Advice needed with buying property.

[CloudJames]

Hi everyone!

I am quite ignorant about housing and property in singapore. I hope the experienced people here can help me. Thank you!

First, a little bit about my finance situation. I am 25years old and self-employed. I am earning an average income of $3000 a month. I don't have any debts no cars. No intention of purchasing any car until I am a millionaire (haha). I have no credit cards, but I am planning to sign for one to build my credit report. Basically, I will be paying my SP/M1/S&CC bills with credit card then pay full at end of month to credit card. My total monthly expenses is about $2000. I live with my mother and brother at a HDB. 3-Room HDB paid in full under my mother's name. Basically my name has no debts, no assets, and no cpf (except medisave). I have about close to 4 months of income of savings (about 11k). I consider myself fairly disciplined with my finances. I don't spend on luxurious or branded stuff other than my gaming computer (2-3k every 3years? Approximately) and games.

Since I am 25, I am unable to purchase any house from HDB. I am planning to buy a condominium. The low end one. The purpose of purchasing a condo is to rent it out while living with my mum. I was looking at certain condo rental flyers and the lowest rent I saw was about $4000 a month. I am not sure is that the market rate. I want to rent the condo to help me earn rental and use the rental to pay the loan. This allows me to earn an extra $2k-$3k a month, if it is actually possible.

I have a couple of questions. I am trying to be strict to myself so do be harsh with criticism and feel free to burst my bubble if my thinking is to naive. I lack a lot of knowledge in housing and property. Any mathematical calculation to explain to me is also great. I appreciate the help and explanation. Thank you.

My goal: Purchase condo, loan from bank pay installments, rent out condo, use rental earnings to pay installments and remaining will be income.

Questions:
(1) What is the price of a low end condo on the market right now?
(2) How much rental is the minimum (or optimal) reasonable rental price for said low end condo?
(3) If my income is not high enough to pay for a condo, how much should I be working for?
(4) How much cash should I have to pay the inital payment?
(5) What are the processes I need to go through in purchasing and renting a condo?
(6) Do I need a gurantor for my condo loan?
(7) What if I have a good credit report but I do not have a gurantor, can I still loan?
(8) What other factors or risk should I consider?

Thank you taking the time in reading!

 

[kebinu]

1 bed room ready to move in will be from $600k.

Your surplus is not enough.

 

[littlegrasshopper]

People want to offload condo you want to jump in now. Investing in condo is sooo 3-5 years ago. What I know -

1. 7k income gets you around 1m loan.
2. Down 20% of the price either in cash and/or CPF.
3. It's not possible to earn 2-3k a month in this period. If you buy now, most probably rentals covers mortgage with maybe spare change of few hundred bucks. Probably will not be enough once interest rates go up.
4. Bear in mind next time you can't apply for HDB unless you dispose off the pte pty. 24 months waiting period b4 you can even apply for one. So unless you are very sure you won't be getting a HDB when you get married, then go for it.
5. Self-employed think need to look at 3 years of annual statement.

 

[CloudJames]

People want to offload condo you want to jump in now. Investing in condo is sooo 3-5 years ago. What I know -

1. 7k income gets you around 1m loan.
2. Down 20% of the price either in cash and/or CPF.
3. It's not possible to earn 2-3k a month in this period. If you buy now, most probably rentals covers mortgage with maybe spare change of few hundred bucks. Probably will not be enough once interest rates go up.
4. Bear in mind next time you can't apply for HDB unless you dispose off the pte pty. 24 months waiting period b4 you can even apply for one. So unless you are very sure you won't be getting a HDB when you get married, then go for it.
5. Self-employed think need to look at 3 years of annual statement.

Oh I see. Thank you very much for your information.

I don't intend this to be a short term goal. It will probably be somewhere in 4-5 years time depending on whether there is any improvement on my income.

So buying a condo and renting it is not a smart finance decision?

 

[Shiny Things]

People want to offload condo you want to jump in now. Investing in condo is sooo 3-5 years ago. What I know -

1. 7k income gets you around 1m loan.

Is this for real? Singaporean banks will lend you 12 times your annual income and 50% repayments-to-income ratio?

 

[arctician]

I m an expert in this n to save time I would say forgo this option for now. Your salary is too low n cash savings are not enough for downpayment. I would rather u keep cash to take care of ur family. Generally a $500k shoebox.lowest in market. . require $100k downpayment and a monthly repayment 2k which exceeded ur total debt servcing limit..bank will not loan even if u can afford downpayment. Consider this option when ur salary hits 5k

 

[salesgp]

1. marry a philippine or indian citizen, then she/he can bring you to their homeland to buy the property that suit your budget.

2. find a super rich girl then you don't need to think about buying property. They will take care of it.

 

[Dividends Warrior]

Do not assume you will definitely find a tenant.

Secondly, your tenant might turn out to be a troublesome one.

