PDA

View Full Version : sgbluechip's D19 purchase



mcmlxxvi
25-04-13, 11:06
Good learning for all.

http://sgbluechip.blogspot.sg/2013/03/3-bedroom-or-3-bedroom-dual-key.html

His posts (from new to old):

3 Bedroom or 3 Bedroom Dual Key

The dual key unit costs $975,000, which is about $250,000 more than the unit I bought. I was struggling whether to spend that $250,000 for the unit for investment. However I decided against it, not due to affordability issue, but rather value principles.The dual key unit costs $250k more compared to 3BR, $300,000 more than a 2BR.*Hence*buyers are*paying*more than*1,000 psf for the 250 square feet studio. This costs the same as buying private condominium studios.If Topiary appreciates, likely because of good rental demand, then dual keys unit makes perfect sense. But*we won't know*till 3 years later. Another alternative is to buy 3BR, if rental is good, the 3BR will appreciate to possibly about 1M. By then*I can gear up back to 80%, get the additional cash out to buy another studio for rental investment. Meanwhile I can*save the down payment, stamp duties, interest costs*for shares investments.Hypothetically, for my case, I bought at ~700k, loan ~560k. If valuation goes up to 1M, I will gear up back to 80%, which is 800k, less outstanding loan about 500k then and CPF used which is 15% or 105k + accrued interest + instalments to date using CPF. I still may have about 200k cash left over for a down payment for a*full sized studio.If rental is lousy, it*means in the first place*the dual key*unit was a poor bet.Dual key makes sense only when the property is completed and rental income is evident, especially if its near mrt. For*my case, it may be a tad risky after some consideration. Who is the target segment of tenants? Professionals earning $5,000 a month? Are they willing to cramp in a hotel sized property? If rental is at most $1,500 monthly, it will take about 14 years to break even, the $250,000 studio unit. If I were to compare it to a 2 BR, the breakeven period will be even longer at 17 years.*This is because*the composition of the*dual key*unit is a*2 Bedroom + 1 Studio. Hence I will be staying in the 2 BR unit and renting out the studio. I have not even taken account into agent fees, utility bills of tenants (since I am effectively renting a room out), property taxes, wear and tear repair etc.Topiary 3BR single key is a safer bet at the price*buyers are paying and also ensures a more comfortable monthly repayment schedule. It is the Chinese saying of being defensive if you take a step back but allows you to be offensive if market is in your favour.Of course*my quality of life, from a space perspective*will be better since my living space is bigger with single key 3BR than a dual key unit!Posted by*Sgbluechip*at*5:41 PM*No comments:Labels:*property

Finally bought a property! (Part 3)

Then, we chanced upon Topiary, which looked very far off on the Singapore Map near Sengkang, along Fernvale and Yio Chu Kang Road.*

It is not within 5 minutes to walk to Fernvale LRT. It is a good 15 minutes. We walked over to Greenwich, which has a cold storage and a number of nice restaurants. The nearest MRT was Buangkok 3km away, followed by Yio Chu Kang, a 10 minutes drive away.

Clearly, the location was not the best. However, we noticed that new condo developments just across the road were selling for at least $1100 PSF. Even older developments can be rent out at about $3,000 for 1000 square feet condominium. There were not many condominiums in that area, being a new estate, but at seletar area, there are many landed properties, similar to Kembangan, Siglap area.**The area gives me a nostalgic feel, with Holland Village as a similar feel (before MRT was up then). I am likely to drive and continue to drive hence dropping off my wife then at MRT station in the morning will alleviate her transport woes.

The pricing was reasonable. On average, they are selling for $730 PSF. The unit I am eyeing for, a 21st*level pool facing 3 Bedroom unit is selling for $716,000 for 915 square feet. This works out to be $783 PSF before grant. As our income is at $12,000, we are eligible for deferred $10,000 grant when my fiancée becomes citizen. This will further reduce our cost to $772 PSF.

Assuming ECs will trade at a 15% discount to nearby similar age properties, there is at least a $100 PSF upside for Topiary. This allows me to floor my downside risk of purchasing market at current levels. Assuming I am able to rent out my condo after 5 years at $2800/month, my gross yield will be 4.76% after grant, before interest costs.

My cash portfolio of stocks generates at least $20,000 per annum of dividends returns, which can comfortably cover the monthly installment of the purchase.

This allows me to continue my cash investments and not be afraid of losing my job. At most I become a tuition teacher, taxi driver or full time blogger; I will not lose the condo over my head. Both my wife and I can work in a $2,500 job and still afford the monthly installments without touching our retirement nest egg.

