Should I sell my D9 FH property if I can nett a million profit.

[shue7]

Hi all,

I have just one property in my name and that’s a D9 FH PC I bought recently.
Transacted psf in my condo has gone up some 30% lately. I know I’m getting ahead of the situation but hypothetically speaking, if it reaches a point where I can make a million from disposing it, should I?

- PC currently rented but yield is not good
- Bought this apt when we had no kid. Shortly after firstborn came along.
- We’ve never moved in for various reasons - outsized being one of factors - so we rented out.
- Bought the place because we like the vicinity (lifestyle) - close to Robertson

When I purchased this place, the intention was to hold for long (even considered the possibility of passing to kid if I have one though at that point we were DINK). Like all buyers, I did try to avoid buy high. Not so much as to hope to profit from it in future but rather to minimise the risk of losing money in case emergency strikes and I need to sell. The recent run up in prices got me thinking this could be THE chance for me to make money if opportunity presents itself.

My “concerns” are:
- if I sell now I don’t foresee myself having another chance of owning another D9 FH property anymore as I’ll be priced out (I really fancy owning a D9 property)
- I don’t know what to do with the proceeds (I don’t invest), and I don’t think I’ll buy any property in the short term due to current high prices. Chances are I’ll be “investing” in some very safe products with a yield of maybe 2% , which can’t beat inflation.
- a much longer timeframe down the road, my place gets enbloc and I lose the opportunity to pocket even more because I didn’t hold out long enough (hahaha, I can dream....)



Like to hear all opinions!

Thanks for reading this long post.

[Arcachon]

When buying ask why are you buying, for rental yield, capital appreciation or inflation hedge.

When selling ask yourself what can you do with the profit or money on hand.

You should get your answer by asking the 2 question first.

[thomastansb]

Agree.

You put that 1M in your bank, you lose 3% a year. You don't sell, you earn 3% a year with the risk of fluctuation.

You decide if that risk is worth 6% (3+3) a year. And in the longer run, do you think the risk of price fluctuation affects you?

6% a year = 100% in 12 years in compounding terms




When buying ask why are you buying, for rental yield, capital appreciation or inflation hedge.

When selling ask yourself what can you do with the profit or money on hand.

You should get your answer by asking the 2 question first.

[Arcachon]

Agree.

You put that 1M in your bank, you lose 3% a year. You don't sell, you earn 3% a year with the risk of fluctuation.

You decide if that risk is worth 6% (3+3) a year. And in the longer run, do you think the risk of price fluctuation affects you?

6% a year = 100% in 12 years in compounding terms

Wow , Time Value of Money playing here.

[tonymontana]

Hi all,

I have just one property in my name and that’s a D9 FH PC I bought recently.
Transacted psf in my condo has gone up some 30% lately. I know I’m getting ahead of the situation but hypothetically speaking, if it reaches a point where I can make a million from disposing it, should I?

- PC currently rented but yield is not good
- Bought this apt when we had no kid. Shortly after firstborn came along.
- We’ve never moved in for various reasons - outsized being one of factors - so we rented out.
- Bought the place because we like the vicinity (lifestyle) - close to Robertson

When I purchased this place, the intention was to hold for long (even considered the possibility of passing to kid if I have one though at that point we were DINK). Like all buyers, I did try to avoid buy high. Not so much as to hope to profit from it in future but rather to minimise the risk of losing money in case emergency strikes and I need to sell. The recent run up in prices got me thinking this could be THE chance for me to make money if opportunity presents itself.

My “concerns” are:
- if I sell now I don’t foresee myself having another chance of owning another D9 FH property anymore as I’ll be priced out (I really fancy owning a D9 property)
- I don’t know what to do with the proceeds (I don’t invest), and I don’t think I’ll buy any property in the short term due to current high prices. Chances are I’ll be “investing” in some very safe products with a yield of maybe 2% , which can’t beat inflation.
- a much longer timeframe down the road, my place gets enbloc and I lose the opportunity to pocket even more because I didn’t hold out long enough (hahaha, I can dream....)



Like to hear all opinions!

Thanks for reading this long post.

Don't sell. YOu gave the reasons yourself. Over time, you will regret offloading it. As you said, you have no urgent need for funds.

