Living and investing in property are two different things. Being risk averse, I believe that the first home where we plan to live in should always be cheap and well within our financial comfort zone.<\/p>\n
The half CPF OA rule<\/strong><\/p>\n Apart from being able to make the down-payments and still have enough money to do a nice renovation, my real comfort zone is when my mortgage payments take less than half of my monthly CPF OA contributions — this meant that for every month I get paid, I would save an extra month in my CPF for rainy days. Relatively speaking, I should be able to fully pay off my mortgage loan in half the time, i.e. 15 years instead of 30 years. I would then be free of this debt at the age of 42.<\/p>\n Sell high, buy high<\/strong><\/p>\n Everybody knows that the property market will be on the uptrend in the long run, but most people barely save enough to pay the first 20% down-payment. I’ve had friends who buy million-dollar condominiums as their first property and are waiting for the right time to “flip” it for a profit but little did they consider the fact that when they sell their properties they’ll have to buy another at the same exorbitant price. They either end up taking up more debt for their resident property (refer to my “comfort zone” rule above) or downgrade in either location or size to keep the profits.<\/p>\n Location vs. practicality<\/strong><\/p>\n In my opinion, the only way to make money from property is to hold a second investment property. Investment properties have slightly different selection criteria from a resident home. For example, I may consider a SOHO unit near Bugis as an investment property but will never buy one for myself if I had a family.<\/p>\n Grow money elsewhere first<\/strong><\/p>\n Unfortunately, most average young working Singaporean adult like myself will not have that kind of money to buy a second property, especially after the recent cooling measures introduced by the Government. Since we can no longer buy two HDB units, investors will have to turn to private properties. A small SOHO-type unit would cost upwards of $800K. If I wanted to buy a $800K private property while still servicing my existing HDB loan, I would have to cough up 40% or $320K in initial down-payments — that’s before stamp duty and GST.<\/p>\n IMHO, the only way for the average Singaporean to become a property investor is to start saving and investing money early and wisely in other financial instruments first. Some may realize that property may not be the best investment afterall — who wants to pay 1% commission to agents? It’s just disgusting.<\/p>\n","protected":false},"excerpt":{"rendered":" Living and investing in property are two different things. Being risk averse, I believe that the first home where we plan to live in should always be cheap and well within our financial comfort zone. The half CPF OA rule… Continue Reading →<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[262,5],"tags":[],"class_list":["post-2048","post","type-post","status-publish","format-standard","hentry","category-finance","category-property"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/posts\/2048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/comments?post=2048"}],"version-history":[{"count":12,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/posts\/2048\/revisions"}],"predecessor-version":[{"id":2085,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/posts\/2048\/revisions\/2085"}],"wp:attachment":[{"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/media?parent=2048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/categories?post=2048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tzlee.com\/blog\/wp-json\/wp\/v2\/tags?post=2048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}