IS IT WISE TO BUY THE BIGGEST PROPERTY YOU CAN AFFORD?

[@Huathuatah88]

Before we bought our first property, we were thinking very hard whether it should be a 4 room, 5 room, executive flat or masionatte. In the end, we bought a 5 room BTO flat. We were glad we didn't buy a flat that was too big and too expensive. We used about 4.5 years to fully repay the flat. Then we kept the flat and bought a landed. Before the ABSD kicked in, we quickly grabbed a freehold unit in killiney area. Now we are staying in the landed and getting rental for the HDB and condo. Everything is fully repaid except the condo which is left with 3 more years to repayment. Think it's a wise choice we didn't start off with the biggest property we can afford and we are in our 40s with 4 kids.🤪

[@joshconsultancy]

Nice journey and very savvy! More should see ^ 👍

[@shaqattack469]

So it would be wise to aquire a BTO then?

[@fool1124]

you have done exceptionally well with 4 kids.

[@Huathuatah88]

@@fool1124 thanks. My eldest is now 20 yrs old. She has a scholarship and all her tuition fees and expenses in Yale Nus all covered. On top of that, she receives monthly allowances from her scholarship too. We still give her pocket money of $500 but it is used to top up her 3 accounts in her CPF. The rates are very attractive for the first $60k. We will finish repaying the last mortgage loan in three years time. By then, we must quickly save up for the other 3 kids' tertiary education fees since their ages are very closely apart.

[@fool1124]

@@Huathuatah88 wonderful, hope there are more stories like this get shared.

[@kenken8907]

Thanks for this. Better analysis than any real estate agent I have heard....

[@joshconsultancy]

Share with someone who should hear =)

[@darrenseah6753]

To me, I also don’t take my house as an investment asset. If there is a gain at the end of the day, take it as a bonus. Else, be happy staying in the house that is chosen. 😀

[@joshconsultancy]

Well said!

[@tintan1688]

Hi Josh, your new fan here. I just sold my Bishan 5 rooms and just gotten my new BTO 4 rooms. You are absolutely correct; we were impacted by the HDB loan of 2.6% per annum at the end of 14 years stayed. The interest above $100K++. I am coming 55 and looking forward to more of your U tube video hopefully "what we can do to hedge my extra funds" to gain above 3% on long term basis.

[@joshconsultancy]

Hi @tintin1688 , great to see you around. There are many ways to invest but I guess the hard part is to find a method that can give you retirement income stream with risk that you can sleep well on. A retirement planning process can address that. Ive this to recommend to you "5 BIG RETIREMENT PLANNING MISTAKES | WHY $1,379 PER MONTH IS NOT ENOUGH FOR RETIREMENT!" kzbin.info/www/bejne/o4XOZoZqg71pp8U

[@tintan1688]

Luckily, I bought my property during recession in 2007. Thus we still gain, you are right again to say- Depends on which period your bought the property. Spot on Josh! By the way, my children are in university too.

[@jackywong4806]

Thanks Josh. The capital gain for 4 rooms and 5 rooms are roughly the same. And you are right, the interest for big loan has to factor in till the day it was sold

[@joshconsultancy]

Yes. Share with someone who should hear the message

[@lesliesia5142]

Given that everyone situation is unique, there is really no good answer to this question, but perhaps a general takeaway is not to buy the biggest property one can just with the intention to downgrade in future. Instead balance your decision with other factors/needs such as: to maximise leverage and free up cash for other asset investment, lifestyle enjoyment, value preservation against inflation, chances of rental income during time of difficulty or in future as lifestyle changes. Sometimes it is a matter of understanding the options of a decision and be comfortable with that. :)

[@gomugomu4489]

Yes, was about to post a similar comment. The considerations goes far far deeper than summarized. If you buy a good appreciating property, the story is different VS an over priced one. The million dollar HDB or expensive HDB, usually are brought by cash rich downgraders or people whom have made their money elsewhere. I need a warning to the viewers would be to leverage prudently. I have heard many times “I just want to buy XX property” and downgrade for the future without analysis.

[@joshconsultancy]

It's true everyones situation is unique in terms of space needs, age, comfort in equity markets etc.... But the question if its BIGGEST PROPERTY CAN AFFORD then answers converge to what has been presented =P

[@gomugomu4489]

@@joshconsultancy Hihi! I must qualify that I appreciate your work for financial prudence and knowledge. Thank you!! My view is that, the calculation is same for someone that can afford a 1.3M HDB vs a 700k HDB. In both cases, CAGR of 2% will result in the same net lost. In both cases, CAGR of 3% will result in a net gain. We can argue that for someone that can afford 1.3M HDB to pay all cash for 700k HDB to reduce the interest cost. But it won’t be cash well spent. As HDB cannot be geared. So the math is pointing to that, appreciation at 2% CAGR doesn’t grow your wealth. Bigger units tend to appreciate less is generally true for 4 room vs 5 room. But there are many areas that have similar appreciation where the quantum is much lower to start. As redhill is much matured, growth is already priced in. But in Singapore, majority are not living near central.