[star]

Don't sell. YOu gave the reasons yourself. Over time, you will regret offloading it. As you said, you have no urgent need for funds.

But sometime hand itchy. :b

[PropVestor]

Looking ahead, do you need that sum of money somewhere in the mid term. There is opportunity cost for everything that you do. I rather you ask what is your holding balance in your bank now which you can weather any sort of downturn now that your kid is in the equation. If you have a 'safe buffer' (amount subjective due to your lifestyle), then I think the answer is clearer.

[Kelonguni]

This is what a 1mil profit can buy. For reference.

https://www.straitstimes.com/singapore/housing/five-room-hdb-flat-sold-for-11-million-in-june-setting-new-record-for-queenstown

[Amber Woods]

If you are very rich and this property is meant for your children, than keep it.

If you are rich, and want to be richer, and believe that a major price correction is in the waiting (for economic reasons or whatever your research suggested), than sell and invest your profits in bonds etc. You can re-enter the market and maybe with the profits you can buy two instead of still holding to this single unit.

However, if you believe that prices can only go up in the long term (like all property agents are advocating) and willing to forgo mid term price correction, and miss the opportunity to add more, than do not sell.

If you are not so rich and hoping to be rich, you may need to take some calculated risk here. You either end up holding to this single unit for the next 20 years or you can add more by taking some risk.

[Arcachon]

Never buy Low sell High because you will never buy because you will be waiting for the next low.

Same with sell High buy Low because you will be waiting for the next high.

Buy when you can with all the reserve for bad time, sell when you need to sell and not when you want to sell.

Remind yourself how many 10 years do you have and you should be safe.

[Amber Woods]

When you want to buy a property or a new car, you need to decide for yourself if it is the right time to buy. You can ask the property agent or the car salesperson anything about the property or car but never ask them is it the right time to buy. You will always get the same 'convincing' answer from them because they need to sell to pay for their own bills and to keep their jobs.

[jwong71]

Sell only if offers above valuation gao gao.
True story, valuation 4mio. Someone sold to china buyer 5mio.

[azeoprop]

Hold till enbloc next time.

[bargain hunter]

Sell only if offers above valuation gao gao.
True story, valuation 4mio. Someone sold to china buyer 5mio.

got lobang bo? i also want to valuation 4m sell to china buyer at 5m leh.

[jwong71]

got lobang bo? i also want to valuation 4m sell to china buyer at 5m leh.

Bo lobang. You can try on their chinese group singapore website

[sginvestor]

how many years of reserve for bad time? 3 years to cover mortgage?

[Arcachon]

how many years of reserve for bad time? 3 years to cover mortgage?

6 month

[Amber Woods]

how many years of reserve for bad time? 3 years to cover mortgage?

If you are below 40 and marketable, 6 months sound reasonable. However, if you are above 40, even if you are marketable, be prepared for 3 years if you expect to get a job to match your last drawn pay. Be prepared to even settle for less than half of what you used to draw to be employable. This is the new norm.

[new2mondrian]

I just sold my D9 FH. Close to 60% gains, ignoring all the rental income which I pocketed and paid down the loan over the years.

As with all investments, there is an entry point, and also an exit point. Listen to yourself and do your own math.

Having said that, since you bought recently (not sure how recent), you should be subject to SSD upon sale. Assuming you paid ABSD, all the stamp duties, legal fees and agent fees will eat into a substantial chunk of your profit. Hence, I am not sure if that 30% gain number is realistic. Again, do your own math.

Money is always fungible, and there are many investment classes. Since you probably are young, can have a longer term investment horizon, calibrated by your risk appetite.

Perhaps you should ask yourself - do you see yourself buying another investment property with the proceeds? Is having a D9 investment property a constant objective? Is this current property rentable in the next 5-10 years horizon? That should inform you on the opportunity costs of holding, versus the potential upside from reinvesting in other investment classes or properties.

[Amber Woods]

I just sold my D9 FH. Close to 60% gains, ignoring all the rental income which I pocketed and paid down the loan over the years.

As with all investments, there is an entry point, and also an exit point. Listen to yourself and do your own math.

Having said that, since you bought recently (not sure how recent), you should be subject to SSD upon sale. Assuming you paid ABSD, all the stamp duties, legal fees and agent fees will eat into a substantial chunk of your profit. Hence, I am not sure if that 30% gain number is realistic. Again, do your own math.