My CPF investments can continue as well as I am only utilizing $60,000 from my OA account for the down payment and stamp duty, the rest shared with my partner.

The calculations are as follows:

5% cash = $35,800

15% CPF = $107,400

3% Stamp Duty - $5400 = $16,000

Total = $159,200

Loan = $573,000

Monthly installment base on 2.5% = $2,270.

Risks:

We are actually buying at the peak of the property cycle. I must be prepared for a 20% downside for my property. Hence, I am likely to liquidate my property counters to avoid taking double layered risks.

My partner and I have about 3 years more before we move in. We need to ensure that we can wait till then and not break up before marriage or we will lose 20% of the property price.

There are at least 2 more sites reserved for ECs, thus limiting upside for Topiary. I do hope that developers bid higher prices for the land so as to translate to higher selling prices.

The next post will be on why we chose a 3 Bedroom instead of a 3 Bedroom dual key and forgo the potential for rental when Topiary is just minutes away from the Seletar Aerospace hub.

Posted by*Sgbluechip*at*3:58 AM*4 comments:Labels:*property

Finally bought a property! (Part 2)

Upon deciding to purchase Riversail, I brought my family members, fiancée, colleagues to view my chosen unit. They all feel it is a good buy, given current market situation. My fiancée who started work 6 years ago*also said she could contribute some money for our future (be it for own stay or investment). All the better, then I will include her in the mortgagor as well. We did our sums and*financing was extremely comfortable; she has about $70,000 CPF and $20,000 cash to contribute, I can cover the rest plus monthly installments till property is completed and ready*to move in. It will be a tenancy in common 40%-60% arrangement.

We place a cheque with the agent and chose the highest floor unit.

However, if it is not meant to be yours, it will not be.

One morning I woke up and went to the IRAS website. I realized that because my fiancée is a PR, we are subjected to pay ABSD of 5%, even though I am a Singaporean. This pissed me off big time. I spent 2.5 years in NS and just because I am not married and want to get an unsubsidized private property, I have to pay 5% additional stamp duty? If we factor the usual 3%, we have to cough out almost $57,000 as taxes to the government! This is an excess of $39,000 in cash to the government. We were quite upset as this is no way to treat a SIngapore citizen, who refused to buy subsidise housing meant for more needy Singaporeans but will be treated as a PR instead. It is not about whether we can afford the condo unit, but rather whether we are willing to pay the tax that is a deadweight loss to us and society. It creates no value to anyone except the government.

We decide to retrieve back our cheque and look elsewhere for better valued properties.

We*rationalised that since government wants to tax us, we will go the conventional way to enjoy subsidies on housing by leveraging my Singaporean identity and pink IC.

We were not keen at BTO, since the locations are poor and construction takes forever to complete. 2017 for the earliest in non mature estate. I will be a old man by then.

We went to look at the Design Build Sell Scheme at Parkland Residences, which was marketing almost $700,000 for a 2nd*level 5 room flat. We decided that DBSS stands for Don’t Be So Silly (DBSS). It is simply not worth the premium when your competitors are just BTOs and by paying a little more, you will be able to get a similar location but smaller sized Executive Condominium (EC).

We went to look at Heron Bay, which left only west sun facing units and low levels dual key 3 bedroom units. The finishing was decent, but the leftover units did not excite us enough to even stay more than 10 minutes at the showflat.

We went over to 1 Canberra. The showflat was already there for about 1 year. Most of the units are west sun facing. If you choose units that are not facing the west, your balcony view will be blocked partially by the unit that covers your west sun. The layout of the condo development*was extremely packed, possibly constrained by the small and trapezium shaped land.

Prices are not cheap, selling for 750 PSF with eight courtyards beside selling for 810 PSF. It does not seem to be of value and capital appreciation will be capped by the full condo beside 1 Canberra. The nearest eatery is koufu a good 10 minutes walk away.**There was some defects in the showroom, which we were appalled, given that even a showroom can have defects, we have little confidence in the actual delivery of the unit. The developer is from China, which has little track record in Singapore.

We decided to focus on looking for EC, given the subsidies by government and cheaper PSF would allow us to purchase a unit comfortable and not rush into marriage till 2-3 years later.

The next post will talk about our purchase of EC.

Posted by*Sgbluechip*at*1:47 AM*2 comments:Labels:*property

Friday, March 8, 2013

Finally bought a property! (Part 1)

The next few posts will document my journey to search for a value property and the thinking process, dilemma I had during the hunt.

