Property - how much to buy ?

[merlion88]

My situation - PR for over 10 years, renting a 3bedder at 3k per month in the east (older condo). Earn 300k per year (50% variable) in the recent 3 years. Been with the same company (small but foreign) for a while and suspect job marketability maybe an issue. With increasing competition, possibly over the next 5 years, earnings could vary from 200k (worst case) to 350k (best case). Expenses (without rent or mortgage) with two kids should be 140k per year, and taxes of say 30k. I have cash savings of 1.35 million though. My bank is willing to lend me 2.5 million!!

The idea is we plan to stay here for as long as things go well, could be the next 5 to 15 years, so we think it maybe better to buy versus rent. If the worst case happens, we could rent the condo to cover the EMI I suppose.

Given the above situation, would you buy? if so, how much?

[Wd40]

I am really surprised you haven't bought anything until now and have accumulated so much cash.

You must put that cash to work. If you dont have any property anywhere else, then its a no brainer. The 1st property to buy, you can buy it anytime, you dont even need to time the market. Especially since you are holding so much cash.

If you dont know what else to do with the cash, I would put it completely into property. If you know about any other ways of putting the cash to work then its a different matter.

[zzm9980]

Yeah, wow. I'd go out and buy a condo ASAP. My off the cuff thought without running numbers would to be find a decent sized 3-bedroom in the 1.2-1.3 million range. Put either half down, or enough so that the mortgage is small enough your CPF can cover it fully. Bank the extra rent as savings. No point in throwing it away to a landlord. In 10 years (or whenever you go) if you believe the bubble, your property should have appreciated a lot. Worst case, it should probably at least match inflation.

[merlion88]

Yeah, wow. I'd go out and buy a condo ASAP. My off the cuff thought without running numbers would to be find a decent sized 3-bedroom in the 1.2-1.3 million range. Put either half down, or enough so that the mortgage is small enough your CPF can cover it fully. Bank the extra rent as savings. No point in throwing it away to a landlord. In 10 years (or whenever you go) if you believe the bubble, your property should have appreciated a lot. Worst case, it should probably at least match inflation.

Dont you think 1.3 mill maybe underleveraged? given that as salaried staff, the only leverage in life is property!.....I'd say given my expenses and salary volitality, and lack of job marketability, with some risk taking, perhaps 4k per month EMI should still be doable (1k from cpf), at current interest rates of 1.5%, I can borrow 750k, at 3.5% its 575k. So should I be looking in the 1.85 to 2 mill range instead, assuming I put all the 1.35 mill into it?...appreciate your thoughts.

[merlion88]

I am really surprised you haven't bought anything until now and have accumulated so much cash.

You must put that cash to work. If you dont have any property anywhere else, then its a no brainer. The 1st property to buy, you can buy it anytime, you dont even need to time the market. Especially since you are holding so much cash.

If you dont know what else to do with the cash, I would put it completely into property. If you know about any other ways of putting the cash to work then its a different matter.

Thanks for the advise. Do you know of any opportunities which can give an 8%++ return on an SGD basis?

[Girl_Next_Door]

I do agree that you should consider investing in a property, either in Singapore or where you are from/familiar if the property market is stable and growing.

A few consideration:
- Put aside 6 months of your salary as savings/reserve funds.
- A quick search in the . site will gives you a huge selection of properties between $1.3 mil to $2 mil. View a few of them, and assess which price range you are comfortable with (after putting aside the reserve funds) and your family will like the property as well.
- Take a quick peak on the rental income that you can expect to derive for the same property, to assess if the rental income can cover your outstanding mortgage. This is in the worse case scenario whereby you have to leave Singapore and is not able to sell your property immediately.
- Remember to check things like property tax, condo maintenance fees, mortgage insurance (assuming you are the sole breadwinner), etc.

My husband and I were also renting for a while before we decided to take the plurge and buy a place last year. We did not regret the decision because the rental cost is increasing each time we renew our contract (went from $2.1K to $3.7K). Now, after deducting our CPF, we pay only $400-$500 cash (depending on interest rates). The property tax, condo maintenance fees and insurance set us back by another $1K, but it is still much lesser than what we were paying. Of course, we can also decorate the apartment the way we wanted, and no stress about handover or unreasonable landlord.

Feel free to drop me a note if you need more information.

[zzm9980]

Yeah, wow. I'd go out and buy a condo ASAP. My off the cuff thought without running numbers would to be find a decent sized 3-bedroom in the 1.2-1.3 million range. Put either half down, or enough so that the mortgage is small enough your CPF can cover it fully. Bank the extra rent as savings. No point in throwing it away to a landlord. In 10 years (or whenever you go) if you believe the bubble, your property should have appreciated a lot. Worst case, it should probably at least match inflation.

Dont you think 1.3 mill maybe underleveraged? given that as salaried staff, the only leverage in life is property!.....I'd say given my expenses and salary volitality, and lack of job marketability, with some risk taking, perhaps 4k per month EMI should still be doable (1k from cpf), at current interest rates of 1.5%, I can borrow 750k, at 3.5% its 575k. So should I be looking in the 1.85 to 2 mill range instead, assuming I put all the 1.35 mill into it?...appreciate your thoughts.