Money is always fungible, and there are many investment classes. Since you probably are young, can have a longer term investment horizon, calibrated by your risk appetite.

Perhaps you should ask yourself - do you see yourself buying another investment property with the proceeds? Is having a D9 investment property a constant objective? Is this current property rentable in the next 5-10 years horizon? That should inform you on the opportunity costs of holding, versus the potential upside from reinvesting in other investment classes or properties.

Very sound advice. For sure, you are not a property agent but a sound investor who understands the mechanics of investment.

[Kelonguni]

If you are below 40 and marketable, 6 months sound reasonable. However, if you are above 40, even if you are marketable, be prepared for 3 years if you expect to get a job to match your last drawn pay. Be prepared to even settle for less than half of what you used to draw to be employable. This is the new norm.

6 month more than suffices. The new reality is at least can be Grab driver. 2-3K close one eye work half day 5 days a week also can meet.

Need more work more hours.

Job security is not really an issue.

[Kelonguni]

What I meant was 6 month would suffice for one to sell a D9 FH property.

[Amber Woods]

6 month more than suffices. The new reality is at least can be Grab driver. 2-3K close one eye work half day 5 days a week also can meet.

Need more work more hours.

Job security is not really an issue.

For the average worker earning less than 5K a month, this option (Grab driver or delivery for Q10 or Lazada) is workable. However, for most professionals earning 5 to 10k a month, they are the one who will need 3 years of mortgage saving to save their homes.

[Kelonguni]

For the average worker earning less than 5K a month, this option (Grab driver or delivery for Q10 or Lazada) is workable. However, for most professionals earning 5 to 10k a month, they are the one who will need 3 years of mortgage saving to save their homes.

Check my previous message. Why can't they sell in 6 months but must reserve 3 years of mortgage to pay for something that they (now) cannot afford?

The deposit required for any D9 FH property and the amount of mortgage paid is already enough to fully settle to pay for a resale HDB anytime they need to downgrade.

And this guy is already sitting on $1 million profit on top of the amounts mentioned.

[Amber Woods]

Check my previous message. Why can't they sell in 6 months but must reserve 3 years of mortgage to pay for something that they (now) cannot afford?

The deposit required for any D9 FH property and the amount of mortgage paid is already enough to fully settle to pay for a resale HDB anytime they need to downgrade.

And this guy is already sitting on $1 million profit on top of the amounts mentioned.

The person who asked this question is not the person sitting on $1m profit. Their needs are different.

[Kelonguni]

The person who asked this question is not the person sitting on $1m profit. Their needs are different.

There is no such profile as someone who must keep a property they can’t afford for three years waiting for their matching job to come along.

No financial advisor will advise three years of mortgage on standby. It’s ultra ultra safe, but way beyond what most require.

For me, 3 months cash for mortgage plus 1 year of CPF OA for mortgage is more than sufficient.

Or perhaps you can share what profile requires 3 years’ mortgage on standby and why? Thanks.

[Amber Woods]

There is no such profile as someone who must keep a property they can’t afford for three years waiting for their matching job to come along.

No financial advisor will advise three years of mortgage on standby. It’s ultra ultra safe, but way beyond what most require.

For me, 3 months cash for mortgage plus 1 year of CPF OA for mortgage is more than sufficient.

Or perhaps you can share what profile requires 3 years’ mortgage on standby and why? Thanks.

That was a hypothetical question posted by someone asking how long does it takes to hold on to a property in bad times.

[Kelonguni]

That was a hypothetical question posted by someone asking how long does it takes to hold on to a property in bad times.

If cannot hold or need money, it's better to sell and move on.

But just to note that we have just gone through those 4 years of simulated "bad" times.

Those who commit in the last few years are likely to have quite a bit of buffer to sell or to hold.

[Amber Woods]

If cannot hold or need money, it's better to sell and move on.

But just to note that we have just gone through those 4 years of simulated "bad" times.

Those who commit in the last few years are likely to have quite a bit of buffer to sell or to hold.

The last 4 years were neither good nor bad times. Weak holders who bought at high at CCC (including Sentosa) in 2007 had already sold their holdings. For those who bought at the peak in 2013 for OCR and RCR, the last 4 years have been testing times but not worrying times since there is neither recession nor crisis affecting the market except the cooling measures still in tact.