The first property showroom I went was Riversail near upper Serangoon Cresent. It was a private condominium developed*by Allgreen. The property was about 3KM from where I am staying. I like the property for several reasons.

- Near to my current home. I am familiar with surroundings such as Hougang Mall, Buangkok, Compass point, Nex, Kovan heartland mall.

- Next to park connector that allows cycling to punggol and kallang.

- Efficient internal layout, with very little wastage space.

- Separate living and dining area instead of having to split your living room to dining and living into half.

- Decent pricing of $850 PSF. A 2+ study 915 square feet unit will cost on average $778k. Assuming a modest rental of $2,800 a month, gross yield is 4.3%.Even if rental is $2,500 monthly, gross yield is 3.86% P.A.

- Downpayment of 5% cash will cost only $39,000, the rest 15% of $117k can be paid by CPF since I am a first timer. It is extremely affordable. Monthly installments will be about $2,150 @1.5% interest; $2,460 @ 2.5% interest and $2,800 @ 3.5% interest.

- The furnishings are excellent for a mass market condominium. It comes with marble flooring, marble wall (hotel standard) in the master bedroom toilet, build-in fridge, shoe rack (outside your unit), branded kitchen appliances.

- Choice units are available and not released yet. I can place a blank cheque and be almost assured to secure my high floor 2+study pool view unit.

- Free 2 years shutter bus service to Hougang MRT was available upon TOP, which looks attractive to my fiancée who doesn’t drive.

- Nearby Executive Condominiums (EC) like Heron Bay are selling on average $750 PSF. Just by paying about $100 PSF higher, or about 100k more, I will not be subjected to HDB complex binding rules and regulations. Even completed ECs (park green) are selling for $800 PSF when it is already 10 years old.

Cons of the project

- Too many units of 900+

- Many condominiums under construction, Austville was sold at about $700 PSF, boathouse residences at $900 PSF, Heron Bay at $750 PSF, BTOs and DBSS projects can be seen under construction. It will definitely affect the traffic, rental yield, living quality, resale value of Riversail, in time to come.

However, the main purpose of purchasing a property is*to ensure I have a roof over my head when my parents pass on and the current HDB is dividend among my 2 siblings. Hence, my consideration is for own stay rather than investment. Even if I were to sell off 1-2 years upon TOP, it will be of good value given that boathouse residences are selling for above $900 PSF, the ECs and HDB projects cannot be sold until 5 years after TOP.

*Despite benefits outweighing the cons, I did not purchase Riversail and purchased another one 3.5KM away.

*It will be explained in the next post.**

Posted by*Sgbluechip*at*1:43 PM*1 comment:Labels:*property

focus
25-04-13, 22:44
lol. This guy is also a bear since 2009 from his blog posts..
So he finally converted to a bull in 2013?

Pikachu1245
26-04-13, 01:01
Good learning for all.

http://sgbluechip.blogspot.sg/2013/03/3-bedroom-or-3-bedroom-dual-key.html

His posts (from new to old):

3 Bedroom or 3 Bedroom Dual Key

The dual key unit costs $975,000, which is about $250,000 more than the unit I bought. I was struggling whether to spend that $250,000 for the unit for investment. However I decided against it, not due to affordability issue, but rather value principles.The dual key unit costs $250k more compared to 3BR, $300,000 more than a 2BR.*Hence*buyers are*paying*more than*1,000 psf for the 250 square feet studio. This costs the same as buying private condominium studios.If Topiary appreciates, likely because of good rental demand, then dual keys unit makes perfect sense. But*we won't know*till 3 years later. Another alternative is to buy 3BR, if rental is good, the 3BR will appreciate to possibly about 1M. By then*I can gear up back to 80%, get the additional cash out to buy another studio for rental investment. Meanwhile I can*save the down payment, stamp duties, interest costs*for shares investments.Hypothetically, for my case, I bought at ~700k, loan ~560k. If valuation goes up to 1M, I will gear up back to 80%, which is 800k, less outstanding loan about 500k then and CPF used which is 15% or 105k + accrued interest + instalments to date using CPF. I still may have about 200k cash left over for a down payment for a*full sized studio.If rental is lousy, it*means in the first place*the dual key*unit was a poor bet.Dual key makes sense only when the property is completed and rental income is evident, especially if its near mrt. For*my case, it may be a tad risky after some consideration. Who is the target segment of tenants? Professionals earning $5,000 a month? Are they willing to cramp in a hotel sized property? If rental is at most $1,500 monthly, it will take about 14 years to break even, the $250,000 studio unit. If I were to compare it to a 2 BR, the breakeven period will be even longer at 17 years.*This is because*the composition of the*dual key*unit is a*2 Bedroom + 1 Studio. Hence I will be staying in the 2 BR unit and renting out the studio. I have not even taken account into agent fees, utility bills of tenants (since I am effectively renting a room out), property taxes, wear and tear repair etc.Topiary 3BR single key is a safer bet at the price*buyers are paying and also ensures a more comfortable monthly repayment schedule. It is the Chinese saying of being defensive if you take a step back but allows you to be offensive if market is in your favour.Of course*my quality of life, from a space perspective*will be better since my living space is bigger with single key 3BR than a dual key unit!Posted by*Sgbluechip*at*5:41 PM*No comments:Labels:*property

