Advice re: HDB / Private / Foreign ?

[Petrelli_83]

Some hard times over the past 2 years have left me in a very weak cash position. I've been renting for the past 2 years as well. Now at the age of 32, i'm debt free and ready to start my investment planning. My top priority is to cut out the rental expense as it is a hefty commitment with no returns, however I'm quite undecided between:

1. Buying a HDB immediately (good rental yield but low appreciation potential)

2. Waiting a year / two years to build up my cash position and go into private property (low rental yield but good appreciation potential)

3. Waiting a year / two years to build up my cash position and buy foreign properties (a lot cheaper than local private property) and use the rental income to subsidize my own rental expense.

4. Put my money elsewhere into more profitable bite-size investments such as stocks, but continue to waste money on rental.

Virtually every property agent is telling me to buy high park residences - touting the 3xx starting price for a studio as a god-send. The half-decent ones advise me to wait for a year before committing. Some crazy ones suggest I buy a cash-flow negative (i.e. the rent is not enough to cover the instalment) property.

Personally I've inspected the location of High Park and it just sucks. There's no way i'm sinking my money into this project. The alternative is HDB but given the sky high prices there's now very limited (if any at all) potential for capital appreciation. Getting a HDB will lock me out of property investing for the next 5 years as well, which is a huge turnoff. I'm not eligible for a BTO as my wife is not a citizen or SPR.

Foreign properties carry higher risks since i'm not familiar with the local market.

In a huge dilemma now - I've got about 6 months before I hit the income ceiling, which means I'll be denied the CPF housing grant.

Any advice is appreciated. Thanks.

 

[wahkao3]

up 4 commentttt

 

[VictorvonDoom]

Some hard times over the past 2 years have left me in a very weak cash position. I've been renting for the past 2 years as well. Now at the age of 32, i'm debt free and ready to start my investment planning. My top priority is to cut out the rental expense as it is a hefty commitment with no returns, however I'm quite undecided between:

1. Buying a HDB immediately (good rental yield but low appreciation potential)

2. Waiting a year / two years to build up my cash position and go into private property (low rental yield but good appreciation potential)

3. Waiting a year / two years to build up my cash position and buy foreign properties (a lot cheaper than local private property) and use the rental income to subsidize my own rental expense.

4. Put my money elsewhere into more profitable bite-size investments such as stocks, but continue to waste money on rental.

Virtually every property agent is telling me to buy high park residences - touting the 3xx starting price for a studio as a god-send. The half-decent ones advise me to wait for a year before committing. Some crazy ones suggest I buy a cash-flow negative (i.e. the rent is not enough to cover the instalment) property.

Personally I've inspected the location of High Park and it just sucks. There's no way i'm sinking my money into this project. The alternative is HDB but given the sky high prices there's now very limited (if any at all) potential for capital appreciation. Getting a HDB will lock me out of property investing for the next 5 years as well, which is a huge turnoff. I'm not eligible for a BTO as my wife is not a citizen or SPR.

Foreign properties carry higher risks since i'm not familiar with the local market.

In a huge dilemma now - I've got about 6 months before I hit the income ceiling, which means I'll be denied the CPF housing grant.

Any advice is appreciated. Thanks.

I'm just curious, do you need the property to stay in or for investment? Property is not the only investment vehicle available.

I agree with the assessment on High Park. Unless you are staying in it, I doubt will have an attractive rental yield. There will be a glut of ECs and BTOs in the Sengkang/Punggol area.

If you're looking to get a place to stay in, I'll say try to get a HDB flat with the grant now. HDB prices going down and its a buyer's market now. Especially those are taking possession of new flats and ECs.

Up for other member's views!

 

[Elmo82]

1. Purchase of HDB requires eligibility in the form of qualification against specific schemes. If you are purchasing with a nucleus family (ie people who stay with you), rental is just one of the many factors to be used in the consideration.

Also, newly purchased HDB is subjected to minimum occupancy period where you can't sublet the entire unit for the initial 5 years anyway.


2. Refer to URA Price Index for housing, property price is trending lower due to the supply glut of 2015/2016. Also, land cost is coming down (as observed in bids), SIBOR is expected to trend up once Fed raise rates (not a matter of if, but a matter of when).


3. Legislation of foreign ownership, ease of repatriation of income, FX depreciation/ease of conversion etc, transparency of actual resale statistics (for subsequent disposal) etc are once again major factors to be reviewed. Property is historically an asset class that tends to require signification amount of patience.


