = $150,000
The couple has $200,000 in their CPF ordinary accounts. $100,000 in each of their accounts.
They have $150,000 cash in their savings.
Amount of CPF in Mr Lee’s CPF account: $250,000
Amount of CPF in Mrs Lee’s CPF account: $250,000
Amount of cash on hand: $400,000
Mr Lee will purchase a 3 bedroom condominium
3 bedroom condominium: $1,100,000
5% Cash: $55,000
15% CPF: $165,000
Stamp Duty: 3% – $5,400 = $27,600 (CPF)

Total CPF outlay = $192,600
Total Cash outlay = $55,000
Monthly instalment = $3,252 (Based on 2% interest and 30 year loan tenure)
Mr Lee still has $57,400 in his CPF account
Mrs Lee will purchase a 1 bedroom condominium for rental income
1 bedroom condominium at city fringe: $750,000
5% Cash: $37,500
15% CPF: $112,500
Stamp Duty: 3% – $5,400 = $17,100 (CPF)
Total CPF outlay = $129,600
Total Cash outlay = $37,500
Monthly instalment = $2,217 (Based on 2% interest and 30 year loan tenure)
Mrs Lee still has $120,400 in her CPF account
Advantages
i) The couple has $307,500 in emergency cash savings after selling their HDB and buying 2 condominiums. Mr Lee also has $57,400 in his CPF account balance and Mrs Lee has $120,000 in her CPF account balance.
ii) The 1 bedroom condominium can be rented for approximately $2,800 (Based on prevailing rents in Queenstown area). This will create a positive cash flow. Mrs Lee can finance for the 1 bedroom with her CPF yet receive her rental income in cash.
iii) They did not fork out any monies for additional buyers stamp duties.
iv) They ended up with 2 private properties which should provide better upside in value than their HDB in Sengkang.
In summary,
Start:
Mr and Mrs Lee had 1 HDB flat in Sengkang, $200,000 in CPF savings and $150,000 in cash.
End:
Mr and Mrs Lee have a 3 bedroom condominium for their own stay, 1 city fringe condominium for investment (the rental pays for the instalment), $177,400 in CPF savings and $307,500 in cash.
Disclaimer: Everyone’s financial situation is different. Before deciding on which of the following options to take, please consult your property agent, financial advisor and mortgage broker. There are some assumptions made in this calculation. For example, for Mr and Mrs Lee need to be both employed.

Other options:

Option B: Keep the HDB flat and buy a 2 bedroom condominium
Let us consider the following scenario to facilitate my explanation.
The family in question is Mr and Mrs Lee and they have 2 children.
They live in a 4 room premium apartment in Sengkang and the flat is valued at about $550,000.
The flat has been fully paid and now they wish to upgrade and rebalance their property portfolio.
They used a combination of cash and CPF to fund their Sengkang flat.
They have a combined income of about $10,000 per month. Mr Lee earns $6,000 and Mrs Lee earns $4000.
This seems to be a typical household in Singapore.
Assumption 1: They are looking for a 2 bedroom condominium which will cost them $900,000.
Assumption 2: They have $200,000 in their CPF ordinary accounts. $100,000 in each of their accounts.
Assumption 3: They have $150,000 cash in their savings.
2 bedroom condominium: $900,000
5% Cash: $45,000
15% CPF: $135,000
Stamp Duty: 3% – $5,400 = $21,600 (CPF)
Additional Buyers Stamp Duty: 7% of 2nd property = $63,000
Things to take note for their 2nd property.

• The prevailing minimum sum is $166,000. The couple must set aside half of this amount ($83,000) before using the rest towards the purchase of their second property.
• The CPF withdrawal limit for the 2nd property is 100% of valuation limit or purchase price, whichever is lower.

