Buying a condo

[dpot]

We're considering the idea of purchasing a condo, and our budget is between $700,000 and $1,000,000. We plan to offer our Singaporean relatives an opportunity to 'buy in' with us, and then receive a proportion of the profits when we sell (or be bought out). This would allow us to get on the property ladder without flushing money down the toilet on rent, and it would give our family an opportunity to invest in the real estate market in Singapore without having to shell out the entire amount themselves, or worry about maintenance fees, stamp duties, etc (which we would cover).

However, given the news about cooling-off measures, we're slightly apprehensive, but we would want to purchase around April-May 2011. Neither of us are citizens or PR's, so we're aware that down payment will be about 30%.

What we're trying to find out is:

a) whether we should be concerned about a housing bubble in Singapore; we don't want to buy at the peak of the market, of course

b) what regions might prove to be a smart investment if we would plan to sell in 5 yrs

c) whether, in your opinions, it is wiser from a money-making standpoint to purchase a smaller, newer property or to modernise a larger, older property (we hope to find a 3br, since we're a small family, but might consider a 2br if it had more upside potential)

Thanks for your suggestions...

[sundaymorningstaple]

Hold on, while I consult my advisor

[revhappy]

We're considering the idea of purchasing a condo, and our budget is between $700,000 and $1,000,000. We plan to offer our Singaporean relatives an opportunity to 'buy in' with us, and then receive a proportion of the profits when we sell (or be bought out). This would allow us to get on the property ladder without flushing money down the toilet on rent, and it would give our family an opportunity to invest in the real estate market in Singapore without having to shell out the entire amount themselves, or worry about maintenance fees, stamp duties, etc (which we would cover).

However, given the news about cooling-off measures, we're slightly apprehensive, but we would want to purchase around April-May 2011. Neither of us are citizens or PR's, so we're aware that down payment will be about 30%.

What we're trying to find out is:

a) whether we should be concerned about a housing bubble in Singapore; we don't want to buy at the peak of the market, of course

b) what regions might prove to be a smart investment if we would plan to sell in 5 yrs

c) whether, in your opinions, it is wiser from a money-making standpoint to purchase a smaller, newer property or to modernise a larger, older property (we hope to find a 3br, since we're a small family, but might consider a 2br if it had more upside potential)

Thanks for your suggestions...

Does an EP holder also have to pay 30% down? I was thinking EP holder can get away with 20%

[dpot]

Thanks SMS, but I've already asked Kreskin and he doesn't know...that's why I came to you.

Revhappy...I'd like to find out the answer to your question, because I never knew there might be a 20% allowance for an EP holder. I'll try to track down an answer, though.

[mrlily]

most likely stating the obvious but here goes anyway;

buying a property with the intention of flicking it off in the short term directly exposes you to market fluctuations, do you feel lucky?

however, buying as a LONG TERM investment, history would say, property prices go up.

from experience (owning a property, i'm not a PR or EP holder), if you can part with a 30% deposit (from savings, not borrowing) plus stamp duty, lawyers fees etc..., can secure an attractive long term interest rate and still have some cash to burn, i would go for it.

reason being;
doing the sums, repayments on the 70% remainder should be considerably less than what you'd pay if you were renting the same apartment from someone else. if you plan to live in it, your rent (mortgage) is relatively cheap, if you plan to leave the country rent it out to cover the costs.

it appears most condo renters can afford the mortgage repayments but would struggle to find the deposit to get them started (300k on 1mill isn't pocket change for masses).

a good location to start looking might be within walking distance of the new mrt stations currently under construction.

[dpot]

Thanks mrlily, that is helpful, and much of what you've said confirms our assumptions as well. Since 1/2 of our relatives are in Singapore & Malaysia, we're not terribly interested in flipping a property; we'd like to stay for a while. We're fortunate to have done much of our saving in £ and US$, which makes a down payment a little easier at this point. I hadn't thought about opportunities associated with new MRT lines, but will certainly research this. I appreciate that you volunteered some of your personal time to share your ideas...thanks very much.

[revhappy]

dpot, There is a very popular forum specifically for condos in singapore, which ofcourse I cannot name here, but you can find it very easily if you google for it. I stumbled upon it yesterday and find it very insightful, already got so many pointers and nitty gritties of buying a property here.

This is an expats forum and ofcourse the point of view from expats is really valuable especially for condos as they form a majority of its end-users, but its really the locals who know more about their property market.

All the best for your property hunt!

[dpot]

thanks very much for that rev, i think i just found it and it looks like just what we need right now...with the amount of money at stake, i'm happy to get all the advice i can.

[revhappy]

dpot, I just checked with DBS and they have confirmed that an EP holder working in SG can get a loan upto 80% of the property value if its their 1st home loan, subject to approval.

Even in the other condo forum I was told that non-pr/citizens can get only 70%.

Anyways, I am going ahead with them to get the approval in principle. Lets see how it goes.

[dpot]

Very interesting rev, and good to hear. I'd asked in a couple other places and received the same guidance re: 70%. However, a recent article about a speaker at NUS Institute of Real Estate concerned me a bit about whether a larger price dip is around the corner. Depending on feedback from our family in the coming months, we'll move forward and trust God for the results...we figure that we can always hold the property for the long-term anyway. Keep me posted on what you find out in the future if you don't mind because we're still flying a bit blind here in the UK. The DBS info was invaluable, btw!