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When should you start buying your first property?

Adulting may be difficult at times but the fun part is – you start to own your own assets, including property! When should you start looking into buying your first property? Perhaps it’s for your own living, or for investments? With some proper planning, you will be able to use your property investments to your advantage and earn from it.


Eligibility to buying your first property

Let’s start off with eligibility. One of your property choices is likely to be a HDB flat. One of the most important factors when considering a HDB flat is the eligibility criteria.

If you are part of a new Singapore Permanent Resident (SPR) household – with either partner under 3 years of being a SPR – and is keen to own a unit now, you will only be able to purchase a private property.

If you are a Singapore citizen and  thinking of purchasing as a sole owner, meaning you are the only person that will be purchasing the unit and you are under the age of 35 years old, generally you will not be able to purchase a HDB flat too.

Exceptions may occur if you are a single, unwed parent. In that situation, HDB will assess on a case to case basis if you are able to purchase a resale flat. In addition, the National Development Minister, Lawrence Wong, announced on 4 March 2020 that single unwed parents aged 21 and above will be allowed to buy new three-room flats in non-mature estates, on top of the existing two-room flexi flats in non-mature estates and resale flats.

So for single individual buyers under the age of 35, your only choice is the private property market.


Objective of the your property purchase

What is the main objective of buying your first property? This is an important point to consider when purchasing a property. Is the unit that you are currently purchasing for your own stay or for investment? There are often polar opposites consideration depending on your objective.

What is your expectations of the market price increase of the unit that you are looking at within the holding period? How much cash and CPF savings are you willing to pay for the capital and rental upside while you hold it? Will you be willing to hold past the expected holding period if the price have not gone up to your expectations?

When should you start buying your first property?_Home Quarters SG_KC Ng Keng Chong

For HDB flats, it is built with the intention for buyers to stay in it, thus, once you have purchased the unit, there is a Minimum Occupation Period (MOP) of 5 years. Even if the price hit a high, you will not be able to sell it within that period.

When should you start buying your first property?_Home Quarters SG_KC Ng Keng Chong

For private property, there is no minimum occupation period. However, there is a seller stamp duty period and right now in early 2020, it is a 3 years period – stepping down from 12% to 8% to 4% for every year held. 

So, it is important to know how long will you wish to hold onto this property as well. Do you hate moving and intend to build a family at this place? Or is this is a temporary housing solution and you will be looking to purchase a bigger unit in the near future if you plan for your family to become bigger with children.


Lifestyle needs

Next up, we can take a look at lifestyle needs. Perhaps you enjoy hosting friends and family over the weekends. You may prefer to have access to condominium facilities such as the pool, gym, BBQ pits and function room then.

You might also have a strict exercise regime, thus needing the pool and gym in close proximity. That will help reduce the travel time to and from your place to your workout location. Or you may want your children to learn how to swim in the comfort and safety of your own condominium pool with a private swim coach teaching them. If the above is important to you, then owning a private condominium might be a better option for you.


What is your next property decision?

Lastly, consider your future property decisions. If you choose to own a private property first, and wish to purchase a HDB build to order (BTO) flat thereafter, you have to wait 30 months after the completion of the sale before you are eligible to apply for a new HDB flat. If you are lucky enough to get a unit on the first try, you might only be able to collect the key to your new HDB home about 4 years later. During the interim period, you have to find alternative housing.

For resale HDB flats, you can go ahead even before selling the private property you own, but you will not get to enjoy the first timer CPF housing grant or take up a HDB loan within that 30 months period either. Also, you will have to sell off the private property within 6 months of owning the resale HDB unit.

For Singaporeans looking to own a HDB flat in your property portfolio, you have to start from a HDB flat first and after satisfying the MOP period, you can then proceed to own multiple other private residential properties. For SPR households, you have to sell off the HDB flat if you desire to own a private residential property after.


Contact US

At Home Quarters, we strongly suggest that you to seek the advice of a professional real estate salesperson to walk you through all these thought provoking questions before you jump head-first into choosing which to buy. Just like how a good doctor conduct fact finding thoroughly for their patients, a good real estate salesperson also do the same before recommending and shortlisting a specific type of property for you. 

Contact Home Quarters by going over to homequarters.com.sg or send us an email at homequarterssg@gmail.com or direct message us on Facebook or Instagram!

If you would like to schedule a virtual viewing when buying your first property, that is also possible – you can read all about what you need to look out for during a property virtual viewing here.