Total CPF required = $156,600.
However, they only can use $117,000 of their CPF monies as they need to set aside $83,000 of their CPF. This means that the balance of $39,600 will have to be paid in cash.
Total CPF outlay = $117,000
Total Cash outlay = $147,600
Monthly instalment = $2,661 (Based on 2% interest and 30 year loan tenure)
In summary,
Start:
Mr and Mrs Lee had 1 HDB flat in Sengkang, $200,000 in CPF savings and $150,000 in cash.
End:
Mr and Mrs Lee have a 2 bedroom condominium for their own stay, $83,000 in CPF savings and $2,400 in cash.

If the above option is not applicable, consider this…
Sell off their HDB and buy a condominium
Let us consider the following scenario to facilitate the explanation.
The family in question is Mr and Mrs Lee and they have 2 children.
They live in a 4 room premium apartment in Sengkang and the flat is valued at about $550,000.
The flat has been fully paid and now they wish to upgrade and rebalance their property portfolio.
They used a combination of cash and CPF to fund their Sengkang flat.
They have a combined income of about $10,000 per month. Mr Lee earns $6,000 and Mrs Lee earns $4000.
This seems to be a typical household in Singapore.
Assumption 1: They are looking for a 2 bedroom condominium which will cost them $900,000.
Assumption 2: They have $200,000 in their CPF ordinary accounts. $100,000 in each of their accounts.
Assumption 3: They have $150,000 cash in their savings.
This is quite straightforward. They hire an agent to try to achieve a good price and afterwards purchase a condominium within their budget. When they dispose of the Sengkang flat, they will receive their sales proceeds which can then be used to purchase the 2 bedroom condominium.
Sale price: $550,000
Total cash from sales proceeds = $250,000
CPF Refund for Mr Lee = $150,000
CPF Refund for Mrs Lee = $150,000

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Top 4 Reasons Why your HDB is not going to make you any money?

1. Mortgage Servicing Ratio

2. Permanent Residents (PR) who want to buy resale flats will have to wait three years after receiving their PR status

3. Removal of Cash over Valuation

4. Private property owners are not allowed to buy HDB

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Your HDB Flat Is Not Really An Investment

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Common mistakes that first-time investors should avoid

Singapore real estate market: Common mistakes that first-time investors should avoid
All copyrights belong to their respective owners. For educational purposes only

#Singapore New To Singapore Housing
Subramanian Veeramani Wednesday, September 6th 2017

Singapore has a booming real estate market, and is an excellent sector for NRIs to invest in. The growth of the city-state’s economy has gone hand-in-hand with the development of the property market, and there are many cases of windfalls for property investors.

Raj Kumar (left) and his son Kishin. Photo courtesy: sina.com
A case in point, the father-son duo of Raj Kumar and Kishin RK have combined assets of USD2.6 billion coming out top among the Indian-origin businessmen in Singapore. They are one of Singapore’s leading landlords with their Royal Holdings/RB Capital property empire.
However, on the other side of the coin, many potential investors often overlook the costs, resulting in grave investment mistakes. Here are some common mistakes that first-time investors need to look out for.
Treating property investment as a business
It is essential that you view property investment seriously, especially if you have to set aside a huge sum of money.
However, most often than not, many investors purchase a property and subsequently fail to allow it to achieve its maximum potential. It is vital to have a detailed business plan and build a good team to advise and guide you to make the prudent decisions.
Procrastination
There is a tendency for first-time investors to convince themselves that they are currently “waiting for the market to bottom out”.
However, there is a need to strike while the iron is hot — property prices are constantly fluctuating and prices may not get any cheaper as inflation rates go up. Procrastination can, therefore, be costly due to the erratic nature of property prices and construction costs.

Photo courtesy: Wikimedia
Buying cheap
Investing in property that is inexpensive can bring about great maintenance and repair costs. More prudence and research would be required when considering a cheap property — do a thorough check on the accessibility of the location or the condition of the unit (such as the kitchen stove or pipes).
Cheap properties do not necessarily make a good investment. Your investment should aim to offer you the maximum rental yield it can.
Fixation on rent
Chasing for a passive source of income is not the best business strategy, but it is one that is often adopted by many first-time property investors.
You will need to adopt a business strategy that aligns with your future goals. It also pays to formulate alternative plans in the unfortunate event you cannot get a tenant, especially in today’s slow market.