Finally bought a property! (Part 3)

Then, we chanced upon Topiary, which looked very far off on the Singapore Map near Sengkang, along Fernvale and Yio Chu Kang Road.*

It is not within 5 minutes to walk to Fernvale LRT. It is a good 15 minutes. We walked over to Greenwich, which has a cold storage and a number of nice restaurants. The nearest MRT was Buangkok 3km away, followed by Yio Chu Kang, a 10 minutes drive away.

Clearly, the location was not the best. However, we noticed that new condo developments just across the road were selling for at least $1100 PSF. Even older developments can be rent out at about $3,000 for 1000 square feet condominium. There were not many condominiums in that area, being a new estate, but at seletar area, there are many landed properties, similar to Kembangan, Siglap area.**The area gives me a nostalgic feel, with Holland Village as a similar feel (before MRT was up then). I am likely to drive and continue to drive hence dropping off my wife then at MRT station in the morning will alleviate her transport woes.

The pricing was reasonable. On average, they are selling for $730 PSF. The unit I am eyeing for, a 21st*level pool facing 3 Bedroom unit is selling for $716,000 for 915 square feet. This works out to be $783 PSF before grant. As our income is at $12,000, we are eligible for deferred $10,000 grant when my fiancée becomes citizen. This will further reduce our cost to $772 PSF.

Assuming ECs will trade at a 15% discount to nearby similar age properties, there is at least a $100 PSF upside for Topiary. This allows me to floor my downside risk of purchasing market at current levels. Assuming I am able to rent out my condo after 5 years at $2800/month, my gross yield will be 4.76% after grant, before interest costs.

My cash portfolio of stocks generates at least $20,000 per annum of dividends returns, which can comfortably cover the monthly installment of the purchase.

This allows me to continue my cash investments and not be afraid of losing my job. At most I become a tuition teacher, taxi driver or full time blogger; I will not lose the condo over my head. Both my wife and I can work in a $2,500 job and still afford the monthly installments without touching our retirement nest egg.

My CPF investments can continue as well as I am only utilizing $60,000 from my OA account for the down payment and stamp duty, the rest shared with my partner.

The calculations are as follows:

5% cash = $35,800

15% CPF = $107,400

3% Stamp Duty - $5400 = $16,000

Total = $159,200

Loan = $573,000

Monthly installment base on 2.5% = $2,270.

Risks:

We are actually buying at the peak of the property cycle. I must be prepared for a 20% downside for my property. Hence, I am likely to liquidate my property counters to avoid taking double layered risks.

My partner and I have about 3 years more before we move in. We need to ensure that we can wait till then and not break up before marriage or we will lose 20% of the property price.

There are at least 2 more sites reserved for ECs, thus limiting upside for Topiary. I do hope that developers bid higher prices for the land so as to translate to higher selling prices.

The next post will be on why we chose a 3 Bedroom instead of a 3 Bedroom dual key and forgo the potential for rental when Topiary is just minutes away from the Seletar Aerospace hub.

Posted by*Sgbluechip*at*3:58 AM*4 comments:Labels:*property

Finally bought a property! (Part 2)

Upon deciding to purchase Riversail, I brought my family members, fiancée, colleagues to view my chosen unit. They all feel it is a good buy, given current market situation. My fiancée who started work 6 years ago*also said she could contribute some money for our future (be it for own stay or investment). All the better, then I will include her in the mortgagor as well. We did our sums and*financing was extremely comfortable; she has about $70,000 CPF and $20,000 cash to contribute, I can cover the rest plus monthly installments till property is completed and ready*to move in. It will be a tenancy in common 40%-60% arrangement.

We place a cheque with the agent and chose the highest floor unit.

However, if it is not meant to be yours, it will not be.

