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Investing in a Condo?

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Old 29-07-2020, 10:07 PM   #31
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ABSD wipes out wadever so called "investment"

dun waste time, it's 2020, not 2009
At least absd is refundable....

But yea need to return cpf and other invisible costs.
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Old 29-07-2020, 10:08 PM   #32
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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.
I think have to look at it holistically. Rental yield plus capital appreciation must be higher than 2.5%

To be honest, buying a ppty in singapore is kind of the cheapest leverage one can find

Interest rate sub 2%.

Of course ur condo must be superb location with high earnings potential

Last edited by pcmdan; 29-07-2020 at 10:11 PM..
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Old 29-07-2020, 10:09 PM   #33
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Anyone works out the sum before? I think condo investing should be much more complicated than normal stocks/bonds investing

I am looking at a 700k condo which can yield 2% rental. If I were to pay half in cash, the mortgage seems to be $1500 per month and I can cover by renting out the condo

Say if the condo price raise 4% per year and 10 years later, it be worth about 1mil. Remember i only took out 350k of my capital and the return is 300k

(650k/350)^(1/10)=6.3%.

Thoughts?
go to excel, use the formula xirr

Better way to show which is higher
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Old 29-07-2020, 10:32 PM   #34
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At least absd is refundable....
What do you mean?
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Old 29-07-2020, 10:42 PM   #35
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To be honest, buying a ppty in singapore is kind of the cheapest leverage one can find
Interest rate sub 2%.
No, not actually. At this instant, as I write this, if you borrow at least S$150,000 from Interactive Brokers (a lower threshold than most mortgage lenders have) youíll pay only 1.373% interest. And thatís with zero fees ó no valuation, legal, stamp duties, or other fees. Itís a mouse click or finger tap away. Yes, thatís Singapore dollars, for margin to take positions in Singapore dollar denominated securities. And at S$1.5 million or more the interest rate falls to 0.873%. Pretty incredible, isnít it?

Thatís not necessarily a recommendation; itís just a factual observation.
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Old 29-07-2020, 10:47 PM   #36
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No, not actually. At this instant, as I write this, if you borrow at least S$150,000 from Interactive Brokers (a lower threshold than most mortgage lenders have) youíll pay only 1.373% interest. And thatís with zero fees ó no valuation, legal, stamp duties, or other fees. Itís a mouse click or finger tap away. Yes, thatís Singapore dollars, for margin to take positions in Singapore dollar denominated securities. And at S$1.5 million or more the interest rate falls to 0.873%. Pretty incredible, isnít it?
There are people who used IB margin loan to buy properties before:
1. Vietnam.
https://medium.com/@justusjp/buying-...y-c15babf1a9c9

2. London.
https://firevlondon.com/2015/12/14/h...use-in-london/

Anybody game to do it in SG?
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Old 29-07-2020, 11:01 PM   #37
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No, not actually. At this instant, as I write this, if you borrow at least S$150,000 from Interactive Brokers (a lower threshold than most mortgage lenders have) youíll pay only 1.373% interest. And thatís with zero fees ó no valuation, legal, stamp duties, or other fees. Itís a mouse click or finger tap away. Yes, thatís Singapore dollars, for margin to take positions in Singapore dollar denominated securities. And at S$1.5 million or more the interest rate falls to 0.873%. Pretty incredible, isnít it?

Thatís not necessarily a recommendation; itís just a factual observation.
Ooo did not know that. Thanks for sharing
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Old 29-07-2020, 11:03 PM   #38
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Any securities ?

Any repayment terms period etc ?

This is nice actually

No, not actually. At this instant, as I write this, if you borrow at least S$150,000 from Interactive Brokers (a lower threshold than most mortgage lenders have) youíll pay only 1.373% interest. And thatís with zero fees ó no valuation, legal, stamp duties, or other fees. Itís a mouse click or finger tap away. Yes, thatís Singapore dollars, for margin to take positions in Singapore dollar denominated securities. And at S$1.5 million or more the interest rate falls to 0.873%. Pretty incredible, isnít it?