4. I wouldn't say that rental is wasting money away. In a downward market where your property be purchased at a lower price with increase of supply, this rental could well result in savings against your purchase price at the higher quantum (eg, 2k rental for 1 year = 24k, which could have equated to price savings against your property purchase if say a 500k property drops 5% to 475k).


At the end of the day, property purchase is first and foremost for your housing needs. If you are ok with the idea of staying with tenants, that can be viewed as a source of income which could fit into your investment objectives.

 

[Petrelli_83]

I'm just curious, do you need the property to stay in or for investment? Property is not the only investment vehicle available.

I agree with the assessment on High Park. Unless you are staying in it, I doubt will have an attractive rental yield. There will be a glut of ECs and BTOs in the Sengkang/Punggol area.

If you're looking to get a place to stay in, I'll say try to get a HDB flat with the grant now. HDB prices going down and its a buyer's market now. Especially those are taking possession of new flats and ECs.

Up for other member's views!

Thanks for the reply. Primarily for residential but I might be moving out of sg in a few years so it must have certain characteristics such as being cash flow positive, and appreciable in value, in the event I do need to dispose of it.

 

[Petrelli_83]

1. Purchase of HDB requires eligibility in the form of qualification against specific schemes. If you are purchasing with a nucleus family (ie people who stay with you), rental is just one of the many factors to be used in the consideration.

Also, newly purchased HDB is subjected to minimum occupancy period where you can't sublet the entire unit for the initial 5 years anyway.



2. Refer to URA Price Index for housing, property price is trending lower due to the supply glut of 2015/2016. Also, land cost is coming down (as observed in bids), SIBOR is expected to trend up once Fed raise rates (not a matter of if, but a matter of when).


3. Legislation of foreign ownership, ease of repatriation of income, FX depreciation/ease of conversion etc, transparency of actual resale statistics (for subsequent disposal) etc are once again major factors to be reviewed. Property is historically an asset class that tends to require signification amount of patience.


4. I wouldn't say that rental is wasting money away. In a downward market where your property be purchased at a lower price with increase of supply, this rental could well result in savings against your purchase price at the higher quantum (eg, 2k rental for 1 year = 24k, which could have equated to price savings against your property purchase if say a 500k property drops 5% to 475k).


At the end of the day, property purchase is first and foremost for your housing needs. If you are ok with the idea of staying with tenants, that can be viewed as a source of income which could fit into your investment objectives.

Thanks. What's your take on the current hdb resale prices? Will they trend downward further? I'm looking at a 505k valuation for a hdb that is extremely close to SK mrt. Seems attractive at first glance but when you consider the glut of flats in the surrounding area...

 

[Elmo82]

Thanks. What's your take on the current hdb resale prices? Will they trend downward further? I'm looking at a 505k valuation for a hdb that is extremely close to SK mrt. Seems attractive at first glance but when you consider the glut of flats in the surrounding area...

The link below shows the record number of hdb launched by HDB.
http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/09B4EA8F05D90F8348257E520003E430?OpenDocument

Prices of recent transactions for HDB near Seng Kang MRT, you can perform a query on HDB website for the specific blk you are interested in, and the historical transacted price.

 

[K|muRa^84]

u have a 'very weak cash position' yet u wanna take on debt?

 

[Petrelli_83]

u have a 'very weak cash position' yet u wanna take on debt?

weak cash starting position but am able to save 4k a month after rent and expenses. Anyway u have to take on debt to buy housing.

 

[hwmook]

Thanks. What's your take on the current hdb resale prices? Will they trend downward further? I'm looking at a 505k valuation for a hdb that is extremely close to SK mrt. Seems attractive at first glance but when you consider the glut of flats in the surrounding area...

It will keep going down, my colleague has been trying to sell his flat for months already and getting no offers, asking price has been revised down 10% in less than 6 months. The next 6-12 months will see further reduction. There is still about 1+ year to go on the cooling measures which prevent new PR from purchasing HDB flats. It will probably go up slightly after that as those new PR still coming onto the market and prop it up slightly in the face of a supply glut.

 

[goldsilvercity]

Some hard times over the past 2 years have left me in a very weak cash position. I've been renting for the past 2 years as well. Now at the age of 32, i'm debt free and ready to start my investment planning. My top priority is to cut out the rental expense as it is a hefty commitment with no returns, however I'm quite undecided between:

1. Buying a HDB immediately (good rental yield but low appreciation potential)

2. Waiting a year / two years to build up my cash position and go into private property (low rental yield but good appreciation potential)

3. Waiting a year / two years to build up my cash position and buy foreign properties (a lot cheaper than local private property) and use the rental income to subsidize my own rental expense.