One morning I woke up and went to the IRAS website. I realized that because my fiancée is a PR, we are subjected to pay ABSD of 5%, even though I am a Singaporean. This pissed me off big time. I spent 2.5 years in NS and just because I am not married and want to get an unsubsidized private property, I have to pay 5% additional stamp duty? If we factor the usual 3%, we have to cough out almost $57,000 as taxes to the government! This is an excess of $39,000 in cash to the government. We were quite upset as this is no way to treat a SIngapore citizen, who refused to buy subsidise housing meant for more needy Singaporeans but will be treated as a PR instead. It is not about whether we can afford the condo unit, but rather whether we are willing to pay the tax that is a deadweight loss to us and society. It creates no value to anyone except the government.

We decide to retrieve back our cheque and look elsewhere for better valued properties.

We*rationalised that since government wants to tax us, we will go the conventional way to enjoy subsidies on housing by leveraging my Singaporean identity and pink IC.

We were not keen at BTO, since the locations are poor and construction takes forever to complete. 2017 for the earliest in non mature estate. I will be a old man by then.

We went to look at the Design Build Sell Scheme at Parkland Residences, which was marketing almost $700,000 for a 2nd*level 5 room flat. We decided that DBSS stands for Don’t Be So Silly (DBSS). It is simply not worth the premium when your competitors are just BTOs and by paying a little more, you will be able to get a similar location but smaller sized Executive Condominium (EC).

We went to look at Heron Bay, which left only west sun facing units and low levels dual key 3 bedroom units. The finishing was decent, but the leftover units did not excite us enough to even stay more than 10 minutes at the showflat.

We went over to 1 Canberra. The showflat was already there for about 1 year. Most of the units are west sun facing. If you choose units that are not facing the west, your balcony view will be blocked partially by the unit that covers your west sun. The layout of the condo development*was extremely packed, possibly constrained by the small and trapezium shaped land.

Prices are not cheap, selling for 750 PSF with eight courtyards beside selling for 810 PSF. It does not seem to be of value and capital appreciation will be capped by the full condo beside 1 Canberra. The nearest eatery is koufu a good 10 minutes walk away.**There was some defects in the showroom, which we were appalled, given that even a showroom can have defects, we have little confidence in the actual delivery of the unit. The developer is from China, which has little track record in Singapore.

We decided to focus on looking for EC, given the subsidies by government and cheaper PSF would allow us to purchase a unit comfortable and not rush into marriage till 2-3 years later.

The next post will talk about our purchase of EC.

Posted by*Sgbluechip*at*1:47 AM*2 comments:Labels:*property

Friday, March 8, 2013

Finally bought a property! (Part 1)

The next few posts will document my journey to search for a value property and the thinking process, dilemma I had during the hunt.

The first property showroom I went was Riversail near upper Serangoon Cresent. It was a private condominium developed*by Allgreen. The property was about 3KM from where I am staying. I like the property for several reasons.

- Near to my current home. I am familiar with surroundings such as Hougang Mall, Buangkok, Compass point, Nex, Kovan heartland mall.

- Next to park connector that allows cycling to punggol and kallang.

- Efficient internal layout, with very little wastage space.

- Separate living and dining area instead of having to split your living room to dining and living into half.

- Decent pricing of $850 PSF. A 2+ study 915 square feet unit will cost on average $778k. Assuming a modest rental of $2,800 a month, gross yield is 4.3%.Even if rental is $2,500 monthly, gross yield is 3.86% P.A.

- Downpayment of 5% cash will cost only $39,000, the rest 15% of $117k can be paid by CPF since I am a first timer. It is extremely affordable. Monthly installments will be about $2,150 @1.5% interest; $2,460 @ 2.5% interest and $2,800 @ 3.5% interest.

- The furnishings are excellent for a mass market condominium. It comes with marble flooring, marble wall (hotel standard) in the master bedroom toilet, build-in fridge, shoe rack (outside your unit), branded kitchen appliances.

- Choice units are available and not released yet. I can place a blank cheque and be almost assured to secure my high floor 2+study pool view unit.

- Free 2 years shutter bus service to Hougang MRT was available upon TOP, which looks attractive to my fiancée who doesn’t drive.

- Nearby Executive Condominiums (EC) like Heron Bay are selling on average $750 PSF. Just by paying about $100 PSF higher, or about 100k more, I will not be subjected to HDB complex binding rules and regulations. Even completed ECs (park green) are selling for $800 PSF when it is already 10 years old.

Cons of the project

- Too many units of 900+

- Many condominiums under construction, Austville was sold at about $700 PSF, boathouse residences at $900 PSF, Heron Bay at $750 PSF, BTOs and DBSS projects can be seen under construction. It will definitely affect the traffic, rental yield, living quality, resale value of Riversail, in time to come.

