Single Resale, or not?.. hmm..

I was thinking about this while on the plane.. hope fellow readers can enlighten me

 

Now that I am eligible for to buy a resale hdb (ok yes, that’s a dead giveaway on my age)

And  my budget is around 300k for a 3BR (so comes with 1 master BR + 1 common BR)

Maybe some minor reno to touch up, say +10k?

 

20% downpay = 62k (cash + cpf)

Monthly mortgage will be paid by cash, since I have no cpf.

 

my plan is to rent it out. (sublet the master BR, since I don’t intend to live there.  I cannot rent out the whole unit either, since I have not fulfilled the 5 year MOP)

assuming, I can rent the master room for 1k/mth. ( location; non-matured estate in the west. ~500m to MRT))

 

Rent = 12,000

Expenses  = 1600

  • Utilities – 600/year
  • 1month commission to agent – 1000

Yield = 12,000 – 1600  / 310,000 = 3.3%.

 

Questions:

Is it better to take a HBD loan or bank loan?

Are my calculations too simplistic?

Anything else I missed out?

Or, is it better to leave the funds in CPF? Or just move it from OA to SA acct to get 4% guaranteed?

If let’s say, I do settle down in the future, does buying a resale hdb (while on single status) put me in a disadvantage or whatsoever?

Any other comments?

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10 thoughts on “Single Resale, or not?.. hmm..

  1. Hi, I am in a similar situation. Turning 35 next year
    the rent for a master bedroom would most likely be less than 1k per mth
    reno cost for a resale is quite high (around 20k excluding furniture … unless you can find a unit that is already quite nicely done up
    if you buy a resale it doesnt affect your chances of buying a bto next time

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    1. Zhanrui.

      thanks for dropping by.

      simple as in fresh coat of paint, touch up the leakages/ broken bits here and there. nothing fancy.

      furniture wise, i do have some spare furniture at my current home, so i intend to bring it over.
      will try not to use brand new as much as i can.

      what about you? you mention you are in similar situation? what are your reservations?

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  2. HI,
    you can compare the difference of HDB versus Private loan. Here is the link.http://www.hdb.gov.sg/cs/infoweb/residential/financing-a-flat-purchase/housing-loan-from-banks

    I have bought a 3room HDB with HDB loan as I wanted to have peace of miind in case interest rates goes up. You also need to cater for town council fees apart from Power supply. Rental markets is very quiet now so doubt you can fetch 1K, However, if you have lots of cash, Pte loan may be for you.
    http://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/resale/single-singapore-citizen-scheme-or-joint-singles-scheme

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    1. Sarah,

      thanks for the insight!.. very informative!

      i dont intend to take any grant. since the grant needs to be “returned” after the unit it sold anyway. so not much use. in the grand scheme of things, the grant dont seem to be too much either.

      i need to cash flow, so i cant stump out too much cash upfront too. but i think a decent size mortgage should be fine. not too strain on the finances.

      sorry, if you dont mind me asking. but u bought it for own stay or are you renting it out a room?
      also, the hdb website doesnt say the interest rate?

      i think i am leaning towards a HDB loan, since who knows, i could be getting a job with CPF, then that could go towards repaying the HDB mortgage.. and i understand that one can pay back in lump sum to offset the loaned amount, during periods whenever one gets extra money.

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  3. Whether it is better to take HDB or bank loan is up to you. HDB loan is currently 2.6% interest rate p.a. It is tagged at 0.1% above CPF 2.5%. Bank loans range from 1.7 to 2.2 % for first few years. HDB loan tenure is max at 25 years.

    The critical point is, when will the interest rate hike? Since the HDB loan payment is stretched over 25 years, it is a long time. If you think that during this long time, interest rate is higher than 2.6% most years, I suggest you go for HDB loan. There are also other advantages.

    Buying a resale HDB now has its advantage as the HDB resale price has softened over the last few years. The renting out of Master room is not likely to fetch $1k per month in this challenging period. Do discuss this with rental agents as they are quite ‘creative’ about it.