4. Put my money elsewhere into more profitable bite-size investments such as stocks, but continue to waste money on rental.

Virtually every property agent is telling me to buy high park residences - touting the 3xx starting price for a studio as a god-send. The half-decent ones advise me to wait for a year before committing. Some crazy ones suggest I buy a cash-flow negative (i.e. the rent is not enough to cover the instalment) property.

Personally I've inspected the location of High Park and it just sucks. There's no way i'm sinking my money into this project. The alternative is HDB but given the sky high prices there's now very limited (if any at all) potential for capital appreciation. Getting a HDB will lock me out of property investing for the next 5 years as well, which is a huge turnoff. I'm not eligible for a BTO as my wife is not a citizen or SPR.

Foreign properties carry higher risks since i'm not familiar with the local market.

In a huge dilemma now - I've got about 6 months before I hit the income ceiling, which means I'll be denied the CPF housing grant.

Any advice is appreciated. Thanks.

try not to get advice from agents who will benefit from your purchases.

how about getting a hdb flat first for a roof over your head, and getting the hdb housing grant.

where u live is not an asset, but a liability, so choose a cheap hdb instead.

if you want, u can get a bigger hdb, and rent out a room or two.
but my guess is most people dont like the sharing of your home, so perhaps buy a small hdb flat for ur own living, and then save up for a few years for your stocks investment or 2nd property investment.

my gut feel is first property - hdb

 

[cupcorn]

If its your first property then get hdb, for the following reasons:
a) it is cheaper in terms of use and psf wise definitely lower than private and since you are staying in it no harm
b) avoid resale; if possible opt for wis to buy leftover units or bro (must wait n incur rental further)
C) if you qualify hdb loan, it's a safe haven now with inching interest
d) almost guaranteed to make capital gains upon selling after the mop, assuming you buy from hdb
e) you are going to stay in it so don't think of investment value
f) private property is losing demand due to rising sibor, excess supply and tdsr. Furthermore if you want capital gains you need to wait 4 years to avoid ssd totally
g) agents likely smoking you. The market is not in such hot demand; they will tell you "10 units left in this development" but in actual fact developer do not release full stacks to create demand
h) investment wise, private residential is high risk now. There are other forms of property to invest in - commercial, industrial, reit and reocs to consider which may have better opportunities
I) there are many holding structures so you can own a hdb and still buy private property before the mop is up -if you have the cash

overall, for personal use, hdb makes sense. Forget about ECs. If it's investments you want, take care of the roof over your head first and then slowly wait - there will be distressed sellers appearing over time. Listen to property agents but also realise they have their own interests over you buying.

All the best to your ideal home

 

[K|muRa^84]

oh ok got it.....

 

[Petrelli_83]

Thanks guys. Appreciate all the advice. Going with HDB after evaluating all the comments and options.

 

[focus1974]

1st property?
Always go for the BTOs! Get the biggest you can afford at good location for rental.
That is your base to build your wealth..

 

[V_for_Vanilla]

If me I will go for hdb resale. Immediate move in. In the long run it gives the best rental yield and price stability.

 

[hindsight]

Some hard times over the past 2 years have left me in a very weak cash position. I've been renting for the past 2 years as well. Now at the age of 32, i'm debt free and ready to start my investment planning. My top priority is to cut out the rental expense as it is a hefty commitment with no returns, however I'm quite undecided between:

1. Buying a HDB immediately (good rental yield but low appreciation potential)

2. Waiting a year / two years to build up my cash position and go into private property (low rental yield but good appreciation potential)

3. Waiting a year / two years to build up my cash position and buy foreign properties (a lot cheaper than local private property) and use the rental income to subsidize my own rental expense.

4. Put my money elsewhere into more profitable bite-size investments such as stocks, but continue to waste money on rental.

Virtually every property agent is telling me to buy high park residences - touting the 3xx starting price for a studio as a god-send. The half-decent ones advise me to wait for a year before committing. Some crazy ones suggest I buy a cash-flow negative (i.e. the rent is not enough to cover the instalment) property.

Personally I've inspected the location of High Park and it just sucks. There's no way i'm sinking my money into this project. The alternative is HDB but given the sky high prices there's now very limited (if any at all) potential for capital appreciation. Getting a HDB will lock me out of property investing for the next 5 years as well, which is a huge turnoff. I'm not eligible for a BTO as my wife is not a citizen or SPR.