However, the main purpose of purchasing a property is*to ensure I have a roof over my head when my parents pass on and the current HDB is dividend among my 2 siblings. Hence, my consideration is for own stay rather than investment. Even if I were to sell off 1-2 years upon TOP, it will be of good value given that boathouse residences are selling for above $900 PSF, the ECs and HDB projects cannot be sold until 5 years after TOP.

*Despite benefits outweighing the cons, I did not purchase Riversail and purchased another one 3.5KM away.

*It will be explained in the next post.**

Posted by*Sgbluechip*at*1:43 PM*1 comment:Labels:*property


Thanks for sharing. Indeed property hunting is a long and winding journey especially with the CMs, ABSD,SSD, QE etc....

invest.23
26-04-13, 13:12
Good learning for all.

http://sgbluechip.blogspot.sg/2013/03/3-bedroom-or-3-bedroom-dual-key.html

His posts (from new to old):

3 Bedroom or 3 Bedroom Dual Key

The dual key unit costs $975,000, which is about $250,000 more than the unit I bought. I was struggling whether to spend that $250,000 for the unit for investment. However I decided against it, not due to affordability issue, but rather value principles.The dual key unit costs $250k more compared to 3BR, $300,000 more than a 2BR.*Hence*buyers are*paying*more than*1,000 psf for the 250 square feet studio. This costs the same as buying private condominium studios.If Topiary appreciates, likely because of good rental demand, then dual keys unit makes perfect sense. But*we won't know*till 3 years later. Another alternative is to buy 3BR, if rental is good, the 3BR will appreciate to possibly about 1M. By then*I can gear up back to 80%, get the additional cash out to buy another studio for rental investment. Meanwhile I can*save the down payment, stamp duties, interest costs*for shares investments.Hypothetically, for my case, I bought at ~700k, loan ~560k. If valuation goes up to 1M, I will gear up back to 80%, which is 800k, less outstanding loan about 500k then and CPF used which is 15% or 105k + accrued interest + instalments to date using CPF. I still may have about 200k cash left over for a down payment for a*full sized studio.If rental is lousy, it*means in the first place*the dual key*unit was a poor bet.Dual key makes sense only when the property is completed and rental income is evident, especially if its near mrt. For*my case, it may be a tad risky after some consideration. Who is the target segment of tenants? Professionals earning $5,000 a month? Are they willing to cramp in a hotel sized property? If rental is at most $1,500 monthly, it will take about 14 years to break even, the $250,000 studio unit. If I were to compare it to a 2 BR, the breakeven period will be even longer at 17 years.*This is because*the composition of the*dual key*unit is a*2 Bedroom + 1 Studio. Hence I will be staying in the 2 BR unit and renting out the studio. I have not even taken account into agent fees, utility bills of tenants (since I am effectively renting a room out), property taxes, wear and tear repair etc.Topiary 3BR single key is a safer bet at the price*buyers are paying and also ensures a more comfortable monthly repayment schedule. It is the Chinese saying of being defensive if you take a step back but allows you to be offensive if market is in your favour.Of course*my quality of life, from a space perspective*will be better since my living space is bigger with single key 3BR than a dual key unit!Posted by*Sgbluechip*at*5:41 PM*No comments:Labels:*property

Finally bought a property! (Part 3)

Then, we chanced upon Topiary, which looked very far off on the Singapore Map near Sengkang, along Fernvale and Yio Chu Kang Road.*

It is not within 5 minutes to walk to Fernvale LRT. It is a good 15 minutes. We walked over to Greenwich, which has a cold storage and a number of nice restaurants. The nearest MRT was Buangkok 3km away, followed by Yio Chu Kang, a 10 minutes drive away.

Clearly, the location was not the best. However, we noticed that new condo developments just across the road were selling for at least $1100 PSF. Even older developments can be rent out at about $3,000 for 1000 square feet condominium. There were not many condominiums in that area, being a new estate, but at seletar area, there are many landed properties, similar to Kembangan, Siglap area.**The area gives me a nostalgic feel, with Holland Village as a similar feel (before MRT was up then). I am likely to drive and continue to drive hence dropping off my wife then at MRT station in the morning will alleviate her transport woes.

The pricing was reasonable. On average, they are selling for $730 PSF. The unit I am eyeing for, a 21st*level pool facing 3 Bedroom unit is selling for $716,000 for 915 square feet. This works out to be $783 PSF before grant. As our income is at $12,000, we are eligible for deferred $10,000 grant when my fiancée becomes citizen. This will further reduce our cost to $772 PSF.