Photo courtesy: Wikimedia
Selling too early
The property market is often speculated to grow every 5 to 8 years. By selling too early, you will be missing out on the following cycle and property growth period.
Do consult your advisors on the best period to sell your property to gain maximum profits. A miscalculation will lead to great financial losses.
Thinking of the property as your own home
Good investment opportunities can be missed when something as simple as the interior design of the property does not cater to the needs of potential tenants.
Do not forget that property investment is a business and not a personal hobby. It is advisable to keep the rooms neutral and to ensure that whatever renovations you do appeals to the widest selection of tenants possible.
Letting fear paralyse you
Being risk averse may sound like a tactical strategy to adopt, especially for first-time investors. It is easy to be overwhelmed by all the information about property investment.
However, do not allow this to cloud your judgment lest you miss great investment opportunities.
New to Singapore Business real estate

Author
Subramanian Veeramani – Contributor https://www.linkedin.com/today/posts/AskRealtorMani
Mani Subramanian Veeramani is real estate consultant in Singapore and successful investor as well. He published 700+ articles including guides for property buyers, sellers & investors. Mani is passionate educate his 13,000+ LinkedIn followers giving tips about property deals and market updates. You can reach him on – help@askrealtor.sg

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Top 5 Tips For First-Time Home Buyers

All copyrights belong to their respective owners. For educational purposes only

The challenge of buying a home for the first time can seem so daunting that it’s tempting to either just go with the first house that falls in your price range or continue to rent. To help you demystify the process and get the most out of the purchase, we’ll examine what you’ll need to consider before you buy, what you can expect from the buying process itself, and some handy tips to make life easier after you purchase your first home.
Tutorial: Mortgage Basics
Considerations Before You Buy
The first thing you’ll need to determine is what your long-term goals are and then how home ownership fits in with those plans. It could be that you’re simply looking to transform all those “wasted” rent payments into mortgage payments that actually give you something tangible. Others see home ownership as a sign of their independence and enjoy the idea of being their own landlord. Narrowing down your big-picture homeownership goals will point you in the right direction. Here are five questions to ask yourself:

1. What type of home best suits your needs?You have several options when purchasing a residential property: a traditional single-family home, a townhouse, a condo, or a multi-family building with two to four units. Each option has its pros and cons, depending on your homeownership goals, so you need to decide which type of property will help you reach those goals. You can also save on the purchase price in any category by choosing a fixer-upper, although the amount of time, sweat equity and money involved to turn a fixer-upper into your dream home might be much more than you bargained for. (To examine your options, check out Does Condo Life Suit You? and Is A Housing Co-op Right For You?)
2. What specific features will your ideal home have?While it’s good to retain some flexibility in this list, you’re making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trust-worthy appliances.
3. How much mortgage do you qualify for?Before you start shopping, it’s important to get an idea of how much a lender will actually be willing to give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you’re only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you’ve been at your current job. (For an introduction to the terminology and structure of a mortgage, read our tutorial Mortgage Basics.)
4. How much home can you actually afford?On the other hand, sometimes a bank will give you a loan for more house than you really want to pay for. Just like with the purchase of a new car, you’ll want to look at the house’s total cost, not just the monthly payment. Of course, looking at the monthly payment is also important, along with how much down payment you can afford, how high the property taxes are in your chosen neighborhood, how much insurance will cost, how much you anticipate spending to maintain or improve the house, and how much your closing costs will be. (For help deciding what mortgage type is best for you, read Shopping For A Mortgage and Make A Risk-Based Mortgage Decision.)
5. Who will help you find a home and guide you through the purchase?A real estate agent will help you locate homes that meet your needs and are in your price range, then meet with you to view those homes. Once you’ve chosen a home to buy, these professionals can assist you in negotiating the entire purchase process, including making an offer, getting a loan, and completing paperwork. A good real estate agent’s expertise can protect you from any pitfalls you might encounter during the process. (Keep reading about this in Finding A Listing Agent and The Benefits Of Using A Real Estate Attorney.)

