Updated: May 21
I have been sharing a few articles in my blogs recently, explaining why you should invest in Singapore property and how property investment can grow your wealth through systematic, strategic planning.
Let me share with you how I had helped my client, Mdm Tan to grow her wealth.
I came to know Mdm Tan in the year 2007. She is the mother of my Brother-in-law’s campmate, Mr Lim.
She was renting half a shop in a HDB shophouse near where she is living in Ang Mo Kio Avenue 5, selling stationary and provide photocopying services and photo development.
When she heard that the shop owner had the intention to sell the shop, she was worried that the new owner might either increase the rental or even worse, vacate them after the tenancy expired. She approached me to assist her on the procedure in buying over the unit.
Mdm Tan had already utilised her CPF in her HDB 3 room flat and had about S$50K cash in hand. She has 2 sons, one is a civil servant and the other was helping her on her business.
Both had funds in their CPF account. Back in the year 2007, Singapore Citizens were still able to buy a commercial property using their CPF funds.
After a more in-depth conversation and understanding of their financial status, I proposed that they buy over the HDB shophouse with living quarters (A HDB 3 room flat on the second level of the shop).
The price of the HDB shophouse unit was $600K back then! A down payment of 20% was $120K which was easily managed with her $50k cash and funds from her son’s CPF account. And the rest of 80% was settled with a bank loan with a 30-years mortgage!
And she only had to pay $1,250 monthly without worrying landlord having to increase her rental when the market picked up.
What did Mdm Tan benefit from this purchase?
Her rental was $1500 before the purchase, now she had saved $250 monthly!
Not forgetting she continued the tenancy with the existing tenant who used it as a hair salon on the other half shop at a rental price of S$1,750.
They kept the residential component on the 2nd floor for their own use.
Mdm Tan then had a positive income of S$2,000 monthly after paying the mortgage instalment and a residential component for her usage!
Things didn’t stop here! Over time, we built a friendship on top of that business relationship! We could talk about everything from her work to her family.
One day, after a conversation with her, she mentioned her HDB 3 room flat is a bit small for her family now that the kids are older and needed their own privacy. So I proposed for her to sell her HDB 3 Room flat and upgrade to a bigger flat.
I managed to get her a HDB 5 room flat within the vicinity close to her shop. This time she bought the flat with her elder son. The transactions were done on a contra manner, meaning both the flats were transacted at the same time, they stayed in the living quarters at the shophouse during the renovation for the HDB 5 Room flat.
2 years down the road, in 2011, the tenant moved out of the shop and I was asked to assist to rent out the shop for her.
While handling the marketing of the shop, Mdm Tan complained to me that business wasn’t as good as before, her son had no intention to take over her business after his graduated in his part-time course, etc. It was taking quite a while to look for a replacement tenant, her health is failing etc…
Offloading To Reap Profit
Understanding her problems, I did a quick analysis of the commercial property market in Ang Mo Kio and found the demand of shophouses in that area is high and she would be able to reap some profit if she sells it.
I suggested her to offload her commercial property and reap the profits so she could retire, She is already close to 60 years old then
After a meeting with the 2 sons and all agreed to sell the HDB commercial shophouse if they could achieve at S$900K selling price.
Nobody would have imagined that the demand for the shophouse was tremendous.
I sold the unit in record time (one day after I advertised!) and a record price in the vicinity and above the expectation of what the sellers wanted. The closing price was at S$1.1M.
Now, take a look at how much profit Mdm Tan and the Lim’s brother gained.
They bought the shophouse for S$600K. Managed to rent out half of the shop at S$1,750 for 2 years. The upfront cost is S$120K cash plus CPF. Sold at S$1.1M.
Purchased price : $600K
Rental income of $1750 for 2 years : $42,000
Down payment : $$120K
Sold at $1.1M
So the proceed they acquired is S$1.1M + S$42,000 – S$600K = S$542,000
That is 90.33% for a 2 years investment, annually is 45.16%.
Now with this amount of cash on hand, Mdm Tan understood that putting money in Real Estate will grow her wealth fast and save.
She decided to sponsor her younger son to purchase a HDB 4 room flat in Ang Mo Kio since he was getting married and also invested in a 3 room private condo in H2O Residences at S$1.1M together with his elder son and daughter-in-law. Now, she is staying together with the elder son and taking care of her grandchildren.
As for the HDB 5 Room flat, she withdrew her name when her elder son got married, replacing it with her daughter-in-law name. Now it was rented out at S$2,400 monthly.
Recently, I am in touch with the Lim’s brother on the issue of the diminishing of the tenure of the HDB flat and how it will affect the value of their HDB flat.
I scheduled a zoom meeting with them during this COVID-19 period, sharing with them the pros and cons, and have given them a proposal plan to move forward that can help them to grow their wealth.
They are keen to explore more and will have more discussion with me on how to go about after the Circuit Breaker is lifted.
I hope the above had given you some light on how I had helped a family to plan their wealth, Will you be the next one?
I strongly support that Real Estate investment will help you to grow your wealth in time to come, especially in Singapore (please read my blog on Why you should invest in Singapore Real Estate).
With proper planning, you can be the next Mdm Tan!
Regardless of what situation you're in at the moment, I always believed that I will be able to come out with the right solution for you to grow your wealth in Real Estate investment.
Do contact me for a 30 minutes free property wealth planning session, and let me help you to put your money to work harder for you. You can schedule the meeting using the calendar below.
If you like my article, please also forward to your friends or anyone you know who want to explore more in growing their wealth in real estate investment.
Peter Tan Choon Guan, The Real Estate Guy.
Senior Associate Group Director with OrangeTee & Tie.
Since 1995, he has been providing professional consulting services to clients in Singapore and beyond. From strategic planning to innovative solutions, his focus is always on building an efficient and results-driven relationship. He will work with you to create a customized plan of action for yourself or your organization.
Peter is an adventurous person, he is a basketball player since school times, represent schools and organisation in the National Tournament. He is also active in track and fields, participated in school events and national events and got a bronze medal for his Long Jump events and a silver medal in his 100M run.
Water sports in another area he is interested, obtained a few medals for his canoeing competition. He conquered Mount Kinabalu in East Malaysia, Mount Tahan and Mount Ophir in East Malaysia.
He is enlisted into National Services as Naval personnel, a Section IC in his department. Appointed to Acting Platoon Sergeant during his Reservist.
During school times, he is a class monitor and a school prefect during his primary school time. Become a youth leader in a later stage. With all the exposal created him a leader by nature, able to train and guide people.
Starting to run in own business in the year 1995 and ended his business in years 2013. This allows him to be able to communicate at all levels in society. Joining the Real Estate Industry in the year 1995 as a part-timer, after he ended his business in 2013, he focuses on Real Estate consultation, not only starts to invest in property himself, he also assisted more than 350 property investors to build their wealth in property investment.
With the hand on investment himself, he will be able to provide you with the real-time property insight and strategic planning for your property investment through Property Wealth Planning System.
WhatsApp Peter if you need any assistant. If you do like this article, please give me some comments and like.