Asked by Anonymous
Asked on 24 Sep 2018
My HDB is in a mature town leasing out for $2600 per month currently. I can probably sell this at around or near to 700k. The HDB is now 15 years old and already been paid off.If I’m keeping my HDB then I will have to pay ABSD of 7% which work out to be 70k or more (my target condo price is between 1 to 1.3m), I will probably need 3 to 4 years to offset this ABSD with my rental income minus tax. If I’m going to sell my HDB then I can en-cash and pay much lesser cash for the upfront payments for the condo. Government is unlikely to relief ABSD soon and I don’t see HDB price be growth substantially in the next few years. That said selling may be a better option, but there are other considerations. Buy/sell commissions, once I do this and difficult to go back and buy HDB in the future, good to keep HDB for rental with reasonable rental yield...etc. Should I keep or sell my HDB? Welcome for advices and suggestions.
I'm assuming you are a Singaporean. The ABSD rate for 2nd property for SC has increased from 7% to 12% recently.
I recommend selling your HDB to take profit of the capital appreciation of your HDB. While HDB seems to have high rental yield, the tenant profile is usually not as ideal as private properties'. I have handled both HDB and private rentals and because there are usually more people staying at a HDB unit, there tends to be more damages to the property than the latter.
Regarding the buy/sell commission, you are only expected to pay agency fees for the sale of your HDB. The purchase of private property would not incur any cost as your property agent would cobroke with the developer/seller's agent.
In the future, if you decide to downgrade back to HDB, you can still purchase a resale HDB without any time lag after you sell your private property(s). Only in the event if you're interested in purchasing a BTO/EC, would you require to sell your private property(s) for 30 months before applying for BTO/EC.
If you're a parent, private properties have its advantages. After you have finished paying your home loan and you realize you need cash to fund your children's university education, you can apply for a home equity loan (term loan) where the bank uses your private property as a collateral and grants you the loan. This is not possible if the property you own is a HDB flat.
Let's think about this together.
is it better to give up a paid up roof for another roof tt will incurred debts?
how about the accurred interest to pay back for the 15yrs (assumed) ?
is the current ppty a good place to stay and grow ur family?
Are u going to sell ur pte ppty in future just to go back to HDB?
IF you can afford the ABSD, and u know you can break even with a short time, u can skip pt 4 and maybe make a good income generating asset from ur HDB.
Condo is good to stay in but if for rental, the possibly increasing management fee and sinking fund fee will eat into ur rental yield.
You cant really cash out and make possibly good profit from one of ur ppty ONLY is the needs arised, if not, both ppty can be put to good use for passive income for retirements.
BUT if you cant afford the 2nd ppty, is better to cherish what you already have and progress from there.
Hope my reply helps.
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With the current information I'm given and the recent trends in the real estate market. I would definitely sell off the HDB, buy a new launch condominium and rent while you're waiting it's completion. However, it's simple to say here, we really have to look at all the fine, minor details which will affect your Cashflow and timeline. Talk to me if you want to find out more @ 97330777. Cheers!