How to invest in property in Singapore? Many people will ask themselves as the property price has skyrocketed over the past years. They are waiting for the price to come down but still every year it keeps increasing and you will never know the right price even when it comes down.
If you are a salaried couple who earn say a combined income of $10K and above, I think you should go and buy a HDB. Don't buy a DBSS as it is overpriced unless you really, really want to buy one. For information, DBSS has been discontinued already as it is not that value for money. Buy a 4-room or 5-room or even an executive unit that falls within your means and budget. Buy a new one and not a resale as it is cheaper to buy new one with the grants given by the government.
A typical 4-room flat at Bukit Batok for example, starts at $272K before grants. After grants, it is about $217K. The flat can be easily paid off within 10 years. After the flat has been paid off after 10 years, the couple can consider to buy a private property. Once the loan has been paid off, the couple can borrow 80% of the private property price from the bank. Consider a condominium with a price-tag of $1 million, the couple needs to come out with only $200K plus to purchase the private property. Of course, the couple will need to check with the bank whether they can borrow the 80% of the property price. My advice is to go to the bank to ask for loan in principle before signing on the dotted line for the property.
The private property if newly launched will take about 2 years to complete. So, still have time to save up for the renovation of the unit.
Since you are staying at the HDB flat, you don't need to worry about the completion of the property or TOP date. After the TOP, you will need to do defect rectification and then renovation. This will take about 2 to 3 months. After the renovation, you can start to move in and in parallel when the renovation starts, you can look for tenants for your HDB flat. A typical 4-room flat rental is around $2.5K for the whole unit. The monthly instalment for the condominium loan is about $2.2K. The maintenance fee is about $250 per month. So the rental for the flat can almost cover the instalment plus the maintenance fee. Assuming the couple rents out the flat for the next 15 years and also saving to pay off the loan, I think the outstanding loan can be paid off within 15 years. Then on the 16th year onwards, the rental will be a passive income for the couple.