Resale condo or new launch?

[Dongbalek]

Hi all, as the new launch prices are getting higher and higher, i would like to ask for your expert opinions whether resale condos (either FH or newer 99LH) will be a better buy in current environment? Is the gap big enough to go for resale condo? I am looking more to buy for rental investment and for future retirement.

 

[kiatme]

In today's market, units are moving fast in both the new launch and resale market so no one can tell you. There are opportunities in both the resale and new launch market, it depends on what are you buying.

For example ~ IMO : Norwood is almost fully sold out for its PSF, i don't know how are people going to exit in the future.Same for EOK, the demand is overwhelming but the area is oversupply, what is the selling point ?

If you want to go for rental investment, likely you won't be making money in the first few years if you are taking maximum bank loan, because a lot of it goes into principal interest, and if you have a high paying job, you will be paying a portion of your yields to income tax as well.

I think you can share more of your profile as well ~ such as, married, single, have place to stay, how old, etc, what kind of timeline are you looking at etc so people can give you better answers

 

[kiatme]

For example if you are buying a resale unit and want to exit in 5 years, likely you won't be making any money at all.
Typically losses include :
- Maintenance fee
- agent fee
- Property tax
- income tax
- Principal interest from bank
- Repairs

Example for a 2 bedder 1.2m property ~
Purchase
25% downpayment : 300k
75% bank loan : 900k
[LOSS|Buyer stamp : 32600
[LOSS]Lawyer fee : 2500

Total losses so far (buyer stamp + lawyer fee) : 35100

Monthly yields (Assuming unit rent out at 3.5k)
Losses (monthly)
Maintenance fee per month : 350
Agent fee : 3500*1.09/2/12 : 159
Property tax (Assume annual value 30k) : 300
Principal interest from bank (Assume 3% 30 year term loan) : 2250
Repairs : 50
Total losses : 3109
Yield : 401
Income tax (depending on what bracket are you at, assume your income is below 120k, its 11.5%) : 46

How much you make every month from renting : Actual positive yield : 355

Selling (assume selling 1.2m 0 profit)
[LOSS]Agent fee 2%+GST :26160
[LOSS]Lawyer fee : 2500

TOTAL LOSSES : 26160 + 2500 + 2500 + 32600 = 63760
To breakeven from purely renting [total loss/positive yield]: 179 months = 15 years
This will drag further assuming there is no back to back rental, but since principal interest wil lfall every month, I'm using that to breakeven the back to back rentals

There's a higher chance of making money from the property appreciating in value than rental, rental is a very long game / very little loan.

 

[Dongbalek]

Thanks @kiatme for your detailed responses. well i have one for homestay now so i am looking for one (smaller) for investment purpose. more for rental income for now but i am open to new launch or resale (if the gap is wide enough) for potential cap gains as well.

ultimately i think the property is more for me to live when i retire in about 20 years time

 

[Advancer]

Thanks @kiatme for your detailed responses. well i have one for homestay now so i am looking for one (smaller) for investment purpose. more for rental income for now but i am open to new launch or resale (if the gap is wide enough) for potential cap gains as well.

ultimately i think the property is more for me to live when i retire in about 20 years time

I myself is a sucker for new launches with the main benefit being its a progressive payment.
It doesn't hurt the pocket so much until when its TOP, in the mean time you can still use your cash savings for many other things or just simply put it into FD.
When its TOP 3 years later, you have the option to rent or sell it as many Singaporeans still love to hunt for brand new property when it comes to own stay as they can have less headache on the need for a major reno.
At least there is an opportunity for you to flip instead of just pure rental when you are looking at resale.

 

[Nemesis_lane123]

Hi all, as the new launch prices are getting higher and higher, i would like to ask for your expert opinions whether resale condos (either FH or newer 99LH) will be a better buy in current environment? Is the gap big enough to go for resale condo? I am looking more to buy for rental investment and for future retirement.

Of course new launch, look at the recent CP n EOK!

 

[Dongbalek]

I myself is a sucker for new launches with the main benefit being its a progressive payment.
It doesn't hurt the pocket so much until when its TOP, in the mean time you can still use your cash savings for many other things or just simply put it into FD.
When its TOP 3 years later, you have the option to rent or sell it as many Singaporeans still love to hunt for brand new property when it comes to own stay as they can have less headache on the need for a major reno.
At least there is an opportunity for you to flip instead of just pure rental when you are looking at resale.

Haha yes. But i feel that the gap between resale and new launch is quite big now. It may also be harder to flip for new launches when it is TOP (but what do i know, haha) I just randomly take a look at a couple of similar sized and big sites CCR LH (TOP in last 5 years) and CCR FH and the prices are comparable or cheaper to CP and EOK.

