It is interesting for me to make that statement considering that i share with you that my first property purchase ended in a loss.
That goes back to my property beliefs. It is very difficult to time the market and by being vested in one property at any time, you will feel less urge to "chase the market". I am currently vested in one and watching by the sideline, ever ready to get into a second property when the timing is ripe. In the mean time, I will continue to save up.
The times has changed because the rules have changed. Previously, we were unable to rent out the HDB in its entirety and the rules were pretty stringent. However, under the current rules, owners who have fulfilled certain conditions will be able to rent out their flat.
One of my closest relatives have an executive flat and the family shifted back to their parents' place and were renting out their flat for the last 2 years.
Imagine the rental is $2,500 a month (on the low side) x 12 = $30,000. That is a cool $30,000 a year in the pocket. They have bought the flat directly from HDB for much lower than $300,000. Nevertheless, if i use $300,000 as the cost (including interest), the yield is an unbelievable 10% each year! Where on earth can you find such good stream of passive income going into your pocket every month! If i am allowed to buy a HDB flat and rent it out, i will definitely consider it even if the yield is not as high as theirs. :)
As such, if you are in a very enviable situation where you can buy a private property or own one without having to sell your HDB flat, then by all means, make use of this opportunity to create a stream of passive income for yourself. It is one of the highest interest yielding assets around.
My relatives, unfortunately, did not heed my advice. They sold the executive flat for $650,000 in April this year. After they sold, my friendly advice to them was this "Now that you have no position in the market, the greatest difficulty for you is to resist the urge to buy a property."
They now get very excited whenever they read news of HDB flat being sold for $1m or that prices of private properties are not coming down, etc etc. They are now technically "homeless" and are afraid that they will miss the property cycle again. They now go property hunting every weekend and my guess is that they will get into one in the next 6 months.
That goes back to my property beliefs. It is very difficult to time the market and by being vested in one property at any time, you will feel less urge to "chase the market". I am currently vested in one and watching by the sideline, ever ready to get into a second property when the timing is ripe. In the mean time, I will continue to save up.
Happy investing and wish you success in your pursuit of financial freedom. :-)
8 comments:
I am curious, ur relative sold off their only house and live where? Rent??
Oh my bad. Din read carefully. :)
Oh is it true? really I am safe to selling it. I have two HDB flat and I am very eager to sell this property. But, Now I don't wanna do that.
I heard top real estate agents with the same arguments. I have recommended the same to a friend of mine, and he looks very pleased with his decision.
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LIke IPO I too started out with around $1850 but I did not go and buy a EC and at a far out area.
Instead I brought a 3 room HDB resale in a mature location and can rent out after 2.5 years later.
Still holding onto the HDB then, I could commit to buy another condo at around less $660k before 2005.( there wasn't stupid rules then like now and prices if you looked back are C-H-E-A-P by present standards.
Now I have 2 Geese that are laying golden eggs for me! LOL
Yeah, I am also curious what happened to your relative. I think Owning an HDB is far more and way better that renting. I have a friend which is an expat and currently living in condo for rent in Singapore believes that owning an hdb be is the best. Unfortunately, expats aren't allowed to own one.
I only fcame across your blog when I was searching for Singapore IPOs. You are so honest in your writings and I truly enjoy every blog of yours especially on the property. How you lost on the first HDB and made money on City Sq etc. Very interesting journey and enlightening at the same time. Thanks for sharing.
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