Given you have 1.3 million in a cash savings, I considered you extremely risk adverse.

Someone recently suggested the best potential returns (either rental or appreciation) are on the condos in the 1-1.2mil range within 1km of MRT, and under a certain age. They then had a list and numbers to back this up. I didn't validate any of it as I'm not in the market, but it seemed sound. This puts you in the outrim of the island. Yishun, Pasir Ris, YCK, etc.

[PNGMK]

Cough. I'd not take financial advice from a forum. There are some real concerns in the MAS that the market may tank.

take this as a suggestion.

[zzm9980]

Cough. I'd not take financial advice from a forum. There are some real concerns in the MAS that the market may tank.

take this as a suggestion.

Good point too. Consider what I gave as my opinion and not necessarily advise. I'd sure hope OP would just consider it as a point to research on. If they invested based on what wd40 or I said, they deserve whatever happens :p

[skipper]

Been a PR for a little over 5 years and saved much less that what you have right now when we took the plunge and bought a property late last year (condo in the east, almost 2000 sq ft above $1.5M). Been wasting $4,000-4,500/month on rent over that period on 2 different condos and we decided enough is enough (moving houses was also a pain). Including the $1K each from our CPF, we're still paying higher than our previous rent (but this is a much bigger place than the previous ones we stayed on) but we're at peace with this decision. Of course, buying last year meant that we were not subject to the additional charges from the new measures

In any case, this should be a no-brainer on your part -- you can always just do your maths based on how much you want to keep and confidently continue to earn. For us, we know that we can manage even if one of us lose our jobs (and the interest doesn't go above 3%)..

[PNGMK]

Skipper has it right as well.

I also bought for similar reasons. I went from a $4k rent to a $2.2k mortgage of which $1k was covered by CPF so I'm happy. Also some CG in there. However I would not go and put ALL my cash into a Singapore proprty - only the bare legal minimum.

[merlion88]

Thanks for all the opinions. I have a few friends who bought 2 to 2.5 mill condos scraping together just 20% 2 years ago, and they laughing today. Their jobs (also in the 300k category) are probably more marketable than mine, meaning they confident of getting one if they lose a job, in say 3 months time. So I guess in conclusion, its each to his own. The logic is about converting wasted rent to emi, being comfortable enough in a lower salary scenario to service the emi, and if the worst case pans out, then move out and have the rent cover the emi!

Wish me luck, and join me in praying the market doesnt tank for the next 5-yrs! else (if job still around) will need to buy a second property - double the value of the first, to cost average it out...

[jamesjoseb]

Good day to all,

I sense that all other forum users are clamoring for writer to go ahead with the purchase of a property as a no-brainer decision.

Perhaps the deeper question to ponder upon is whats holding you back? Job security? Mortgage? family planning?

On the flip side, there are some quarters suggesting that the property market us due for a correction at some point in time.

Allow me to share my thoughts on this (from a realtor):

a) In the last 5 years, property prices has gone off the boil, with appreciation of up to 80% for some private property and up to 100% for HDB flats (in some cases). This begs the questions: how far can we go in this upwards climb? Lets not forget the gov is tracking the market closely to prevent a bubble developing lest the younger generation in Singapore is not able to afford a flat in the not too distance future.

b) To curb speculation, there had been 8 rounds of cooling measures with the aim to bring out runaway prices. Its manifesting in the last few months as transaction volume is coming down. More downside to come soon? Your guess is as good as mine! But I do know that by latest 2016, the prices in Singapore must be of a reasonable standard because its the polls again. Any upheaval is definitely gonna be detrimental to the incumbent.

c) While all comments points to a clear decision of buying - I guess it boils down to individual choice after due consideration of the life circumstances and financial status.

I wish you the best in your decision, mate. Be happy and stay by it!

[zzm9980]

Lets not forget the gov is tracking the market closely to prevent a bubble developing lest the younger generation in Singapore is not able to afford a flat in the not too distance future.

Developing? The bubble is here. Government is doing all in its power to keep it from popping. Cooling measures are just to keep the bubble from getting too much larger too quickly and bursting. They're definitely not trying to deflate it though.

But I do know that by latest 2016, the prices in Singapore must be of a reasonable standard because its the polls again. Any upheaval is definitely gonna be detrimental to the incumbent.

Which is why I said what I did above. They'll lose more votes if property prices plummet as oppose to keep rising.

[Mi Amigo]

Lets not forget the gov is tracking the market closely to prevent a bubble developing lest the younger generation in Singapore is not able to afford a flat in the not too distance future.

Developing? The bubble is here. Government is doing all in its power to keep it from popping. Cooling measures are just to keep the bubble from getting too much larger too quickly and bursting. They're definitely not trying to deflate it though.

He's an agent, what do you expect him to say?

Nothing to see here - everything's fine! Don't pay any attention to the man behind the curtain!