I have been a regular reader of your articles. I appreciate your efforts to put in much analysis in answering real issues faced by the community on property matters.I just entered my 50th year and bought my first condo with a loan for 15 years. I didn’t use cash from hand effectively as condo cash portion was funded by CPF and sales proceeds of HDB.
However, even as rental demand for condos returns to pre-pandemic levels, securing a monthly rent of $2,607 for a 2-bedroom unit should not be too difficult, provided the right development is chosen.Depending on the interest rates, this could not only cover the monthly repayment but may also cover other expenses such as maintenance fees and property tax.
Furthermore, should you decide to sell, the process — from marketing to completing the sale —could take around 6 months.Option 1. Invest the funds instead of buying a property Naturally, the return on investments may vary depending on your chosen avenue. Property investment offers advantages such as hedging against inflation and leveraging loans .
In any case, for my calculations, let’s assume that you already have an emergency cash reserve set aside and are comfortable investing the full $600,000.As discussed earlier, it’s feasible in your circumstances to acquire a condo that can essentially cover its expenses. Alternatively, in your situation, it’s advisable to seek a property where you can readily identify potential renters.
While you can’t immediately rent out the property, the progressive payment scheme makes the monthly repayments during the construction phase more manageable. I did not consider brokerage fees but it is likely that if any costs are incurred here, it’ll be the lowest among the three options. Opting for a resale property allows for immediate rental, effectively having someone else “pay for the property” on your behalf.Due to the lower loan quantum, even with a conservative 3% rental yield, you’ll see profits in 10 years.