Saturday, 6 February 2016

Buying EC, Condos or otherwise... depends on your situation.

2016, the progress of the investments are pretty slow CG wise. Cashflow wise, was doing well til the hotels hit a snag with bad management. Oh well, lets ride this through.

Coming nearer home, selling HDB for me becomes a real necessity to move forward, this means safety net will be compromised. But I can deliberate further. My other 2 friends would have a real need to move and its time to re-evaluate their options.

Discussing with E and L who are in the same position. E have to sell off her Pinnacle HDB to set up a new family with her daughter. This means she will have several options; with her salary at $4200 gross per month, there is not much that she can do, lets review the options here. 

This is the cheapest Option, 3 years of build and 5 years of MOP plus all the other restrictions. Typical 4 bedder would be around 300k. She will need to pay resale levy - $20k and renovations $30-$40k.

This means a out of pocket $70 easily. Her loan will be within her 30% (just covered by CPF)

In addition, she have to rent for 3 years before moving in.. additional ~$70k.

Resale HDB
Resale HDB is a good Option as well. Better than BTO in my opinion.

HDBs price in the next few years will be stagnant and it might not be a good idea to invest in one. 

Buying a EC will be full of restrictions like the BTO Flat as well. With her affordability level she can get a 1+1 room. Hardly enough room. The advantage would be after 5 years. She saves on renovations. She may have to pay resale levy. Out of pocket $20k and factor in rental and maintenance charges. This one she will be stretched.

Normal Condo
She can get a normal condo after evaluating her for TDSR she can afford something in the range of $798k. This is great. she can easily get a renovated 2 bedder near a mrt and keep enough cash buffer to last min 5 years. If things goes awry after 5 years, she can still extract equity to tide through the challenges.

A normal condo would be my recommendation to her.

L on the other hand just sold her private, she is staying with her MIL and there is no huge issue on renting. She don't qualify for BTOs and ECs, and this narrows her options to resale HDB and normal condos. Given her situation, they are not doing too well in their business, no cars, 2 kids, average income 3k plus minus plus a bit of buffer from their sale of the condo. In my heart, I think a resale HDB would suit her best. Til she build up her cashflow, she had wanted to buy 2 Condos and rent one out or buy a bigger condo to remake into a dual key. That was textbook solution but it would be hard to do in real world. 

Both of them, schools are important, hence, it would be important to buy something near schools and near amenities to make living easier.