Your search results

Does Sell 1 Buy 2 Strategy Still Works Today in 2024?

Posted by Jayson Ang on June 28, 2023

| 0

TLDR

When considering the “Sell One By Two” property investment strategy, keep in mind that it involves selling your previous home to purchase one larger and one smaller condo. This approach can help you generate rental income and avoid the Additional Buyer’s Stamp Duty. However, it requires careful financial planning, eligibility for separate home loans, and the ability to sustain multiple mortgages. Make sure to evaluate property prices, rental income potential, and mortgage sustainability before deciding if this strategy is right for you. Consulting with experts and conducting thorough due diligence is crucial to ensure its suitability for your situation.

I’m going to be discussing the “Sell One By Two” property investment strategy that you may have heard about on the internet or in the news. You may have wondered why anyone would opt to buy two condo units instead of just upgrading to a single, larger condo.

Well, there are actually two main reasons for this approach.

First, by selling your previous home, which could be an HDB flat, you will receive a lump sum of money. You can then use this money to purchase one larger and one smaller condo.

This approach can be lucrative for sound property owners who are looking to generate rental income. You can rent out one condo while living in the other, depending on your lifestyle and preferences. You can even swap later on. For example, once your children have moved out, you may want to move into the smaller condo and rent out the larger one. All of this is great in terms of property investment.

The second reason to opt for this approach is that you can avoid paying the Additional Buyer’s Stamp Duty (ABSD) that you would have to pay if you and your spouse bought the property separately. By selling your previous home, you and your spouse can each go out and qualify for separate home loans. Both of you would count as owning one property, which means you would be spared the 12% ABSD.

However, for this strategy to work, it relies on some basic assumptions. The first and most important assumption is that you have sufficient sales proceeds from selling your previous home. You also need to be aware that whatever funds you use from your CPF for your previous home will have to be refunded with the usual 2.5% interest. So, if you do not have sufficient cash in hand for the down payment of your next home, this approach may not be suitable for you.

The other assumptions are that you and your spouse are both eligible for separate home loans and have the ability to sustain a mortgage on your own. Remember that this is different from both of you upgrading to a single, larger home where you’re both sharing the mortgage. In this case, you have one mortgage, and your spouse has another mortgage. You need to be certain that you won’t get into trouble if one of you loses your income or ends up earning less.

Moreover, this is a property investment strategy that is better suited for more affluent Singaporeans.

As a rule of thumb, your property should not cost more than five times your annual income. This means that you alone should not be getting a property that costs more than five times your annual income, and neither should your spouse.

One thing to bear in mind is that choosing the smaller unit can be tricky.

Most of the time, it’s a compact unit 510 square foot or below, or it’s a two-bedroom. Picking a good investment property at one million or below takes good acumen.

Between a one-bedroom that’s 490 square feet and costs $900,000, and one that’s 550 square feet that costs $1 million, which would be the better investment?

While the one-million-dollar unit is cheaper on a per square foot basis, to a tenant, one-bedroom is still just one-bedroom. So there’s a good chance your rental income won’t be that much higher, and your more expensive unit might end up generating the same rental income as its smaller counterpart.

To sum up, the “Sell One By Two” strategy can be a lucrative approach for sound property owners who are looking to generate rental income. It allows you to rent out one condo while living in the other, and it also helps you avoid paying the additional buyer’s stamp duty.

Ultimately, the success of the sell one by two strategy relies on various factors, including your financial situation, your ability to sustain multiple mortgages, and your ability to pick the right investment properties.

In conclusion, the Sell One By Two strategy is a property investment approach that can be lucrative for sound property owners who have the financial means to execute it. By selling their previous home and buying two other properties, one larger and one smaller, they can use one condo as their residence and rent out the other, generating rental income and avoiding the additional buyer’s stamp duty.

However, the strategy does rely on several assumptions and requires careful consideration of various factors, including property prices, rental income potential, and mortgage sustainability. So, if you are considering this strategy, make sure to do your due diligence and consult with experts to ensure that it is the right approach for you.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

All Buying Tips Opinion

The Sneaky Role of Property Appraisals in Shaping Singapore’s Home Prices

Jayson Ang – January 20, 2024 –

TLDR When it comes to the real estate market in Singapore, understanding property valuations and the impact on mortgage loans...

Buying Tips Mandarin Top 5

5 Reasons Why You Should Consider Investing In Singapore Real Estate

Jayson Ang – August 1, 2023 –

TLDR Investing in Singapore real estate offers attractive tax incentives, low cost of living, high rental yields, market reliability, diversification...

All Blog Posts Opinion

How to Maximise Your Home Value Before Selling : 6 Simple Steps

Jayson Ang – February 9, 2023 –

TLDR When looking to sell your home, consider simple ways to boost its value without costly renovations. Organize living spaces,...

All Blog Posts Buying Tips

HDB Loan Vs Bank Loan: Pros & Cons

Jayson Ang – February 25, 2023 –

TLDR When deciding between an HDB loan or a bank loan for purchasing a property in Singapore, consider key factors...

All Buying Tips Opinion

Unlock the Secrets of Property Investment and Transform Your Financial Future!

Jayson Ang – September 30, 2024 –

TLDR The Singapore property market has experienced fluctuations, impacting private home prices. Understanding your financial capacity is crucial when considering...

All Buying Tips Opinion Selling Tips

Discover the Optimal Timing to Invest in Singapore Real Estate: Unveiling Historical Insights

Jayson Ang – August 1, 2024 –

TLDR When considering the best time to buy or sell a property in Singapore, historical data analysis reveals key insights....

Mandarin Top 5

Top 5 Museums in Singapore for Art and History

Jayson Ang – February 29, 2024 –

Singapore, known for its vibrant culture and rich history, is home to a plethora of museums that cater to art...

All Buying Tips

Apply Your HDB HFE Letter in 5 Easy Steps: A Simplified Guide for 2023

Jayson Ang – December 18, 2023 –

TLDR The HDB Flat Eligibility (HFE) letter has experienced delays since its introduction alongside the HDB Flat Portal in May...

All Opinion

Why Can’t We Buy Low, Sell High?

Jayson Ang – February 11, 2024 –

Madam Tan voiced that approximately two years ago, when her apartment hit its minimum occupation period, she and her spouse...

All Blog Posts Buying Tips

Buying a Second Property – 3 Key Factors to Consider

Jayson Ang – June 18, 2023 –

TLDR When navigating the complexities of purchasing a second property in Singapore, ensure you meet eligibility criteria, consider affordability factors...