First-time buyer, how to start investment in Singapore Property?

Owning private residential property is where most Singaporean dream.

Property investment, most of the people will have a mindset that you must invest in a private property. Is that the only area, let explore.

Before you start, it will much easier if you engage an estate professional to assist you in your planning if you are looking into building your wealth in property investment.

Where should I start? Public housing or Private Housing?

Let take a look at the differences in owning public housing and private property before you decide to which is good for you.

HDB Public Housing - BTO / EC and Open Market Resale

1. For BTO flats and new ECs, both buyers must be Singapore Citizens. Check here for the eligibility to buy.

2. You are eligible for HDB loan, there is an income ceiling for BTO flats.

3. For HDB loan, you can loan up to 90% of the valuation.

4. You are entitled to CPF housing grants, income ceiling apply.

5. You are not allowing to sell, buy or rent out your units before you fulfilled your minimum occupation period (MOB).

6. All buyers, age must be at least 21 years old.

7. For a single buyer, age must be at least 35 years old.

8. Mortgage Servicing Ratio (MSR) is at 30% of your income.

Private Property.

1. Age must be at least 21-year-old.

2. No restriction to the citizenship of the buyers.

3. Can buy in a single name or joint names.

4. Loan to value only 75% of the valuation of the property for the first property.

5. Total Debt Servicing Ratio (TDSR) is capped at 60% of your income.

6. No MOB period, you can buy another unit, sell or rent out your unit instantly.

How to go about to build my wealth in property investment?

I can simply say that in Singapore, most of us have this mindset. When you get married, you must get yourself a property, build your own dream home. This is how we start to get involved in property investment.

Most of us will go for the Public Housing, just because is the most affordable.

I strongly believe that you would want to make sure that your property, the values appreciates when you decide to upgrade in future.

Investing in property is a long term event, proper strategic, detail structural planning is a must.

let look into the different options.

Buying HDB Flats

John Tan 27-year-old and Mary Tay 26-year-old.

First-time buyer...

They intended to buy a matrimony home and build their dream home, and at the same time planning for investment in property.

Financial status for John and Mary.

1. Total monthly income for both of them is S$7,000.

2. Total fund in their CPF is S$70,000.

3. Cash on hand is S$90,000.

With the financial status above, they can have 2 options

Buying HDB BTO Flat.

If John and Mary have a place to stay and can wait for the HDB BTO flats to be built, this may be one of the options they can choose.

With the financial status, they can easily book a unit from HDB without any obstruction.

If they chose this option, they will only be able to further their property investment in another 7 to 8 years after they fulfilled their MOP.

By then, they should have more saving, they can then sell their HDB flats and ventures into investment in a private property.

Let see how much is your proceeds when you reach MOP for going for BTO flat.

Prices for the BTO flats at Garden Vale @ Tengah.

The above chart, you can see that, if John and Mary bought a HDB BTO 4 room flat, they can easily achieve proceeds of S$91,000.

Buying a Resale HDB Flat

If John and Mary need a place fast, they can look into HDB resale flat, especially that just reach MOP.

With their current financial status, they are more than eligible.

Since they are first-time buyers, they are eligible for CPF Housing Grant.

This makes their purchase price much lower than the actual resale transactions.

The MOP period is only 5 years from the day they collected the key, this allows them a to have time to prepare for their next venture and in a much shorter period then getting HDB BTO flat.

By the time they reach the MOP, they are ready for the next venture in their property wealth planning journey.

With the CPF housing grant, they most likely will still have proceeds when they sell.

Buying a New launch private property.

Edmund 28 years old and Emily 27 years old

Looking to start their property investment

Financial status:

1. Edmund monthly income of S8,000 and Emily have an income of S$5,000

2. Edmund CPF ordinary accounts have S$85,000, cash on hand S$250,000.

3. Emily CPF ordinary accounts have $72,000, cash on hand S$180,000

With the above financial status, Edmund and Emily can actually buy 2 units of 2 bedrooms of private properties.

One unit as their dream home and the others will be for investment.

Suggest the investment unit be a new launch property.

Let take a look at how the performance of the new launch development after when T.O.P.

Let take High Park Residences as an example

The entry price for High Park Residences during the launch is about S$960psf when Temporary Occupancy Permit (T.O.P.) granted in end 2019, the transaction price reach as high as S$1,260psf within 3 and half year time.

There is a difference of S$240 per square foot.

Just imaging, you bought a 2 bedroom unit of sizes 678 sqft, you profited $162,720 within 3.5 years.

Let take another new launch project, H2O Residences

The entry price for this new launch is from S$930psf and when T.O.P , the selling price is at S$1,110psf, a difference of S180psf, for a period of 4 years.

For a 2 bedroom unit of sizes 850 sqft, you will profit S$153,000.

As you can see, most of the New Launch development will have a substantial appreciation, if you be able to know when to exit, you will able to gain and build your wealth through property investment.

Do contact me, your property wealth planner for more detailing and structural planning in your property venturing.

Hi, I am Peter Tan.

The Real Estate Guy.

Since 1995, I’ve been providing professional consulting services to clients in Singapore and beyond.

From strategic getting to innovative solutions, my focus is usually on building an efficient and results-driven relationship.

I’ll work with you to make a customized plan of action for yourself or your organization

WhatsApp Peter