Thatís not necessarily a recommendation; itís just a factual observation.
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Old 29-07-2020, 11:09 PM   #39
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Anybody game to do it in SG?
What you could do, eventually, is park your ES3 or G3B, MBH, VWRA, etc. ó and maybe some Singapore Government Securities too ó at IB, borrow on margin against that collateral, and use the Singapore dollar cash for some other purpose. Itís an ďinteresting idea.Ē

How about, for example, borrowing at 1.373% to repay CPF OA, plus accrued interest, if youíre at or near age 55? Or to jack up your CPF Retirement Account to the Enhanced Retirement Sum AND repay your OA while shielding both your SA and OA? Then, if IBís margin interest rate sours, repay from CPF (maybe with another SA shield)?
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Old 29-07-2020, 11:13 PM   #40
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Any securities ?
Pretty much, but IB will assess different securities differently in terms of collateral value, and IB reserves the right to adjust its assessments. For example, Singapore Government Securities ó T-bills, say ó will likely have the highest or among the highest collateral value.

Any repayment terms period etc ?
No repayment per se. You can pay interest only if you wish.

This is nice actually
At this instant. This is a variable rate, adjusted daily I believe.
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Old 29-07-2020, 11:16 PM   #41
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Another idea: borrow S$10,000 at 1.873% (IB’s current rate for margin below S$150,000), then deposit in Singlife to earn 2.5%. As long as that spread lasts, enjoy it.

Hmmmm.... There are some really weird possibilities here, aren’t there?
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Old 29-07-2020, 11:23 PM   #42
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Yea interesting. Has their interest rate been that low alway?

And it seems like not much criteria to qualify

Another idea: borrow S$10,000 at 1.873% (IBís current rate for margin below S$150,000), then deposit in Singlife to earn 2.5%. As long as that spread lasts, enjoy it.

Hmmmm.... There are some really weird possibilities here, arenít there?
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Old 29-07-2020, 11:35 PM   #43
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Yea interesting. Has their interest rate been that low alway?
Their margin interest rates are very reasonable relative to market interest rates, yes.

And it seems like not much criteria to qualify
Quite easy, but as Shiny Things points out they will be fierce in margin calls and enforcing other risk limits when they feel they need to be.

I should point out that the actual interest rate you get is a blended rate across the tiers, depending on how much you borrow. So the most you will pay is...oh, snap, the daily rate update just hit, so they’re now charging 1.716% instead of 1.873% on the first S$150,000. The next tier which runs up to S$1.5 million is 1.216% now. So if you borrow S$1 million you’ll pay 1.716% on the first $150,000 and 1.216% on the remaining S$850,000, which is ~1.29%. Like I said, these rates are adjusted daily, and interest is computed daily, too. But they are the annual rates, and they are quite low.

Last edited by BBCWatcher; 29-07-2020 at 11:38 PM..
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Old 29-07-2020, 11:52 PM   #44
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Another idea: borrow S$10,000 at 1.873% (IB’s current rate for margin below S$150,000), then deposit in Singlife to earn 2.5%. As long as that spread lasts, enjoy it.

Hmmmm.... There are some really weird possibilities here, aren’t there?
that called credit risk. What if XXX unable to repay you and you owe IB 150k. just saying just in case someone go try it
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Old 30-07-2020, 12:00 AM   #45
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that called credit risk. What if XXX unable to repay you and you owe IB 150k. just saying just in case someone go try it
Not really. That Singlife account is SDIC protected. The CPF Board is definitely going to pay your SA and OA from age 55+, assuming your RA is at least decently funded and the Government of Singapore exists. There’s no material risk in these examples.

There’s much more credit risk in taking a loan and buying real estate with it. But you could (it appears) take your real estate loan from Interactive Brokers at a current interest rate of about 1.3% or less. You’ll need enough, highly preferably more than enough, collateral parked at IB to then borrow. One crazy aspect is (unlike a mortgage in Singapore) there’s no requirement to repay principal on any particular schedule, or at all really. As long as your securities collateral is ample enough for IB, you can pay interest only if you wish. Pretty wild. Likewise, there’s no prepayment penalty.
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Last edited by BBCWatcher; 30-07-2020 at 12:09 AM..
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