The Buying Process
Now that you’ve decided to take the plunge, let’s explore what you can expect from the home buying process itself. This is a chaotic time with offers and counter-offers flying furiously, but if you are prepared for the hassle (and the paperwork), you can get through the process with your sanity more-or-less intact. Here is the basic progression you can expect:
1) Find a home.
Make sure to take advantage of all the available options for finding homes on the market, including using your real estate agent, searching for listings online and driving around the neighborhoods that interest you in search of for-sale signs. Also put some feelers out there with your friends, family and business contacts. You never know where a good reference or lead on a home might come from.
2) Consider your financing options and secure financing.
First-time homebuyers have a wide variety of options to help them get into a home, including federally-backed loans and loans for homebuyers who don’t have the standard 20% minimum down payment. Your state may also have its own programs for first-time homebuyers. Your mortgage interest rate will also have a major impact on the total price you pay for your home, so shop around. It will really pay off.
3) Make an offer.
Your real estate agent will help you decide how much money you want to offer for the house along with any conditions you want to ask for, like having the buyer pay for your closing costs. Your agent will then present the offer to the seller’s agent; the seller will either accept your offer or issue a counter-offer. You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. If you reach an agreement, you’ll make a good-faith deposit and the process then transitions into escrow. Escrow is a short period of time (often about 30 days) where the seller takes the house off the market with the contractual expectation that you will buy the house – provided you don’t find any serious problems with it when you inspect it. (For more on the escrow process, read 10 Hurdles To Closing On A New Home.)
4) Obtain a home inspection.
Even if the home you plan to purchase appears to be flawless, there’s no substitute for having a trained professional inspect the property for the quality, safety and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, you’ll generally be able to rescind your offer and get your deposit back. Negotiating to have the seller make the repairs or discount the selling price are other options if you find yourself in this situation. (For tips on coming out ahead in any negotiation, read Getting What You Want.)
5) Close or move on.
If you’re able to work out a deal with the seller, or better yet, if the inspection didn’t reveal any significant problems, you should be ready to close. Closing basically involves signing a ton of paperwork in a very short time period, while praying that nothing falls through at the last minute.
Things you’ll be dealing with and paying for in the final stages of your purchase may include having the home appraised (mortgage companies require this to protect their interest in the house), doing a title search to make sure that no one other than the seller has a claim to the property, obtaining private mortgage insurance or a piggyback loan if your down payment is less than 20%, and completing mortgage paperwork.
Congratulations New Homeowner … Now What?
You’ve signed the papers, paid the movers and the new place is starting to feel like home. Game over right? Not quite. Let’s now examine some final tips to make life as a new homeowner more fun and secure.

1. Keep saving.With homeownership comes major unexpected expenses, like replacing the roof or getting a new water heater. Start an emergency fund for your home so that you won’t be caught off-guard when these costs inevitably arise. (To make saving for your emergency fund a breeze, read Build Yourself An Emergency Fund.)
2. Perform regular maintenance.With the large amount of money you’re putting into your home, you’ll want to make sure to take excellent care of it. Regular maintenance can decrease your repair costs by allowing problems to be fixed when they are small and manageable.
3. Ignore the housing market.It doesn’t matter what your home is worth at any given moment except the moment when you sell it. Being able to choose when you sell your home, rather than being forced to sell it due to job relocation or financial distress, will be the biggest determinant of whether you will see a solid profit from your investment.
4. Don’t rely on making a killing on your home to fund your retirement.Even though you own a home, you should still continue to save the maximum in your retirement savings accounts each and every year. Although it may seem hard to believe for anyone who has observed the fortunes some people made during the housing bubble, you won’t necessarily make a killing when you sell your house. If you want to look at your home as a source of wealth in retirement, consider that once you’ve paid off your mortgage, the money that you were spending on monthly payments can be used to fund some of your living and medical expenses in retirement. Read more: Top Tips For First-Time Home Buyers http://www.investopedia.com/articles/mortgages-real-estate/08/first-time-homebuyer-guide.asp#ixzz4rimSg0RT

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