The next 4 years shall be interesting with buyers and sellers taking different positions. Some are taking the opportunity to take profits now while the market is still hot while some are buying now not wanting to miss the boat despite all the cooling measures still in tact.

[shue7]

Deleted

[shue7]

I’m closer to the last category than anything else. One part of me wanted very much to take risk at some point and cash out on a “meaningful” profit if it comes along instead of being sentimental over the property (my first purchase!). Precisely so I don’t “end up holding on to this single unit for the next 20 years”. The latest cm sort of burst my bubble.... sort of.. let’s see how this pans out next year.



If you are very rich and this property is meant for your children, than keep it.

If you are rich, and want to be richer, and believe that a major price correction is in the waiting (for economic reasons or whatever your research suggested), than sell and invest your profits in bonds etc. You can re-enter the market and maybe with the profits you can buy two instead of still holding to this single unit.

However, if you believe that prices can only go up in the long term (like all property agents are advocating) and willing to forgo mid term price correction, and miss the opportunity to add more, than do not sell.

If you are not so rich and hoping to be rich, you may need to take some calculated risk here. You either end up holding to this single unit for the next 20 years or you can add more by taking some risk.

[shue7]

nary a chance in the mid term. Unless next master plan revision lifts plot ratio of the area


Hold till enbloc next time.

[Laguna]

property is no longer a good investment class in view of yield is getting lower and lower with upside is rather limited. How many foreigners wanting to buy now with this ABSD. On top, democratic profile in Singapore with dropping birth rate and control of working permit, the vacancy rate is going to stay around 8-10% or even higher if recession hits.

There are so many asset classes giving u very good return without the needs to please the tenants and maintain the properties. One just need to broaden the horizon of investment, don't just confine with property, then the picture is very clear.

[tonymontana]

Laguna, can you list down two or three of your asset class that is better than property? Thank you.

[Kelonguni]

On the contrary, yields are about to go up with vacancy dropping below historical average.

There are many asset classes but no one gives me such good and and stable yield as property. Some people are more suited than others to be landlord I feel.



property is no longer a good investment class in view of yield is getting lower and lower with upside is rather limited. How many foreigners wanting to buy now with this ABSD. On top, democratic profile in Singapore with dropping birth rate and control of working permit, the vacancy rate is going to stay around 8-10% or even higher if recession hits.

There are so many asset classes giving u very good return without the needs to please the tenants and maintain the properties. One just need to broaden the horizon of investment, don't just confine with property, then the picture is very clear.

[Laguna]

Laguna, can you list down two or three of your asset class that is better than property? Thank you.

1. floater bond... about 5.5% pa
2. pick up some good equity over many markets
3. Lately I get into forward redemption in FX

[Laguna]

On the contrary, yields are about to go up with vacancy dropping below historical average.

There are many asset classes but no one gives me such good and and stable yield as property. Some people are more suited than others to be landlord I feel.

Net yield will not go up in view of rates hike and higher maintenance. I have high doubt on vacancy rate (now about 6.8%) is going to improve in the near term. All my properties rental are still not going up at all, just maintaining. Those above $5,000 rental is rather difficult now to find tenants.

My investment asset class
1. Bond - a good varities - about 20%, I moved in quite heavily into floater (5.5%)
2. Equity - about 10% now increasing to 30%, need cherry picking (buy now, selling in Dec)
3. Properties - around 40% of total, these are not for selling already.
4. Spare : 10%

Property is the worst in term of liquidity. If you don't prepare your asset class for crisis or downturn, then you won't understand why I don't encourage people to investment in properties now.

The new generation, if they are caught in recession, job loss... stuck in properties, with no more dry powder, then that will be end of their journey to be rich.

[Kelonguni]

6.8% vacancy has been a marked improvement from a few quarters back when it was 8.4%. The numbers will continue to improve due to sustained slowdown in TOP developments over the next year.

$5,000 rental is above my belt and not the type suitable for investment in current climate due to the occupational type and income of those who rent. Even that may improve a little due to people who need to rent short term (3 months to 6 months or longer) to beat the financing requirements of moving or upgrading. Suddenly, it made sense why they would shorten the minimum rental period to 3 months just a few months back.