Assuming ECs will trade at a 15% discount to nearby similar age properties, there is at least a $100 PSF upside for Topiary. This allows me to floor my downside risk of purchasing market at current levels. Assuming I am able to rent out my condo after 5 years at $2800/month, my gross yield will be 4.76% after grant, before interest costs.

My cash portfolio of stocks generates at least $20,000 per annum of dividends returns, which can comfortably cover the monthly installment of the purchase.

This allows me to continue my cash investments and not be afraid of losing my job. At most I become a tuition teacher, taxi driver or full time blogger; I will not lose the condo over my head. Both my wife and I can work in a $2,500 job and still afford the monthly installments without touching our retirement nest egg.

My CPF investments can continue as well as I am only utilizing $60,000 from my OA account for the down payment and stamp duty, the rest shared with my partner.

The calculations are as follows:

5% cash = $35,800

15% CPF = $107,400

3% Stamp Duty - $5400 = $16,000

Total = $159,200

Loan = $573,000

Monthly installment base on 2.5% = $2,270.

Risks:

We are actually buying at the peak of the property cycle. I must be prepared for a 20% downside for my property. Hence, I am likely to liquidate my property counters to avoid taking double layered risks.

My partner and I have about 3 years more before we move in. We need to ensure that we can wait till then and not break up before marriage or we will lose 20% of the property price.

There are at least 2 more sites reserved for ECs, thus limiting upside for Topiary. I do hope that developers bid higher prices for the land so as to translate to higher selling prices.

The next post will be on why we chose a 3 Bedroom instead of a 3 Bedroom dual key and forgo the potential for rental when Topiary is just minutes away from the Seletar Aerospace hub.

Posted by*Sgbluechip*at*3:58 AM*4 comments:Labels:*property

Finally bought a property! (Part 2)

Upon deciding to purchase Riversail, I brought my family members, fiancée, colleagues to view my chosen unit. They all feel it is a good buy, given current market situation. My fiancée who started work 6 years ago*also said she could contribute some money for our future (be it for own stay or investment). All the better, then I will include her in the mortgagor as well. We did our sums and*financing was extremely comfortable; she has about $70,000 CPF and $20,000 cash to contribute, I can cover the rest plus monthly installments till property is completed and ready*to move in. It will be a tenancy in common 40%-60% arrangement.

We place a cheque with the agent and chose the highest floor unit.

However, if it is not meant to be yours, it will not be.

One morning I woke up and went to the IRAS website. I realized that because my fiancée is a PR, we are subjected to pay ABSD of 5%, even though I am a Singaporean. This pissed me off big time. I spent 2.5 years in NS and just because I am not married and want to get an unsubsidized private property, I have to pay 5% additional stamp duty? If we factor the usual 3%, we have to cough out almost $57,000 as taxes to the government! This is an excess of $39,000 in cash to the government. We were quite upset as this is no way to treat a SIngapore citizen, who refused to buy subsidise housing meant for more needy Singaporeans but will be treated as a PR instead. It is not about whether we can afford the condo unit, but rather whether we are willing to pay the tax that is a deadweight loss to us and society. It creates no value to anyone except the government.

We decide to retrieve back our cheque and look elsewhere for better valued properties.

We*rationalised that since government wants to tax us, we will go the conventional way to enjoy subsidies on housing by leveraging my Singaporean identity and pink IC.

We were not keen at BTO, since the locations are poor and construction takes forever to complete. 2017 for the earliest in non mature estate. I will be a old man by then.

We went to look at the Design Build Sell Scheme at Parkland Residences, which was marketing almost $700,000 for a 2nd*level 5 room flat. We decided that DBSS stands for Don’t Be So Silly (DBSS). It is simply not worth the premium when your competitors are just BTOs and by paying a little more, you will be able to get a similar location but smaller sized Executive Condominium (EC).

We went to look at Heron Bay, which left only west sun facing units and low levels dual key 3 bedroom units. The finishing was decent, but the leftover units did not excite us enough to even stay more than 10 minutes at the showflat.

We went over to 1 Canberra. The showflat was already there for about 1 year. Most of the units are west sun facing. If you choose units that are not facing the west, your balcony view will be blocked partially by the unit that covers your west sun. The layout of the condo development*was extremely packed, possibly constrained by the small and trapezium shaped land.