That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!

The 3 Best Timings To Sell Off An Investment Property!

So you bought an investment property years ago, and are now wondering when is the best time to sell? In this article, we share about what we feel are the 3 best timings to sell off an investment unit.


Stagnation of prices of the unit when you want to sell off an investment property

As investors, we know the importance of making your money work hard for you. For property, we look at both rental yields and capital appreciation potential in a real estate asset. Rental yields are easy to determine, based on the current market rental that is being transacted. For example, in a condominium unit, we can take reference to the recent transacted rental prices in the condominium.

The 3 Best Timings To Sell Off An Investment Property!_Home Quarters SG_KC Ng Keng Chong

That will determine the next rental price if the current tenant is looking to renew or terminate. From there, we are able to calculate the gross rental yield and also the nett rental yield after taking into account other costs relating to the investment unit such as mortgage rate, condo maintenance fee, property tax and agent service fees to name a few.

Capital appreciation potential is a little more complicated. Like the name suggests, it is potential and it could go higher in due time. But how long the potential can be realized is important here. Let me illustrate. If there are 2 properties that cost S$1 million each, and both have the potential to increase 50% to S$1.5 million. Investors will most likely be indifferent to choose one over another.

The 3 Best Timings To Sell Off An Investment Property!_Home Quarters SG_KC Ng Keng Chong

However, let’s say after 5 years, Property A appreciates by 25% and Property B appreciates by 30%. On hindsight, Property B is a better investment if the investor only wants to hold on to the unit for 5 years. However, if the investor has another 5 years to go before needing the money from the investment for other needs, then what could be done?

Assuming that both Property A and B’s prices are already stagnant. For one, the investor can keep the same property and hopefully at the end of another 5 years, it will realize its full potential and appreciate to S$1.5 million. He could sell off the unit and put it in another one that have a better growth potential. As an added bonus, with a larger capital after sale, there could be units with better opportunities available.


Restructuring the owners for tax planning purposes

If you have bought an investment unit with a partner or spouse, and currently have capital to invest into the real estate market, it might be helpful to look at how you plan the ownership of the current residential property portfolio.

In a typical scenario, a couple bought a 2 bedroom condominium unit for investment for S$700,000 and it has since appreciated to S$1 million as their second property purchase. Their first property purchase is a built-to-order HDB flat that they currently own, valued at around S$500,000. If together, they were to put the money into another 2-bedroom unit priced at S$1 million, they will have to pay 15% Additional Buyer Stamp Duty(ABSD).

What they can do is to sell off both the HDB flat and the 2 bedroom unit and start afresh. One of them can purchase and own a S$1.5 million 3 bedroom condominium unit. The other spouse can then purchase the 2 bedrooms unit for investment. Between the both of them, they are able to make profit as well.

Each of them owns 1 property, so there is no need to pay the ABSD. The same scenario works if the couple aims to sell the 2 bedroom unit to purchase a landed property priced above S$2 million. The ABSD would have been at 12%. That would be S$240,000 – almost half the price of their HDB flat! Of course, there are other considerations such as loan eligibility and whether they will want to live in a condominium. 


Better investment opportunities

Lastly, with limited capital, an investor may identify a better investment unit than the one they currently own. Thus, it might be worthwhile to take the profit that the current investment unit generated and put it in another unit with better growth potential.

We have seen cases where investors cut losses to do the same as well. The money returned together with rentals and savings accumulated over the years. In that way, they might be able to purchase a bigger investment unit or even multiple investment units diversified across Singapore.

For example, take the case that we have mentioned regarding the 2 bedroom unit which initially cost S$700,000 and have appreciated to S$1 million. Assuming they have S$400,000 mortgage loan left, the cash returned would be S$600,000. After an even split of S$300,000 each between the couple, each partner can put a down payment on a close to S$1 million property at a 75% loan from the bank.


Contact Us

If you have questions or if you are thinking about properly showcasing your house for sale, contact Home Quarters by going over to homequarters.com.sg or send us an email at homequarterssg@gmail.com or direct message us on Facebook or Instagram!

If you would like to schedule a virtual viewing, that is also possible – you can read all about what you need to look out for during a property virtual viewing here before COVID-19 end.

Reach out to us any way you like and we love to help you out and answer any questions you have to sell your house so that you can move on to the next big thing in life!

That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!