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Investing in a Condo?

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Old 28-07-2020, 10:42 PM   #16
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i think should use XIRR method to calculate the real annualized yield
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Old 28-07-2020, 10:55 PM   #17
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Yes I only included the interest component. Because when you sell after ten years, the principal repaid is effectively a cash gain.
this type of calculation does not take into account the time value of money.
the equity is only unlocked after 10 years.
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Old 28-07-2020, 10:57 PM   #18
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i think should use XIRR method to calculate the real annualized yield
Yep. it would be a better measure to compare across income producing assets. in fact IRR enough liao, dont even need XIRR.
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Old 29-07-2020, 12:40 AM   #19
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ABSD wipes out wadever so called "investment"

dun waste time, it's 2020, not 2009
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Old 29-07-2020, 12:52 AM   #20
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Understand amortisation too... the initial years you are losing alot of money..

Many ppl thought they earned, “price appreciated x%” over last y years... and forgot about all the interests, transaction, taxes....
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Old 29-07-2020, 06:27 AM   #21
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Understand amortisation too... the initial years you are losing alot of money..

Many ppl thought they earned, “price appreciated x%” over last y years... and forgot about all the interests, transaction, taxes....
That's right. Not to forget all other misc expenses eg maintenance fee, repair, and any furniture invested.
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Old 29-07-2020, 07:59 AM   #22
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Factoring in the monthly principal repayments, a negative cashflow adds a lot more risk to this investment proposal.
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Old 29-07-2020, 08:07 AM   #23
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Not to forget all other misc expenses eg maintenance fee, repair, and any furniture invested.
And insurance, agent fees (or at least advertising costs), loss of rental income (vacancies between tenants, nonperforming tenants, suppressed rental rate periods), basic SP Services utility charges between tenants, periodic remodeling and refinishing (to keep the unit relevant in the rental market), and the value of your time being a landlord, as examples.
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Old 29-07-2020, 08:54 AM   #24
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Simple back of paper calculation for rental yield is;
Rentals over a year/ actual price you bought your condo.

So, 2% yield you are looking at $1,167 per month rental for a $700k property.

If you are buying a investment condo, your rental yield must be higher than 2.5%. I assume that you will using your CPF monies to fund it too. And if you left your CPF in the OA, it will be accumulating interest of 2.5%. If your rental yield is lower than 2.5%, better to keep the money in the OA account?

On the other hand, if you are using pure cash to fund the purchase completely without using CPF, by all means, please go ahead.
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Old 29-07-2020, 10:39 AM   #25
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Simple back of paper calculation for rental yield is;
Rentals over a year/ actual price you bought your condo.
Much, much too simple. Look to the recent posts for a long list of subtractions from gross rental income.

If you are buying a investment condo, your rental yield must be higher than 2.5%.
Even if you get the cost figures right, not necessarily. Hypothetically capital appreciation could compensate for a low yield during the ownership term. Neither capital appreciation nor even capital preservation are guaranteed or even necessarily likely, of course.
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Old 29-07-2020, 12:07 PM   #26
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If you are buying a investment condo, your rental yield must be higher than 2.5%. I assume that you will using your CPF monies to fund it too. And if you left your CPF in the OA, it will be accumulating interest of 2.5%. If your rental yield is lower than 2.5%, better to keep the money in the OA account?

On the other hand, if you are using pure cash to fund the purchase completely without using CPF, by all means, please go ahead.
you do not have to beat oa interest. All you need is to beat what the bank interest.
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Old 29-07-2020, 08:11 PM   #27
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Understand amortisation too... the initial years you are losing alot of money..

Many ppl thought they earned, “price appreciated x%” over last y years... and forgot about all the interests, transaction, taxes....
If want to buy investment condo should not buy new one, it seem that the first few years of ownership will suffer more significant drop in value.
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Old 29-07-2020, 08:12 PM   #28
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ABSD wipes out wadever so called "investment"

dun waste time, it's 2020, not 2009
TS never say he got existing property, maybe this is his first property, no need ABSD.
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Old 29-07-2020, 09:59 PM   #29
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You don't know what is called leverage?
Without leverage, say you are looking at 2.5% pa yield.
Then, with 80% LTV leverage, you will be looking at ~2*4 = 10% pa yield!

Simple back of paper calculation for rental yield is;
Rentals over a year/ actual price you bought your condo.

So, 2% yield you are looking at $1,167 per month rental for a $700k property.

If you are buying a investment condo, your rental yield must be higher than 2.5%. I assume that you will using your CPF monies to fund it too. And if you left your CPF in the OA, it will be accumulating interest of 2.5%. If your rental yield is lower than 2.5%, better to keep the money in the OA account?

On the other hand, if you are using pure cash to fund the purchase completely without using CPF, by all means, please go ahead.

Last edited by chrisloh65; 29-07-2020 at 10:02 PM..
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Old 29-07-2020, 10:06 PM   #30
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ABSD wipes out wadever so called "investment"

dun waste time, it's 2020, not 2009
Paid $100+k for my condo. After 2years capital gain more than $150k

My absd fully paid (though 1 is realized the other is unrealized)
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