[@joshconsultancy]

@@gomugomu4489 no probs! hmmm maybe I should dig one stat point at Sengkang to try haha. Coz I’m near Redhill I researched for my own interest. Cya around :)

[@gomugomu4489]

@@joshconsultancy 👍🏻👍🏻👍🏻👍🏻 Thanks! I’ll look forward to it. I like your key message that it’s very hard to find an “investment + stay” especially resale HDB. I agree fully with you that many people overlook that the same 200k profit from a property that cost 50k, 400k or 600k can make or break your “investment”.

[@abcabc-m1q]

Great video Josh, personally I believe whether or not one makes a profit is if he buys at the tail-end of a bear market + sells in a peaking bull market. Because of the overheads (that you have rightly mentioned - loan interest quantum, stamp duties, renovation costs, agent fees, etc), any other buy/sell combination would result in a loss.

[@joshconsultancy]

Yes. If there are gains after these cost are factored in, then it’s usually a good roi due to leverage

[@AhWing89]

Awesome video. This video is what every Singaporean needs.

[@joshconsultancy]

Thanks for the high praise WK

[@AhWing89]

@@joshconsultancy You are welcome.

[@savethebees2506]

Buy the biggest u can afford, I stand by this golden rule. And I have flipped a few properties throughout my life and have always made at least 50% gains per flip. Esp now with covid, and we all work from home. Space is a luxury now!! With cpf as our banker, keep your cash for stocks investment. Rather spend more on property than buy a branded bag.

[@joshconsultancy]

As mentioned in video, Largely dependent on which time frame you did the flips I guess? :)

[@maxmillion868]

Thank You Mr. Josh Tan Happy New Year 2022 . 31/12/2021 .

[@joshconsultancy]

Same to you Max =)

[@adolphd12345]

Great video Josh. Long time viewer, first comment, One thing about buying is you save the cash that you would pay for rent. So even if you do not get great capital appreciation, what you have saved on is the rental outflow. Also do you think you can make a video on free hold v/s regular condos, (similar to this video with data points)

[@joshconsultancy]

HI Adolph, great to cya around. The train of thought is BIGGEST PROPERTY YOU CAN AFFORD which is a common mindset. A reasonable home would also save on rental cost + probably allow more room to invest. Have you seen this sharing What is the theory behind RENTING vs BUYING A PROPERTY being equal 🔥 ! kzbin.info/www/bejne/ioXZpHWQjrFngrs

[@josephng9641]

Hi, Josh. Thanks for your detail insights. Happy New Year, 2022.

[@joshconsultancy]

Happy new year too =)

[@kwokweng76]

as always great video josh...........

[@samlai3362]

Spot on for the Redhill flats near the MRT. I know of quite a few PR make a windfall selling the Redhill flat, when Singapore still allow PR to ballot for BTO flats. Right now, a lot of couples and new citizens aiming for windfall from BTO flats. That's the reason, I advocate for 60 years lease and 20 years MOP for PLH BTO flats in your PLH flat episode. This has a lot of pros than cons, it will make couples think carefully before ballot for PLH BTO flats and allow new citizen to prove their commitment to Singapore.

[@joshconsultancy]

Hi Sam, great to cya around. Ya agree, the windfall gains there are a certain IMO

[@fool1124]

PR was never allowed to buy BTO.

[@bigno1900]

I did that for my first house which was a HDB. I bought a Executive Maisonette from HDB and sold it.

[@bill7580]

Trying to pay off mortgage as soon as possible is one of the dumbest thoughts. Keep your mortgage as long as possible and the extra money to invest in stock of good companies.

[@joshconsultancy]

Yes. Ability to pay. Ability. Need not pay off until a certain interest rate level

[@abcabc-m1q]

Assuming the mortgage is to free up some cash, then it also depends on what one uses the money for. Some wisely invest the money to generate yield that exceeds the loan interest while others splurge it all on extravagant stuff. The former ends up in a better situation, the latter in a much worse position.

[@goldbird86]

I do not agree on that. It depends on the individual,if the person is not financially savvy, then it's best to pay off the loan asap. As josh mentioned, it's the ability. And no debt is really a hugh rock off mind and be peace.

[@AshleySpace1111]

That’s right provided the person is a savvy investors. It really depends on the type of person you are. When have lots of cash, it’s always tempted to invest here and there, and may jump into some more risky stocks which causes loss.

[@phyllislay2233]

@@AshleySpace1111 True, better to be down to earth, than following those sexy trends.😸😸😸😸

[@darrenkwok84]

Mmm ... Considering a 2 room flat bto as a single ... wonder if it a savvy product in addition to REITs ... Thoughts are that 2 room flats with 99 years already the smallest size unit plus if you do not intend to stay with someone else for purpose of rental income then might as well use REITS (quarter/semi annual) dividends?

[@joshconsultancy]

single bto is only indeed 2rm. Personally im not sure the market demand for 2rm flats coz they are too small for families

[@darrenkwok84]

@@joshconsultancy yea there is indeed a lack of data on this product type ... maybe under emphasized due to its limit of space for families ...

