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 Blog Posts Buying Tips

Step-By-Step Guide To Buy Resale HDB (Updated March 2023)

Jayson Ang – July 13, 2023 –

TLDR The process of purchasing a resale HDB flat involves steps such as checking eligibility, calculating affordability, registering intent to...

All Opinion

Why Aren’t Spacious, Wallet-Friendly Homes Our Reality Yet?

Jayson Ang – April 17, 2024 –

TLDR The article discusses the current housing market in Singapore, focusing on the challenges faced by individuals like Sherlyn Tan...

Mandarin Top 5

The Top 5 Features to Look for When Buying a Luxury Property in Singapore – Expert Insights!

Jayson Ang – September 22, 2024 –

Singapore, a thriving financial hub and one of the world's wealthiest nations, has become an attractive destination for luxury property...

All Blog Posts Buying Tips Opinion Reports

What Difference in One Year After the ABSD Hike in April 2023?

Jayson Ang – December 7, 2024 –

TLDR The recent hike in ABSD rates, especially the increase from 30% to 60% for foreign buyers, has dramatically affected...

All Blog Posts Buying Tips

Buying HDB Resale : How to Minimise COV

Jayson Ang – January 20, 2023 –

TLDR Understanding Cash Over Valuation (COV) is crucial when buying a resale HDB flat in Singapore. COV is the additional...

Mandarin Top 5

Top 5 Cocktail Bars in Singapore for a Night Out

Jayson Ang – March 8, 2024 –

Singapore, the vibrant city-state known for its impressive skyline and diverse culture, is also home to an exceptional cocktail scene....

All Opinion Selling Tips

Great Reasons for Condo Owners to Sell upon Reaching TOP – A Guide to Sub-Sale Transactions

Jayson Ang – August 17, 2023 –

TLDR A recent sub-sale transaction in Midtown Modern set a new record with a 2-bedroom home selling at $3,150 psf....

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

Will Your HDB Flat Provide For Your Retirement?

Jayson Ang – July 11, 2023 –

TLDR Singapore's property market presents challenges with high prices, particularly in private housing, while public housing remains relatively more affordable....

Mandarin Top 5

5 Dangerous Ideas Singapore Property Investors Have

Jayson Ang – September 2, 2024 –

Singapore's property market has always been a hot topic among investors, both local and international. With its strong economy, stable...

All Blog Posts Buying Tips

CPF Accrued Interest On Housing: Learn What It Is and How to Calculate It

Jayson Ang – February 14, 2023 –

TLDR Understanding the CPF accrued interest on housing loans is crucial for Singaporean homeowners. When using CPF funds to finance...

All Opinion Reports

Is the Dream of Homeownership Becoming a Steeper Climb?

Jayson Ang – December 6, 2023 –

TLDR The article discusses the evolving trends in the Singaporean real estate market, focusing on the affordability and accessibility of...

Mandarin Top 5

Top 5 : Places to Find Unique Singaporean Souvenirs

Jayson Ang – February 27, 2025 –

Singapore, a vibrant city-state known for its multicultural heritage and modern marvels, is a treasure trove of unique souvenirs that...

All Buying Tips

A Guide to Purchasing a New Launch Condo in Singapore in 2023

Jayson Ang – October 26, 2023 –

TLDR When buying a new launch condo in Singapore, start by planning your finances to determine loan and property limits....

All Blog Posts Opinion Selling Tips

Unveiling 4 Scenarios of CPF Accrued Interest Impact on Property Owners

Jayson Ang – December 11, 2024 –

TLDR When selling your first home, be aware of CPF accrued interest, which is the interest that would have accumulated...

All Blog Posts Buying Tips

Resale Viewing Do’s and Don’ts: Expert Advice from a Singapore Real Estate Agent

Jayson Ang – December 19, 2022 –

TLDR The blog post provides valuable insights for first-time buyers on navigating the resale property market in Singapore. It covers...

All Buying Tips

Single, Over 35, and Searching for a Home? Here’s Your Guide to Choosing Between an HDB and a Condo!

Jayson Ang – January 21, 2025 –

At the age of 35, a single Singaporean starts a significant year, highlighted by the long-awaited chance to buy their...

All Opinion

Is it Possible for the Government to Truly “Reclaim Your Home” in Singapore?

Jayson Ang – January 25, 2025 –

The Singaporean government possesses considerable authority to reclaim land, whether freehold or not, in accordance with the Land Acquisition Act....

All Blog Posts Buying Tips

Learn How To Negotiate For The Best Price When Purchasing a Resale HDB Flat

Jayson Ang – February 17, 2023 –

Navigating the complexities of purchasing a resale HDB flat requires honing negotiation skills and market awareness. Understanding property valuations, seller...