 

[NiteX2]

Self employed gets a haircut on the annual income as well. So your assessable income to the bank will be lower than what you have declared now. There's no chance of them loaning you the amount based on current income unless you have a lump sum to reduce the loan amount

 

[Bedokian]

Since you are self-employed, it is better to concentrate on your best investment - your business. From there, after you have accumulated enough savings for emergency funds, do some passive investments and build up a portfolio for an alternative income stream.

 

[Some-one]

Hi everyone!

I am quite ignorant about housing and property in singapore. I hope the experienced people here can help me. Thank you!

First, a little bit about my finance situation. I am 25years old and self-employed. I am earning an average income of $3000 a month. I don't have any debts no cars. No intention of purchasing any car until I am a millionaire (haha). I have no credit cards, but I am planning to sign for one to build my credit report. Basically, I will be paying my SP/M1/S&CC bills with credit card then pay full at end of month to credit card. My total monthly expenses is about $2000. I live with my mother and brother at a HDB. 3-Room HDB paid in full under my mother's name. Basically my name has no debts, no assets, and no cpf (except medisave). I have about close to 4 months of income of savings (about 11k). I consider myself fairly disciplined with my finances. I don't spend on luxurious or branded stuff other than my gaming computer (2-3k every 3years? Approximately) and games.

Since I am 25, I am unable to purchase any house from HDB. I am planning to buy a condominium. The low end one. The purpose of purchasing a condo is to rent it out while living with my mum. I was looking at certain condo rental flyers and the lowest rent I saw was about $4000 a month. I am not sure is that the market rate. I want to rent the condo to help me earn rental and use the rental to pay the loan. This allows me to earn an extra $2k-$3k a month, if it is actually possible.

I have a couple of questions. I am trying to be strict to myself so do be harsh with criticism and feel free to burst my bubble if my thinking is to naive. I lack a lot of knowledge in housing and property. Any mathematical calculation to explain to me is also great. I appreciate the help and explanation. Thank you.

My goal: Purchase condo, loan from bank pay installments, rent out condo, use rental earnings to pay installments and remaining will be income.

Questions:
(1) What is the price of a low end condo on the market right now?
(2) How much rental is the minimum (or optimal) reasonable rental price for said low end condo?
(3) If my income is not high enough to pay for a condo, how much should I be working for?
(4) How much cash should I have to pay the inital payment?
(5) What are the processes I need to go through in purchasing and renting a condo?
(6) Do I need a gurantor for my condo loan?
(7) What if I have a good credit report but I do not have a gurantor, can I still loan?
(8) What other factors or risk should I consider?

Thank you taking the time in reading!

SGD 3000 per month is hardly enough to buy any condo. You can get HDB flat though if you are above 35. With the TDSR cap, you can only pay your loans up to 60% of your income. That is like only up to $1800 per month. Your expense is $2000 per month and that left you with only $1000 per month to pay for the condo. Don't forget that you cannot rent out the condo until after it TOP and that is about 5 years later. In the meantime, you also cannot sell it as you need to pay the seller stamp duty but at the same time, you would need to pay the bank on your loan.

Your cash savings of $11k is not enough to even pay for the downpayment and do not forget that there are stamp duty, legal charges, property tax that you need to pay above the price of a condo. You are depending on the fact that you can find a tenant but like what Dividend Warrior says, DO NOT assume that you can find a tenant and can pay at the rate you want especially when there are a lot of condos that are doing the same thing as well. The rental that you have seen of $4000 per month is probably at a very good location but you did not factor in the capital cost involved in buying the condo.

People who rent a house would want one which is at good location. Looking at the amount that you have, you would not even be able to buy a condo. Let's just assume that you can buy one, it would not be in a good location and no one would rent from you.

Sorry for being harsh. My last words to you is "Stop Dreaming". Just continue with your work and stay with your mum and get a HDB flat in the future.

 

[CloudJames]

Thank you all for the comments and response really appreciate all the direct warnings!

Since you are self-employed, it is better to concentrate on your best investment - your business. From there, after you have accumulated enough savings for emergency funds, do some passive investments and build up a portfolio for an alternative income stream.

Yes I am planning my finances to build some passive investments. I am looking at all choices, long term and short term. I am not rushing, just taking things slowly, and learning. Already 25, if now don't plan, later sure suffer. What ideas do you have for making passive investments?
Thank you for your comments!

Sorry for being harsh. My last words to you is "Stop Dreaming". Just continue with your work and stay with your mum and get a HDB flat in the future.

Thank you very much for a detailed perspective! I don't intend to achieve this in short term. I plan to be able to achieve this in 5-10 years, which is why I am planning now, making this post, and looking up more information. Things that you have said above are all the factors that I must consider before making such an investment. This also let me learn what do I need to work for, or calculate if such an investment even worthwhile. Your harsh comment is definitely appreciated.