Foreign properties carry higher risks since i'm not familiar with the local market.

In a huge dilemma now - I've got about 6 months before I hit the income ceiling, which means I'll be denied the CPF housing grant.

Any advice is appreciated. Thanks.

How can something with good rental yield have low price appreciation potential? It ought to be the other way round. A property's price is more likely to fall than rise if yields are falling, so the question you ought to be asking yourself right now is "are yields projected to rise or fall"?

Imo yields are set to fall further because rents are falling and interest rates have bottomed so the only direction is up, property investors face a double whammy and yields could well turn negative in the next 2 years, nobody sane is going to want to pay more for such an asset.

Renting for the last 2 years hasn't been such a sore deal for you really, at least you are in a better position than the many who bought at the peak 2 years ago. Some people have lost hundreds of thousands of dollars in capital losses, perhaps count yourself lucky that you weren't one of them.

HDB flats represent the best value for anyone who is looking to save on housing expenses, so I think that is your best bet. DBSS and ECs/condos (very high monthly conservancy fees) are luxury goods that will eat into your retirement planning, by all means go for them if you can well afford it but please do not think of them as sure-win investments.

 

[makeupconnect]

my own rationale would be to get a HDB flat as the yield is generally better.

having money in your pocket now is better than praying and hoping for the elusive capital gains. The condo prices are still rather high now.

further if you buy a private property first, you will not be eligible for public housing.

Thus, better to buy HDB than a private? But keep looking out for gems on the way?

 

[Didjerama]

how did u manage to rent and yet want to buy HDB?

 

[yummie]

Some hard times over the past 2 years have left me in a very weak cash position. I've been renting for the past 2 years as well. Now at the age of 32, i'm debt free and ready to start my investment planning. My top priority is to cut out the rental expense as it is a hefty commitment with no returns, however I'm quite undecided between:

1. Buying a HDB immediately (good rental yield but low appreciation potential)

2. Waiting a year / two years to build up my cash position and go into private property (low rental yield but good appreciation potential)

3. Waiting a year / two years to build up my cash position and buy foreign properties (a lot cheaper than local private property) and use the rental income to subsidize my own rental expense.

4. Put my money elsewhere into more profitable bite-size investments such as stocks, but continue to waste money on rental.

Virtually every property agent is telling me to buy high park residences - touting the 3xx starting price for a studio as a god-send. The half-decent ones advise me to wait for a year before committing. Some crazy ones suggest I buy a cash-flow negative (i.e. the rent is not enough to cover the instalment) property.

Personally I've inspected the location of High Park and it just sucks. There's no way i'm sinking my money into this project. The alternative is HDB but given the sky high prices there's now very limited (if any at all) potential for capital appreciation. Getting a HDB will lock me out of property investing for the next 5 years as well, which is a huge turnoff. I'm not eligible for a BTO as my wife is not a citizen or SPR.

Foreign properties carry higher risks since i'm not familiar with the local market.

In a huge dilemma now - I've got about 6 months before I hit the income ceiling, which means I'll be denied the CPF housing grant.

Any advice is appreciated. Thanks.

actually, at least half of pte pties in singapore now, are selling at 3X the prices than 10 years ago but rental are still the same, so most rental yield most likely would break even or negative, unless u consider to stay in the pte pty later down the road. imagine, a house at geylang cost ~$300k (3-bedder) in early 2000s but cost at least $900k (2bed + 1 study) in 2013/2014. but rental is stagnant/slight increase from $3k, 10 years ago to $3k-$5k now. so do your math.

for overseas pty, if you say you not familiar with the country, do your own homework. like, if you want to buy in malaysia, i would buy shophouse instead of landed pty because of better potential rental yield as i can convert into hostels or rent it out to biz or F&B. unless you intend to stay there in future.

u say you not eligible for BTO as wife not citizen/SPR, wait till u have kid lor. u say income going to hit ceiling, it may or may not be a bad problem, depend on how you look at it, buy resale flat now. but remembe, HDB cannot rent out whole flat for first 5 years and even if can rent out, have racial quotas to meet, now can only rent out rooms (1-3 rooms) depending on how many type of HDB you buy, so you are looking at $300 at least for 1 room, depending on location on where you stay and condition of room, so rental may not be fully utilitised for first 5 years. either way, you are caught.

if i am you, i am assuming you are staying with your parents now, buy a condo which can at least break even in rental PM.