 

[ZacharyA]

I myself is a sucker for new launches with the main benefit being its a progressive payment.
It doesn't hurt the pocket so much until when its TOP, in the mean time you can still use your cash savings for many other things or just simply put it into FD.
When its TOP 3 years later, you have the option to rent or sell it as many Singaporeans still love to hunt for brand new property when it comes to own stay as they can have less headache on the need for a major reno.
At least there is an opportunity for you to flip instead of just pure rental when you are looking at resale.

What if it's a huge development and many has the same mentality, supply constant / more but demand less because prices psf creeping up each time a new project launch -> TOP (3-4yrs time cycle).

Esp those without hodling power.

 

[drkcynic]

To be fair, their fate are more or less intertwined.

If today's new launches don't do well on TOP, the resale of today will not do well as well.

Few ways to make money in resale imo
1. Find a bargain (Easier said than done)
2. Buy a big unit in one of those low hanging fruits developments in OOCR (maybe easiest route, there are many upgraders to exit)
3. Buy a good FH and hold long term (Good FH also ATH now so you are going to pay for many years)

BTW, always aim for capital appreciation, the rent is just to help service your loan.

 

[䏣炆玧示老太]

Hi all, as the new launch prices are getting higher and higher, i would like to ask for your expert opinions whether resale condos (either FH or newer 99LH) will be a better buy in current environment? Is the gap big enough to go for resale condo? I am looking more to buy for rental investment and for future retirement.

Shunpoon must buy new launch and live there fresh from the start

 

[DevilPlate]

I myself is a sucker for new launches with the main benefit being its a progressive payment.
It doesn't hurt the pocket so much until when its TOP, in the mean time you can still use your cash savings for many other things or just simply put it into FD.
When its TOP 3 years later, you have the option to rent or sell it as many Singaporeans still love to hunt for brand new property when it comes to own stay as they can have less headache on the need for a major reno.
At least there is an opportunity for you to flip instead of just pure rental when you are looking at resale.

Who say resale js for pure rental?

 

[DevilPlate]

Haha yes. But i feel that the gap between resale and new launch is quite big now. It may also be harder to flip for new launches when it is TOP (but what do i know, haha) I just randomly take a look at a couple of similar sized and big sites CCR LH (TOP in last 5 years) and CCR FH and the prices are comparable or cheaper to CP and EOK.

Right now the price gap for North region still quite big when compared to Norwood.

 

[Advancer]

Who say resale js for pure rental?

Was only inferring to thread starter when his intent is to invest to rent out.

 

[Advancer]

Haha yes. But i feel that the gap between resale and new launch is quite big now. It may also be harder to flip for new launches when it is TOP (but what do i know, haha) I just randomly take a look at a couple of similar sized and big sites CCR LH (TOP in last 5 years) and CCR FH and the prices are comparable or cheaper to CP and EOK.

But seems like historically it's always been the case where ppl buy new launch hoping to have capital appreciation.
And that's why new launches are forever creeping up and the resale trying to catch up.

 

[DevilPlate]

Was only inferring to thread starter when his intent is to invest to rent out.

If his intent is to rent out plus some cap gain, the more he should look at resale and crunch the numbers on rental yield and cashflow

 

[kiatme]

Thanks @kiatme for your detailed responses. well i have one for homestay now so i am looking for one (smaller) for investment purpose. more for rental income for now but i am open to new launch or resale (if the gap is wide enough) for potential cap gains as well.

ultimately i think the property is more for me to live when i retire in about 20 years time

So its like your spouse have one property you have one, or are you buying with ABSD ?
IMO if you are going for pure rental for very long you can consider commercial properties, there are also ways to bring down your tax (i'm assuming you are in your 40s because you say retirement in 20 years).

If you want to hold a property to stay when you retire i think its not very good too? Imagine taking over a 20 year old rented unit to stay, you will probably have to spend a bomb to repair the place as well, might as well invest better then consider what are your options nearing to retirement

 

[qwertyqwerty138]

In today's market, units are moving fast in both the new launch and resale market so no one can tell you. There are opportunities in both the resale and new launch market, it depends on what are you buying.

For example ~ IMO : Norwood is almost fully sold out for its PSF, i don't know how are people going to exit in the future.Same for EOK, the demand is overwhelming but the area is oversupply, what is the selling point ?

If you want to go for rental investment, likely you won't be making money in the first few years if you are taking maximum bank loan, because a lot of it goes into principal interest, and if you have a high paying job, you will be paying a portion of your yields to income tax as well.

I think you can share more of your profile as well ~ such as, married, single, have place to stay, how old, etc, what kind of timeline are you looking at etc so people can give you better answers

What do you think would be a fair price for norwood and eok?

I balloted for eok and got 2800+ queue number, if given a choice, I would have gone ahead.

What would be the price that can exit from your perspective?

 

[drkcynic]

Every year will have people ask the same thing for new launches - "How are people going to exit in future?"

