Originally Posted by
teddybear
Think you should be able to do a calculation..... I am sure the couple can live like a king & queen by renting luxury condo apartment rather than being stuck in a LH property for own stay even if fully paid up (which will keep decreasing in value as it ages).........
E.g. they living in a 3BR LH property all their life (which they fully paid up), the property say now worth >$1.5M, but will keep decreasing in value as it ages, and no rental income (because own stay), so why keep? And they still have to pay for maintenance fees to MCST, pay property tax, pay to maintain and repair the property, etc, and all these are extra costs!
Instead, sell the property, invest in bonds with return of 4% p.a. (which is reasonable even at current low yield evironment) (consult cbsh if want to earn more), which means they will get a coupon of $60k p.a., and they can use these to pay for max $5k pm for a rental property without even touching their capital of $1.5M (vs their 99LH property depreciating in value if they hold too long)........
Now, a studio/1BR luxury rental condo apartment fully furnished even in CCR is only about $4k pm! And what's more, they don't even need to pay property tax, maintenance fund, and major repair and maintenance of the rental property (because these are due to wear and tear)! (All these additional costs will probably results in another $12k p.a. in costs! And furthermore they still can save another $12k p.a. as buffer for future rent increase! Hei, they can tolerate $2k pm rental increase (which they unlikely to max out in their life time!))
See, well worth it rather than keeping the LH property that will keep decreasing in value and still sink in more money for property tax, maintenance fund, repairs and maintenance etc!