[@lumvincent7431]

Best time 2 buy condo from 2000-2009. Last few yrs , price surge so high . How much profit in 5-10yrs ? Wait n c . I will focus on Ocbc, keppel, MCT n Frenken for this yr .

[@hbu8012]

I foresee Mapletree Log & Mapletree Ind to merge. Then it will merge with Mapletree Pan Asia to rival Ascendas. Diversification is key after pandemic era

[@joshconsultancy]

Hmmm haha, cant say its impossible =P

[@hokahhui6977]

Really appreciate your effort and insight. Great content and amazing knowledge for me. 😃

[@joshconsultancy]

No probs. Share with someone who should see too =)

[@homhope]

would love if you can do a video on the analysis of the pros and cons of SG private property decoupling for a 2nd SG property investment since the absd for 2nd property has increased recently. Thank you.

[@joshconsultancy]

It clearly forces the choice into decoupling. On the ground, I havent heard of a couple planning to pay ABSD actually

[@fool1124]

4 rm was more popular back then partially bc 4 rm was build much larger and was good entry level price home for most families. Now the 5rms are smaller than alot of older 4rms and people want more personal space, so i think 5rm HDB are better buys which has high potential. in my opinion always buy the biggest HDB possible. As HDB is "subsidised" housing.

[@joshconsultancy]

Agree on first point. But point 2 ive presented a finding that CAGR may be better for a smaller HDB

[@lmhong2172]

Excellent analysis

[@anthonytan164]

And agent fees for buying and selling

[@greyzonee8242]

How about rental as a buffer? will that help?

[@joshconsultancy]

AS in buy the biggest property possible and then rent out 1 room? Thats imo not common

[@ydtan1]

not sure if you mentioned agent fees for buy & sale

[@joshconsultancy]

Agree... that could come in also

[@hbu8012]

Happy New Yr Josh tonight XP ... .. now raining siah lol.

[@joshconsultancy]

First comment haha! Happy new year too HBu! =)

[@superconnie5003]

What happens if both owned properties are fully paid ?

[@joshconsultancy]

The narration is more on stretching max (which means paying off fully is harder) for the possible capital gains, is it a good idea?

[@ajcapitano2425]

Hi Josh , your videos are good .. let say if someone has following , would you still advice him to invest in stock market ? : - Single - 48 yells old -Wealth of around 3.6 million dollars ( 50 % Cash , 50 % properties - Has quit job forever since last year .. as achieving FI maybe - no pensions or any other government in payment as took all benefits for future retirement in cash ( lump sum ) at once - no mortgages / loans etc - all Health care insurance is free based on where is from and live 😀 - current income from one rental property and fixed bank interest around 1.6% is total around 60 US dollars annually .. other 3 properties are left for own use on 3 different locations including the one living in .. - never invested in stock market .. the wealth is mainly from high salaries and owned property rental , and selling from few properties in past .. - current total expenses is around ( 100 k US dollars ) Is ok not to risk in investment and keep it as it is as living from what have already as to be on safe side ? I am Interested to know your view on this .. thanks 🙏

[@joshconsultancy]

Cannot advice on whether to invest into stock market or not. But whats clear is 50% cash (ie 1.8m) is not a right approach to preserve wealth

[@ajcapitano2425]

@@joshconsultancy thank you

[@dav3105834]

In order to maximise hdb gain, do we sell first bto and apply 2nd bto? Then later on nearing retirement sell the 2nd bto And downgrade to a resale.

[@joshconsultancy]

Oops im even sure if can apply a second bto. Anyone can chime in. BTO from the data ive seen is the one with almost certain upside

[@yvonneong7704]

Hi Josh. How can I engage your services ? I sent a message online but no response. Thanks

[@joshconsultancy]

Hi Yvonne, ✅ ENGAGE Josh Tan on a fee for financial planning to build towards for your retirement! ►‌ www.theastuteparent.com/josh-tan

[@1lomme1]

Owning a home still beats renting one. Although you might not make money (capital gain minus the interest costs etc), at least you’re not losing money every month the way you do when you rent..(no capital gain but still rent costs etc). Preservation of capital :) and if you’re lucky even some profit. If you also take into account the wins from Airbnbing your property during your vacations (something thats usually not allowed when you rent a property), the win for owning a home is even bigger.

[@joshconsultancy]

This might interest you What is the theory behind RENTING vs BUYING A PROPERTY being equal 🔥 ! kzbin.info/www/bejne/ioXZpHWQjrFngrs

[@AlanSoph]

Rental for different sizes must be included in the analysis else the comparison is flawed.

[@joshconsultancy]

The discussion point is on homestay and no rental income

[@AlanSoph]

@@joshconsultancy That's absolutely right, therefore, one must count the cost of rental if one do not own the property then one will need to rent a place to stay isn't it. Therefore the analysis includes only bank interest is not complete, assume rental must be included too.

[@accqpqp2339]

good point

[@nikn2804]

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