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    1. i didnt realise the HDB loan was +0.1% of the CPF OA. If thats the case, then i guess HDB loan is more stable,

      when IR will rise.. who knows? even FED themselves cannot agree among their themselves.
      but once FED increase the IR, then for sure the sibor will rise accordingly. i guess in a timeline of say, 5-10 years, the possibility is quite high, that it will go up.

      actually, my money is on, after the US prez election, that they will increase the IR =)

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  4. Hello Foolish Chameleon, thank you for leaving your comments on my blog. Totally appreciate your comments. I’m currently helping my parents rent a master bedroom in the west at 900, and I’m looking to raise the rent though.

    1k for master bedroom is definitely doable if you know how to sell the value of your location.

    Just a quick advice, you don’t need an agent to rent your rooms and pay commission. Why don’t you just rent the rooms out yourself? I admit it’s quite a hassle to have to deal with viewing.

    Cheers!

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    1. hi there,

      yes, i agree 1k is doable. it is very close to MRT <500m, maybe 5min walk?
      i guess i was erring on the side of being conservative.

      the reason i kinda prefer agent, is coz i am usually not in sgp. yea, i guess, i can trouble my parents to do that, and give them the commission? haha.

      a few questions since you are here;
      – how do u settle the utlity bills? water/elect/internet/etc. is that included in the 900?
      – is there aircon in the master BR?
      – how do you deal with the privacy lost in the house?

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      1. Wow, thank you for the quick response. I’m also not in SG though since I’m investing in France and jobless. 😀

        I used the site, Easyroommate.com to organize my viewing. You just simply take photos post them on the site. Now, you have to pay to use their services. I paid about 80SGD for about 6 months of live advertising. Initially, I was also quite skeptical about the sunk cost and the possibility of getting good tenants. I was like, what the heck, let’s just try. In fact, I was flooded with inquiries and got a tenant within 2 weeks.

        These people were high-quality tenants and I didn’t have to screen them at all on their ability to pay. I’ve got postdoc, professors, nurses, mostly professionals coming to rent. I didn’t have to negotiate with them for my rent too. I realized that using a paid service has its own benefits. People automatically refuse to use a service because they have to pay. Imagine the trade off of your time and money.

        You don’t want to have any future problems with your tenants, so you have to draft a contract and have them signed. It’s always good to have everything clearly indicated so your tenants know their rights. In order to have a contract written up, you can just print a standard contract off the internet and have it stamped virtually by HDB to make it valid. You can write up your own condition and clauses too. There’s no need for a lawyer in that case.

        Perhaps, you can make an arrangement with your parents using whatsapp like I did. It takes just 5 min to view the entire apartment. Then you can pay them just a few hundred bucks for the close. 😀 I quite sure your parents will be willing to do that if there’s money on the line. haha. If there is any problem, everything can be arranged via email or whatsapp with the potential tenant or your parents. I love technology!

        Now, in my situation, my parents had the entire apartment vacant for a year which has 3 rooms. My father felt that it was too much work for him to get tenants since we live elsewhere. We have AC fitted in every rooms and internet arranged.

        We left 1 room vacant and rented out 2 rooms. So we are essentially getting more than 900, and we cover all the bills – electricity, water, and internet. Electricity and water is payable by the tenants above 80 bucks. My bills are paid virtually using my credit card. You can arrange GIRO payment if you want for your utilities.

        I guess my situation is different from yours. Since we don’t live in the place there is no issue with privacy.

        My strategy is this: if I make my tenants happy, they will stay for a longer time. If they stay for a longer time, I don’t worry about vacancy and i can still raise rent with no problems.

        I hope I helped you with your questions. You can send me a private email to discuss further if you like. Cheers!

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  5. haha.. coz i am bored sitting in my hotel room. been reading blogs, papers, etc.. not much to do …

    thanks for the very insightful post! it is very clear you have everything worked out! which is great!
    lots to learn from you!

    just got back from lunch, saw your email.. yea, good idea, lets take the discussion offline =)

    Like

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