Posted on 23 Apr 2018
its good to be a tenant today - rents are dirt cheap compared to what it was 4-5yrs back. rents are not expected to increase unless there's a policy change wrt to immigration laws and singapore being flooded with more expats.
if you rent $3k a month for 5yrs - thats $180k. is it enough for your downpayment and stamp duties incurred for your condo purchase? probably yes.
over the next 5yrs, you only pay for your interest portion of your mortgage + all the misc running fees of owning a property in singapore.
you definitely get back your principal after 5yrs (unless we see a market C R A S H. if it does, then every one is screwed. you. me. everyone. cos if Pte market crashes, HDB will crash harder)
dont buy an agent's hype of which project is the best buy today. DYOR and find out whats the best option in the market today in terms of entry price and growth areas that will help support price increases.
with the right DYOR, you'll get back your principal AND a healthy capital profit on your purchase.
if you buy a pte today, do you have to wait for 5yrs before you do anything? potentialy if your property increases in price from 900k to 1.2mil in 3 yrs, dont need to be greedy and hold on longer. you can already cash out. since you have a time frame of 5yrs, the next two years you have a $300k kitty to pay for your rental (since that was your original alternative).
For any form of Property Investment, we would recommend holding a longer term. As property investment is usually considered as a hedge against inflation.
At the current market, property prices are on an uptrend and I agree that there is a very high chance that property prices will appreciate quite a fair bit 5 years from now. However, we cannot guarantee that it will not drop 5 years from now. Hence, longer holding periods will allow you to have more flexibility to ride out the volatility in property prices if any.
And for you to gain real appreciation, you will have to factor in the stamp duties, monthly maintenance as well as commission fees for the sale of the property.
On the other hand, if property prices do increase in your favor, you will be able to retain your money as well as make a handsome profit should the market situation allows.
For your case, I will recommend that you draft out your finances for both situations and make he comparison.
For example, what would your rental outlay be like for a period of 5 years vs the outlay for holding/owning a property for the next 5 years.
Factor in the costs and estimate what the selling price of the property should be like in 5 years and how much should you sell your property for in order for the investment to make sense.
With the numbers in hand, you can decide if you should rent or own a property base on what you value in life.
Hope this helps.
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