Just my own experience.


Net yield will not go up in view of rates hike and higher maintenance. I have high doubt on vacancy rate (now about 6.8%) is going to improve in the near term. All my properties rental are still not going up at all, just maintaining. Those above $5,000 rental is rather difficult now to find tenants.

My investment asset class
1. Bond - a good varities - about 20%, I moved in quite heavily into floater (5.5%)
2. Equity - about 10% now increasing to 30%, need cherry picking (buy now, selling in Dec)
3. Properties - around 40% of total, these are not for selling already.
4. Spare : 10%

Property is the worst in term of liquidity. If you don't prepare your asset class for crisis or downturn, then you won't understand why I don't encourage people to investment in properties now.

The new generation, if they are caught in recession, job loss... stuck in properties, with no more dry powder, then that will be end of their journey to be rich.

[Arcachon]

6.8% vacancy has been a marked improvement from a few quarters back when it was 8.4%. The numbers will continue to improve due to sustained slowdown in TOP developments over the next year.

$5,000 rental is above my belt and not the type suitable for investment in current climate due to the occupational type and income of those who rent. Even that may improve a little due to people who need to rent short term (3 months to 6 months or longer) to beat the financing requirements of moving or upgrading. Suddenly, it made sense why they would shorten the minimum rental period to 3 months just a few months back.

Just my own experience.

The picture look clearer now.

[Kelonguni]

Now got two main routes for people who need to buy another property and move while selling the old property (assuming only own 1 property - the vast huge majority).

1. Buy the next property, move over then sell the old - Upfront 25% downpayment if current property fully paid up(or more), 12% ABSD, 4%- BSD. Plus renovation costs. 40+% plus renovations. Even if the intent is for ABSD remission within half year.

2. Sell and move out (rent), proceeds in, then buy - if proceeds from previous property can cope with the 25% downpayment, 4%- BSD and renovations, minimum cash outlay required.

Makes sense?

[starrynight]

Laguna, what's a *floater* bond? Thanks


1. floater bond... about 5.5% pa
2. pick up some good equity over many markets
3. Lately I get into forward redemption in FX

[Laguna]

Laguna, what's a *floater* bond? Thanks
PM

[tonymontana]

1. floater bond... about 5.5% pa
2. pick up some good equity over many markets
3. Lately I get into forward redemption in FX

Thank you.

How about the risks involved? I see property as having low risk. I do dabble (invest) in stocks for years. Although I did reasonably well in it, but I find property is still the best, and safest. As I get older, I don't really care for all that volatility.

[Laguna]

Thank you.

How about the risks involved? I see property as having low risk. I do dabble (invest) in stocks for years. Although I did reasonably well in it, but I find property is still the best, and safest. As I get older, I don't really care for all that volatility.

All asset classes come with risk. I remembered during Lehman time, we did not even dare to talk about the paper losses we had from properties. The amount was far beyond we could take. We were very very highly leveraged then.
Only you been through crisis, at least once, better twice, then you would understand the importance of a balanced portfolio especially when you are getting older, cannot take any more heart attacks.

Property is the worst class in term of liquidity. If you believe in economy cycle, then a balanced portfolio is very critical. Hold only good quality property, stay liquid and capitalise on crisis to grow retirement eggs.

[Kelonguni]

All asset classes come with risk. I remembered during Lehman time, we did not even dare to talk about the paper losses we had from properties. The amount was far beyond we could take. We were very very highly leveraged then.
Only you been through crisis, at least once, better twice, then you would understand the importance of a balanced portfolio especially when you are getting older, cannot take any more heart attacks.

Property is the worst class in term of liquidity. If you believe in economy cycle, then a balanced portfolio is very critical. Hold only good quality property, stay liquid and capitalise on crisis to grow retirement eggs.

Some truths there as well.

But actually equity term loan can enhance one's liquidity if required. The cheapest personal loan one can access. Let's say 1.6% interest rate, then invest in some of the higher growth instrument or hold for opportunities.

Small FH properties easier to do this I realised.

[Laguna]

well, if the market reading of interest rate movement comes true, then in late 2019, we might see negative yield for investment assets (yield based on market value of the property and not the historical cost of purchase which could be very lower)