From Duxton (however long ago) to WG (20% sold at launch), to JS, to SR, to AP... we all know what happened eventually... today AP already transacted 3000psf...

Don't need to ask la, nobody can predict the future. Your money your choice, no risk no rewards.

Usual risk management applies, don't overleverage, choose wisely and you are good to go.

 

[kiatme]

What do you think would be a fair price for norwood and eok?

I balloted for eok and got 2800+ queue number, if given a choice, I would have gone ahead.

What would be the price that can exit from your perspective?

What is your rationale for going for EOK instead of GD / Tembusu Grand / Continnum ?
I'm very curious on the mindset of the EOK buyers.

This is how I feel
Norwood ~ Everything banks on RTS, if RTS completes and working as expected i think Norwood would be a good buy for people in the North, the resales in the vicinity have room for growth because of it. If not, it will suffer. I think the springleaf/lentor area will benefit more because of Norwood.

EOK ~ I don't know ~ price wise ~ again very hard to say. I think EOK is not a good investment because there are 3 mega projects GD (1008 units), TG (638 units), Continnum (618 units), EOK (846 units), if you do a 2km sweep around those condos, there are more than 200 private condos around the entire area (boutique and big ones), when all these project TOPS and hits resale market, buyers will have 3110 units to choose from purely just from these 4 projects, if you include all the other condos, imagine how much competition there are. Of course once you filter by bedrooms the numbers will be smaller.

So the question back will be, if you are a resale buyer, assuming prices are all the same, which will you buy.

• GD is 1km to Kong Hwa and proximity MRT
• Continnum is freehold 1km Kong Hwa
• TG / EOK are not 1km kong hwa nor near MRT

Based on attributes TG and EOK already ranked last, the only thing left to compare are

• The floor plans where EOK is ranked last for the smaller units because of the harmonization (i think this is quite important, because today if you want to buy a resale, you will filter for example, 3 bedroom 1000 sqft because most under 1000sqft houses don't have utility rooms, so some buyers will miss out EOK already).
• Site facade ~ I think it is very subjective but pet owners might like EOK more because of the park at the site, EOK probably rank higher than 1 or 2 of the other projects for sure, but the nursing home might kill EOK.
• Only thing left is pricing, EOK have to price cheaper to cash out vs the other 3 projects. Continnum can ask higher because of its freehold status, GD can ask higher because of its MRT and primary school proximity, what does EOK offer that will make the resale buyers pay a premium over the other 3 projects? The resale buyers will use the neighboring condos to bargain your price down also

 

[DevilPlate]

What is your rationale for going for EOK instead of GD / Tembusu Grand / Continnum ?
I'm very curious on the mindset of the EOK buyers.

This is how I feel
Norwood ~ Everything banks on RTS, if RTS completes and working as expected i think Norwood would be a good buy for people in the North, the resales in the vicinity have room for growth because of it. If not, it will suffer. I think the springleaf/lentor area will benefit more because of Norwood.

EOK ~ I don't know ~ price wise ~ again very hard to say. I think EOK is not a good investment because there are 3 mega projects GD (1008 units), TG (638 units), Continnum (618 units), EOK (846 units), if you do a 2km sweep around those condos, there are more than 200 private condos around the entire area (boutique and big ones), when all these project TOPS and hits resale market, buyers will have 3110 units to choose from purely just from these 4 projects, if you include all the other condos, imagine how much competition there are. Of course once you filter by bedrooms the numbers will be smaller.

So the question back will be, if you are a resale buyer, assuming prices are all the same, which will you buy.

• GD is 1km to Kong Hwa and proximity MRT
• Continnum is freehold 1km Kong Hwa
• TG / EOK are not 1km kong hwa nor near MRT

Based on attributes TG and EOK already ranked last, the only thing left to compare are

• The floor plans where EOK is ranked last for the smaller units because of the harmonization (i think this is quite important, because today if you want to buy a resale, you will filter for example, 3 bedroom 1000 sqft because most under 1000sqft houses don't have utility rooms, so some buyers will miss out EOK already).
• Site facade ~ I think it is very subjective but pet owners might like EOK more because of the park at the site, EOK probably rank higher than 1 or 2 of the other projects for sure, but the nursing home might kill EOK.
• Only thing left is pricing, EOK have to price cheaper to cash out vs the other 3 projects. Continnum can ask higher because of its freehold status, GD can ask higher because of its MRT and primary school proximity, what does EOK offer that will make the resale buyers pay a premium over the other 3 projects? The resale buyers will use the neighboring condos to bargain your price down also

Among the 4 projects….only GD has close to doorstep MRT.
TC frontload FH price premium too much liao.

EOK vs TG:
EOK is quantum play plus non MSCP

So i rank:
1.GD
2.EOK
3/4: TG and TC (same rank)