Top 5 Factors To Consider When Choosing Between A Resale Condo And A New Launch In Singapore
TLDR Choosing between a resale condo and a new launch in Singapore depends on your priorities as an investor or...
Read More
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 …
Top 5 Japanese Restaurants in Singapore
Singapore, a melting pot of diverse cultures and flavors, offers an incredible array of dining experiences for food lovers. Japanese...
Read More
Beware of These 7 Deceptive Tricks In Showflat Condo Sales
TLDR When navigating the complexities of the real estate market, it's crucial to be wary of hidden marketing tricks when...
Read More
Top 5 Emerging Trends in Singapore Real Estate: What Investors Need to Know
The Singapore real estate market has experienced significant growth in recent years, attracting investors from around the world. As the...
Read More
Top 5 Factors That Real Estate Investors Should Consider When Selecting A Luxury Condo In Singapore
Investing in a luxury condominium in Singapore is an attractive option for real estate investors seeking high-quality properties with potential...
Read More
5 Tips : How To Negotiate A Good Deal When Buying A Singapore Property
When looking to buy a property in Singapore, it's essential to know how to negotiate a good deal. Here are...
Read More
Downsizing From A Spacious 4-Bedroom Condo To A Cozy 2-Bedder: How I Chose A Condo Over A HDB
TLDR Mdm Sim's decision to trade her four-bedroom house for a two-bedroom condo is explored, highlighting the benefits of right-sizing....
Read More
Top 5 Trends And Developments That Will Shape Singapore’s Property Market In The Next 5 Years
TLDR Singapore’s property market is set for significant transformation over the next five years, driven by rapid proptech adoption, growing...
Read More
The Top 10 Traits Of A Good Real Estate Agent
TLDR Jayson Ang, a reputable real estate agent in Singapore, offers extensive experience and a data-driven approach to guide clients...
Read More
Snag a Sentosa Condo for 40% Off? Should You Consider It!
TLDR The Residences at W Singapore Sentosa Cove has slashed prices by over 40%, but there are important details to...
Read More
Discovering the Response of Private Property Owners towards the 15-Month Wait-Out Phase
TLDR The blog post discusses the impact of the 15-month wait-out period cooling measure on private property owners in Singapore....
Read More
Is Singapore’s Property Market on the Verge of a Crash? Understanding the 5 Factors at Play
The Singapore property market has long been an attractive option for both local and international investors. However, as with any...
Read More
Learn the Essentials of Renting Property in Singapore as a Foreigner
TLDR Renting in Singapore offers various options for foreigners, such as HDBs, Condos, and even unique properties like heritage homes....
Read More
Discover the Best Breakfast in Singapore: Top 5 Must-Try Spots!
Trying out some of the best breakfast places, I've put together a list of the top 5 must-try breakfast spots...
Read More
Pitfalls of Owning a Boutique Condo: 5 Insider Insights You’ll Wish You Knew Earlier
TLDR When considering boutique condos, be mindful of potential drawbacks such as dominating families influencing rules, lack of privacy due...
Read More
Top 5 Hawker Centres in Singapore for Local Food
Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...
Read More
HDB Loan Vs Bank Loan: Pros & Cons
TLDR When deciding between an HDB loan or a bank loan for purchasing a property in Singapore, consider key factors...
Read More
6 Reasons to Think Twice Before Hiring a Friend or Family Member as Your Agent
TLDR In Singapore, hiring a friend or family member as your property agent can be risky. Disclosing sensitive financial details...
Read More
44 Exciting New Condo Launches in 2024 Starting at $1,402!
Alright, let's talk about 2024. We're not expecting the same kind of shortages we've seen after COVID-19. Some folks are...
Read More
Top 5 : Reasons why Freehold Properties Cost More in Singapore
Freehold properties, a term often heard in the real estate market, are properties that are "free from hold" of any...
Read More