I would like to ask,
assuming that I do have the financial ability to finance a condo, without rentals, is renting out a condo later a good investment? Or is this a bad idea overall? Should I just forget about this idea and look for alternate passive investment?

Thank you all!

 

[Some-one]

Thank you all for the comments and response really appreciate all the direct warnings!

Thank you very much for a detailed perspective! I don't intend to achieve this in short term. I plan to be able to achieve this in 5-10 years, which is why I am planning now, making this post, and looking up more information. Things that you have said above are all the factors that I must consider before making such an investment. This also let me learn what do I need to work for, or calculate if such an investment even worthwhile. Your harsh comment is definitely appreciated.

I would like to ask,
assuming that I do have the financial ability to finance a condo, without rentals, is renting out a condo later a good investment? Or is this a bad idea overall? Should I just forget about this idea and look for alternate passive investment?

Thank you all!

In 5 to 10 years time, there could be a lot of changes and it is really too early for you to plan it now. Condo price would rise again in the future. I only see the current cooling measure as temporary. A 1 bedroom condo is about 800K now and it would probably rise to 1.2 million in the future. If your income can rise faster than the price of the condo, then you can consider about it but would you even know how your income would fare in the future, 5 to 10 years from now since you are self-employed?

Yes. Renting out a condo for passive income is a good idea provided that you are able to finance it without rental for a few years. However, you would need to find a condo that is in a good location and condos at good location are not cheap. It is not only the loans that you need to pay. You need to consider insurance, property tax, maintenance fee. You would also need to understand the supply and demand. When there are a lot supplies for rental units in a particular location, rental price would fall. Currently, there are too much supplies pressuring the rental yield.

Don't always think about getting condo. Why not consider HDB flats which are cheaper? However, do note that there are more regulations in the HDB market.

 

[kebinu]

If you were to look at the capital put in v rental yield for a condo and with the risk involved, there are many other investment instrument you can look at.

Sotck market?

 

[holysmokes]

TS, you should calculate how many months of vacancy you can as afford.

My own minimum is,"so long as I have my income, I can fully service The loan and all associated costs. I depend $0 on rental".

 

[endlssorrow]

TS got plan with good goal and good ambition.
who knows his mother will chip abit?

cheers

 

[CloudJames]

If you were to look at the capital put in v rental yield for a condo and with the risk involved, there are many other investment instrument you can look at.

Sotck market?

Yup. Stocks or forex are actually two investments that I am currently reading up about and learning. I will be demo-trading for the next one year and learning, until I reach a consistent profit, before I put a small investment into a live trade account.

I am only opening up myself to more passive income oppourtunities.

Thank you!

TS got plan with good goal and good ambition.
who knows his mother will chip abit?

cheers

Haha. After reading from everyone's comment, I am thinking it actually sound good on paper but requires a lot of considerations and planning to make it work practically.

In 5 to 10 years time, there could be a lot of changes and it is really too early for you to plan it now. Condo price would rise again in the future. I only see the current cooling measure as temporary. A 1 bedroom condo is about 800K now and it would probably rise to 1.2 million in the future. If your income can rise faster than the price of the condo, then you can consider about it but would you even know how your income would fare in the future, 5 to 10 years from now since you are self-employed?

Yes. Renting out a condo for passive income is a good idea provided that you are able to finance it without rental for a few years. However, you would need to find a condo that is in a good location and condos at good location are not cheap. It is not only the loans that you need to pay. You need to consider insurance, property tax, maintenance fee. You would also need to understand the supply and demand. When there are a lot supplies for rental units in a particular location, rental price would fall. Currently, there are too much supplies pressuring the rental yield.

Don't always think about getting condo. Why not consider HDB flats which are cheaper? However, do note that there are more regulations in the HDB market.

Thank you very much Some-one for such a detailed response again. I learn a lot from you. There are many things that you mention that I have not considered. I appreciate it very much. I will definitely be reading up more information.

HDB has a lot more regulations, and I can only buy after married or after 35. But I will look it into it as one of my investment choices.

Thank you everyone again for all the responses and information! I learn a lot from everyone.

 

[SpinFire]

IMO, property prices are too high now. Wait for the govt to relax its cooling measures as it'll signal that prices are stabilizing.

If I'm not wrong, rental yields are currently only about 3-4%, it means that prices are too high!

 

[sAVaGEmP5]

wow ts young n innocent. typical....


I started looking for my condo only after i pass the 6k monthly and total savings w/ cpf cross 120k. btw 6k means 1k of cpf, or abt 1150 for cpf oa usable for monthly loan payment. maybe its a base line for u and some others.

GL

 

[CloudJames]

wow ts young n innocent. typical....


I started looking for my condo only after i pass the 6k monthly and total savings w/ cpf cross 120k. btw 6k means 1k of cpf, or abt 1150 for cpf oa usable for monthly loan payment. maybe its a base line for u and some others.

GL

Not young liao.
I am old liao still so blur with many things. Damn naive lol