Prices are not cheap, selling for 750 PSF with eight courtyards beside selling for 810 PSF. It does not seem to be of value and capital appreciation will be capped by the full condo beside 1 Canberra. The nearest eatery is koufu a good 10 minutes walk away.**There was some defects in the showroom, which we were appalled, given that even a showroom can have defects, we have little confidence in the actual delivery of the unit. The developer is from China, which has little track record in Singapore.

We decided to focus on looking for EC, given the subsidies by government and cheaper PSF would allow us to purchase a unit comfortable and not rush into marriage till 2-3 years later.

The next post will talk about our purchase of EC.

Posted by*Sgbluechip*at*1:47 AM*2 comments:Labels:*property

Friday, March 8, 2013

Finally bought a property! (Part 1)

The next few posts will document my journey to search for a value property and the thinking process, dilemma I had during the hunt.

The first property showroom I went was Riversail near upper Serangoon Cresent. It was a private condominium developed*by Allgreen. The property was about 3KM from where I am staying. I like the property for several reasons.

- Near to my current home. I am familiar with surroundings such as Hougang Mall, Buangkok, Compass point, Nex, Kovan heartland mall.

- Next to park connector that allows cycling to punggol and kallang.

- Efficient internal layout, with very little wastage space.

- Separate living and dining area instead of having to split your living room to dining and living into half.

- Decent pricing of $850 PSF. A 2+ study 915 square feet unit will cost on average $778k. Assuming a modest rental of $2,800 a month, gross yield is 4.3%.Even if rental is $2,500 monthly, gross yield is 3.86% P.A.

- Downpayment of 5% cash will cost only $39,000, the rest 15% of $117k can be paid by CPF since I am a first timer. It is extremely affordable. Monthly installments will be about $2,150 @1.5% interest; $2,460 @ 2.5% interest and $2,800 @ 3.5% interest.

- The furnishings are excellent for a mass market condominium. It comes with marble flooring, marble wall (hotel standard) in the master bedroom toilet, build-in fridge, shoe rack (outside your unit), branded kitchen appliances.

- Choice units are available and not released yet. I can place a blank cheque and be almost assured to secure my high floor 2+study pool view unit.

- Free 2 years shutter bus service to Hougang MRT was available upon TOP, which looks attractive to my fiancée who doesn’t drive.

- Nearby Executive Condominiums (EC) like Heron Bay are selling on average $750 PSF. Just by paying about $100 PSF higher, or about 100k more, I will not be subjected to HDB complex binding rules and regulations. Even completed ECs (park green) are selling for $800 PSF when it is already 10 years old.

Cons of the project

- Too many units of 900+

- Many condominiums under construction, Austville was sold at about $700 PSF, boathouse residences at $900 PSF, Heron Bay at $750 PSF, BTOs and DBSS projects can be seen under construction. It will definitely affect the traffic, rental yield, living quality, resale value of Riversail, in time to come.

However, the main purpose of purchasing a property is*to ensure I have a roof over my head when my parents pass on and the current HDB is dividend among my 2 siblings. Hence, my consideration is for own stay rather than investment. Even if I were to sell off 1-2 years upon TOP, it will be of good value given that boathouse residences are selling for above $900 PSF, the ECs and HDB projects cannot be sold until 5 years after TOP.

*Despite benefits outweighing the cons, I did not purchase Riversail and purchased another one 3.5KM away.

*It will be explained in the next post.**

Posted by*Sgbluechip*at*1:43 PM*1 comment:Labels:*property


Mcm, you do alot of researches. thumbs up!

I got one bedroom at casa cambio last year. Now i also headache, heard from friend that kitchen at main door is not a good fengshui. Follow by my husband saying in future difficult to sell as only 1 bedroom. haiz...

mcmlxxvi
26-04-13, 13:13
Mcm, you do alot of researches. thumbs up!

I got one bedroom at casa cambio last year. Now i also headache, heard from friend that kitchen at main door is not a good fengshui. Follow by my husband saying in future difficult to sell as only 1 bedroom. haiz...

No la. I am really lazy. Just that i am willing to share good tips i cum across with bros n sis here. Thats all.

Casa cambio is a very good buy. You have no need to worry really. Just enjoy it when it is ready.

NO_7
26-04-13, 13:26
Why did agent fail to review ABSD with the client?

invest.23
26-04-13, 14:12
No la. I am really lazy. Just that i am willing to share good tips i cum across with bros n sis here. Thats all.

Casa cambio is a very good buy. You have no need to worry really. Just enjoy it when it is ready.

Finger crossXX, hope so... developer mentioned TOP in 2015, but according to URA is TOP 2014. Wonder which is the correct info... :beats-me-man: