that is very interesting idea. paying for the same monthly mortgage/rent but staying in a priv. at most every month extra 100-200 if rental more than your rental income
YT algo just ushered me this clip. Very interesting indeed. Unfortunately this clip was quite some time back, with outdated data. Would be good to update it for current situation.
I still don't understand why so many Singaporeans look to live in private properties, especially when the QOL and safety concerns (almost everywhere in SG is safe other than army camps) in HDB is pretty high already. The monthly upkeep costs of condo is around 3~4x of HDB, with that difference in monthly cost, I can literally on my Aircon 24/7 and still come out on top with savings. Personally, I think in SG, if one can live in an as cheap as possible HDB and invest the rest, one will probably reach retirement goals much earlier as compared to going down the route of chasing after condo. Because ultimately, most condo are on 99 years lease like HDB, so given a 60 years timeframe, all of those condo will not be growing at a 2.x% rate, and most likely decay in value instead after certain amount of years.
@@joshconsultancy defintely, i feel more well rested in the private property than the hdb flat. The tranquil is something i enjoy. I think the amount of neighbours count (and also need to see your luck if you get some weirdos with peeves), big development to me is no different from staying in a hdb flat. Currently staying in a freehold condo less than 50 units and another condo rented out. See how on the two condo, likely we would gift them to our child, if we have enough for own overseas retirement in future. But if talking about investment, i feel reits would give you better exposure than property. I only see them as a roof over the head and if they make money, okay.
thanks have been thinking about it...i dont think its possible to come to a conclusion because there are just too many variables involved...both has its pros and cons...for me i'm very used to renting when i lived overseas and even in singapore....it doesnt bother me at all not to "own" my place...its just in your mind really....and the fear of being kick out by home owners is just frankly exaggerated....how often does it happen and even when it does its just inconvinience...not like you will become homeless...my reason for considering renting is that i need a bigger space but i really don't want to take a bigger loan to upgrade...and frankly i'm fine with "losing out" for paying rent instead of owning my own home...if i can comfortably pay my rent i dont see any issue really...i get to move where i want to...and i can buy anytime when i change my mind...
Rent - u have more cash flow to do whatever you want. You can invest or just spend to enjoy. Buy - u have > 20 years commitment to pay the loan. Property value is increased in term of paper value. You need to sell the property to get the real money and you know it is not easy to sell a house as compare to stock. I understand that we have the concept renting = paying loan for the owner, we need to own a house in our life. But I think the game is changing. Many things are changing to subscription mode instead of owning them e.g. iCloud storage, Netflix.
Liked. Very good video. Would you consider doing a video on Buying Condo & renting (non central) out while saying in another condo (central area) for comparison? Not everyone wants to be stuck in condo whole life but want to be “in the market”. Thanks !
Hi Eric, but the savings may not be there for such an idea. Id think rent out HDB to stay condo is a bigger difference. Formulating that sharing, subs and stay tuned!
2 million rental 3.5k Low yield,,plenty at Newtown /novena..they are freehold ,landlords maybe holding since 20-30 years ago when they bought 900k and below..it make sense for them as legacy but not for current investor.
@@joshconsultancy because these Ptys usually very rundown look..even worst than hdb ,,plus tons of selection for tenants from Newton to Steven to River Valley to Grange Road..
Good insights! 4:20 I believe freehold condos at that pricepoint MIGHT be ae to find... But it's probably also a bad/inconvenient unit if it's 2.1% yield haha! Enjoyed listening to the numbers crunching and your hearty sharing as always Josh!
Your Hdb 600k rent out example, although there’s rental cash flow in, wouldn’t that go into the mortgage repayment? So cash flow out to rent private would be a negative?
What if one sell's his/her MOP flat and while waiting for his/her Sales of balance, temporarily live in a rented condo. Is this viable? As the profits may not only cover the rent, it can help reduce loan for the sales of balance or one cam pay full
Just want to highlight that In the recomputed REIT example to $53m, that is not realistic as you had not factored the 3.5k outflow for renting ie you are assuming 700k + monthly investment of 3.5k over the time period
@@joshconsultancy I may not be able to use extra cash to pay for the rental and therefore would need to use the money from the investment to pay rental. That could mean that I would need to withdraw $42K out of the $700,00 initial investment into REIT to pay for the rent.
Y u want to make things complicated, just crawl back the years which give u realistic figures, u just need 5 years to compare buying REITs or house after that 5 yrs selling REITs or house. The younger u loan give u lower capital cost. So do u think the writer still make a realistic sense.. ?
@@joshconsultancy the expenses aren't compounded at the same 7.5% returns, so 50m+ in future value wrong included "returns" from re-investing the expenses
Very interesting subject and you carefully consider many aspects in many type of costs involved. How about doing a comparison of buying a Free Hold Condo & stay in rental 99 lease anywhere u like to preserve freehold property
Freehold or Leasehold. It is all about Location Location Location if you talk about rental yield or capital gain. Nowadays investing in properties we don't just buy Freehold properties. How many Freehold projects are there in the market ? Moreover our lifespan is also leasehold 🤣
Hi Josh, it’s a great video to provoke some thoughts. Is 2.5% private property annual growth realistic for a continuous 60 yrs? Would the $2mil FH private property (assume it’s a 3BR condo around 1,000sqft @ $2000psf) worth $8.8mil in 60 years time? Who will buy a 60yr FH at $8,800 psf? Developers buying en-bloc sales? Just thinking out loud!
Hi Swee Hong, oh definitely realistic. Its just weird when we extrapolate. 1998 Orchard had a plot that enbloc and guess the price..... It was $800psf.
@@joshconsultancy Thanks for highlighting! I saw how property prices in China grew since I worked there 10 yrs ago. Now the properties in Shanghai is now beyond the typical Chinese. But it still attracts the foreigners in the Chinese Metropolitan cities. On your last point, it’s no more a secret. I have seen many people do it too. I like to hear your view in buying 2nd private property and if paying 12% ABSD worth it?
1. Why use 60 years? How old are we now? Practically we should use maximum 30 years. 2. Like what you said, cannot compare property worth 2mil vs rental $3500 per mth, practically we should use property worth 1.5mil vs rental $3500 per month. :)
Reits do hv down side as most commercial property has life span of 30-60 years. Reits payout dividends but seldom par down the loan but instead just re finance hence it will find difficulty in raising capital unless share dilution.
there are a substantial number of people who would not be able to qualify for pty purchase/ineligible for the loan quantum (i.e. low income singles) so no choice but to rent. but could afford to come up with smaller sums to DCA into REITs or pty development companies. so the author's piece at least give this segment of people some hope that they can still ride the pty market when the same wave has excluded them from home ownership.
Agree the equivalence seems back-calculated -- would have thought that home ownership is a leveraged play in property so would have given a better return than renting+REITS, as long as property prices gp up, and that capital appreciation for the house is similar to REITS generally
Renting does make sense as rental has not increased much in past 10 years as compared to private property price. Rental capped low because government allowed HDB to be rented out hence that depress the rental unlike HK. The only benefit for property is capital appreciation and hedge against inflation.
To be fair to the article I think you misread or misinterpreted the fact that the distribution yield from the reits is not reinvested as it is used to pay rental expense so it is not 'garbage in garbage out'. Generally most property owners underestimate costs involved in owning property and omit the opportunity cost of capital tied up in home equity (which is by far the largest cost).
I think owning a property is not about money. It is the sense of security. I have a family with two kids. I need a place without worrying owner Chase me out because owner want sell the property etc
I agree with Mike Aaron. Do explore that option more. Do also include an alternative: a condo owner renting out his condo, and renting another place to live in.
If I can, I may want to rent out my premium HDB at $2.5k, then find a more remote and lower rental HDB. That way I get true savings into my pocket every month. Question is whether the savings is worth the trouble.
don't bother - not worth it. if you include additional income tax payable, additional property tax payable, maintenance, vacant periods and possibly agent fees the tiny amount of arbitrage will evaporate...
One cannot put a price on the security of knowing you own the roof over your head, and do not need to worry about not finding a suitable and affordable place to rent!
very few people have $700k net. Likely a mid-career couple. How about doing a scenario of a young couple first home, with all the HDB subsidies, does it still make sense to buy HDB or rent & invest the rest? Sounds like buy term and invest rather than life insurance. haha. I guess after minimum occupation period, the playing field becomes more level.
@@joshconsultancy i think it is because in the past as SG had tremendous economic growth, so home assets too enjoyed that spurt. Going forward, a mature city with shrinking population will only see slow econ growth. So the attitude towards home as investment will have to shift and be updated
If you have 60yrs for the analysis, it means the person is 20yrs old or less than 30 yrs having 700k in savings🤔. I would rather compare using the mortgage loan years which relates to the age of the person too. At the end of the mortgage loan, compare both the property and reits in value and growth.🙂
The good side of buying 1. You take effort instament (force saving) into future asset owning when sold a lump sum of money 2. Nobody can suddenly avict you and waste precious time moving everything inside the house. 3. The constact feeling of fear being suddenly chaseoutby home owner.
Yours are wrong la.. just buy simple hdb will do .. renting will be big trouble and u are helping out to pay installment for other people .. why so silly want to rent and want to stay whole life with a lot of trouble.. If it is true whole sg island no one want to own properties and some even own second and third
Yes, pls make a video on renting out a HDB and renting a condo to stay. Thanks!
Waiting for this video whether able to do it year 2022
that is very interesting idea. paying for the same monthly mortgage/rent but staying in a priv. at most every month extra 100-200 if rental more than your rental income
YT algo just ushered me this clip. Very interesting indeed. Unfortunately this clip was quite some time back, with outdated data. Would be good to update it for current situation.
Subs and stay tuned =)
I still don't understand why so many Singaporeans look to live in private properties, especially when the QOL and safety concerns (almost everywhere in SG is safe other than army camps) in HDB is pretty high already. The monthly upkeep costs of condo is around 3~4x of HDB, with that difference in monthly cost, I can literally on my Aircon 24/7 and still come out on top with savings. Personally, I think in SG, if one can live in an as cheap as possible HDB and invest the rest, one will probably reach retirement goals much earlier as compared to going down the route of chasing after condo. Because ultimately, most condo are on 99 years lease like HDB, so given a 60 years timeframe, all of those condo will not be growing at a 2.x% rate, and most likely decay in value instead after certain amount of years.
Oh its facilities. Its environment. There are differences. But also, doesnt mean necessarily better.
@@joshconsultancy defintely, i feel more well rested in the private property than the hdb flat. The tranquil is something i enjoy. I think the amount of neighbours count (and also need to see your luck if you get some weirdos with peeves), big development to me is no different from staying in a hdb flat. Currently staying in a freehold condo less than 50 units and another condo rented out. See how on the two condo, likely we would gift them to our child, if we have enough for own overseas retirement in future. But if talking about investment, i feel reits would give you better exposure than property. I only see them as a roof over the head and if they make money, okay.
agree
@@scbchong6964 She is a girl :P my sons get nothing.
Took the words right out of my mouth!
thanks have been thinking about it...i dont think its possible to come to a conclusion because there are just too many variables involved...both has its pros and cons...for me i'm very used to renting when i lived overseas and even in singapore....it doesnt bother me at all not to "own" my place...its just in your mind really....and the fear of being kick out by home owners is just frankly exaggerated....how often does it happen and even when it does its just inconvinience...not like you will become homeless...my reason for considering renting is that i need a bigger space but i really don't want to take a bigger loan to upgrade...and frankly i'm fine with "losing out" for paying rent instead of owning my own home...if i can comfortably pay my rent i dont see any issue really...i get to move where i want to...and i can buy anytime when i change my mind...
Good sharing Darren
Yes, pls do a video on renting out a HDB while renting a condo. :)
Vote noted :)
Up for this video as well. It will be interesting
Hoping you can expand more topics for your buying hdb and condo. Thanks in advance :)
Hi Josh,
Thanks for the comprehensive detailed breakdown.
No worries! Share with someone who should hear too
I have subscribed your channel. Really lots of good content 👍👍👍
Sure! Sequel to this video coming next week, stay tuned
Very good topic.. I'm very agree and good example bro👍👍👍
Thanks! Share w someone who is at this topic too
Rent - u have more cash flow to do whatever you want. You can invest or just spend to enjoy.
Buy - u have > 20 years commitment to pay the loan. Property value is increased in term of paper value. You need to sell the property to get the real money and you know it is not easy to sell a house as compare to stock. I understand that we have the concept renting = paying loan for the owner, we need to own a house in our life. But I think the game is changing. Many things are changing to subscription mode instead of owning them e.g. iCloud storage, Netflix.
Point noted and I agree to an extent. Its just a safety net to have
If property earns 2.2% per annum, then, is it better to leave money in CPF. Use cash to buy REITs
Using cash or not depends on what returns you generate on the cash I guess?
Liked. Very good video. Would you consider doing a video on Buying Condo & renting (non central) out while saying in another condo (central area) for comparison? Not everyone wants to be stuck in condo whole life but want to be “in the market”. Thanks !
Hi Eric, but the savings may not be there for such an idea. Id think rent out HDB to stay condo is a bigger difference. Formulating that sharing, subs and stay tuned!
This is assuming you have 700K in cash. If you don't, perhaps its only feasible to borrow from the bank to 'own' the property.
Think the concept is the same for $350k for $1m condo also
@@joshconsultancy True! Thanks for sharing this perspective 😀
I have done the "rent out hdb and rent a condo" gig before. For 4 years. There are always pros and cons to everything of course.
Nice! Validation for the concept. Ive just released the findings for it in a new video
If want to do hdb rental after mop then probably it shd be a fully paid unit in order to utilise the rental income for the condo isn't it?
Must be MOP for full rental yes
2 million rental 3.5k Low yield,,plenty at Newtown /novena..they are freehold ,landlords maybe holding since 20-30 years ago when they bought 900k and below..it make sense for them as legacy but not for current investor.
Wouldnt asking be $4k plus at least?
@@joshconsultancy because these Ptys usually very rundown look..even worst than hdb ,,plus tons of selection for tenants from Newton to Steven to River Valley to Grange Road..
Good insights!
4:20 I believe freehold condos at that pricepoint MIGHT be ae to find... But it's probably also a bad/inconvenient unit if it's 2.1% yield haha!
Enjoyed listening to the numbers crunching and your hearty sharing as always Josh!
Hey Gerald how’s things. Sure, stay tuned for more
Great content!
Thanks Joanne =)
I am doing a 'rent out a bigger condo' at a higher price and rent out a smaller condo in the core region for a lower price.
Thanks for the sharing. What were ur motivations?
Your Hdb 600k rent out example, although there’s rental cash flow in, wouldn’t that go into the mortgage repayment? So cash flow out to rent private would be a negative?
True. We can tweek simulations around it
What if one sell's his/her MOP flat and while waiting for his/her Sales of balance, temporarily live in a rented condo. Is this viable? As the profits may not only cover the rent, it can help reduce loan for the sales of balance or one cam pay full
Sell MOP flat for SERS? I think that has resale levy.
Just want to highlight that In the recomputed REIT example to $53m, that is not realistic as you had not factored the 3.5k outflow for renting ie you are assuming 700k + monthly investment of 3.5k over the time period
The total expense out would have captured that
@@joshconsultancy I may not be able to use extra cash to pay for the rental and therefore would need to use the money from the investment to pay rental. That could mean that I would need to withdraw $42K out of the $700,00 initial investment into REIT to pay for the rent.
Y u want to make things complicated, just crawl back the years which give u realistic figures, u just need 5 years to compare buying REITs or house after that 5 yrs selling REITs or house. The younger u loan give u lower capital cost. So do u think the writer still make a realistic sense.. ?
@@joshconsultancy the expenses aren't compounded at the same 7.5% returns, so 50m+ in future value wrong included "returns" from re-investing the expenses
Very interesting subject and you carefully consider many aspects in many type of costs involved. How about doing a comparison of buying a Free Hold Condo & stay in rental 99 lease anywhere u like to preserve freehold property
Thats a hard topic haha. Maybe crowdsource first, anyone with inputs for us?
Freehold or Leasehold. It is all about Location Location Location if you talk about rental yield or capital gain. Nowadays investing in properties we don't just buy Freehold properties. How many Freehold projects are there in the market ? Moreover our lifespan is also leasehold 🤣
@@amuletmarketdotcom yes, life is mortal😂
Public transport will likely to cost most very soon. Do you think it's a good time to buy sbs transport?
Think number of riders is more crucial now
@@joshconsultancy ya. You have a good point.
Good video… I think we should only compound reit dividends. Lease decay should cancel both out.
Hi, what is the risk of renting HDB and using the rental fund buying condo?
Everything covered in video Can You Rent Out Your HDB To Rent A Condo With NO Extra Cost? 🤫th-cam.com/video/KaYzsdUXTDo/w-d-xo.html
@@joshconsultancy Thanks for your prompt reply. 😃
It sound gd to rent out hdb and rent a condo for own stay. …. Definitely would be a gd idea to explore further. 👍
Voted noted chua ken!
Able to do a video on commercial property?
Check this =) Investing Into Commercial Property BETTER Than Buying REIT??? th-cam.com/video/_1iVtHtyPdA/w-d-xo.html
Hi Josh, it’s a great video to provoke some thoughts. Is 2.5% private property annual growth realistic for a continuous 60 yrs? Would the $2mil FH private property (assume it’s a 3BR condo around 1,000sqft @ $2000psf) worth $8.8mil in 60 years time? Who will buy a 60yr FH at $8,800 psf? Developers buying en-bloc sales? Just thinking out loud!
Hi Swee Hong, oh definitely realistic. Its just weird when we extrapolate. 1998 Orchard had a plot that enbloc and guess the price..... It was $800psf.
@@joshconsultancy Thanks for highlighting! I saw how property prices in China grew since I worked there 10 yrs ago. Now the properties in Shanghai is now beyond the typical Chinese. But it still attracts the foreigners in the Chinese Metropolitan cities. On your last point, it’s no more a secret. I have seen many people do it too. I like to hear your view in buying 2nd private property and if paying 12% ABSD worth it?
1. Why use 60 years? How old are we now? Practically we should use maximum 30 years.
2. Like what you said, cannot compare property worth 2mil vs rental $3500 per mth, practically we should use property worth 1.5mil vs rental $3500 per month. :)
We might live 60y I guess haha
Reits do hv down side as most commercial property has life span of 30-60 years. Reits payout dividends but seldom par down the loan but instead just re finance hence it will find difficulty in raising capital unless share dilution.
Reit manager should actively refresh the portfolio and make recycling decisions. Simpler than a DIY commercial prop investor i guess?
there are a substantial number of people who would not be able to qualify for pty purchase/ineligible for the loan quantum (i.e. low income singles) so no choice but to rent. but could afford to come up with smaller sums to DCA into REITs or pty development companies. so the author's piece at least give this segment of people some hope that they can still ride the pty market when the same wave has excluded them from home ownership.
Agree the equivalence seems back-calculated -- would have thought that home ownership is a leveraged play in property so would have given a better return than renting+REITS, as long as property prices gp up, and that capital appreciation for the house is similar to REITS generally
Coz the leverage spread used is only 0.5% (2.2% less 1.7%)
Thank you
No probs. Smash the subs and cya around!
Renting does make sense as rental has not increased much in past 10 years as compared to private property price. Rental capped low because government allowed HDB to be rented out hence that depress the rental unlike HK. The only benefit for property is capital appreciation and hedge against inflation.
Think is supply and demand at this juncture
To be fair to the article I think you misread or misinterpreted the fact that the distribution yield from the reits is not reinvested as it is used to pay rental expense so it is not 'garbage in garbage out'. Generally most property owners underestimate costs involved in owning property and omit the opportunity cost of capital tied up in home equity (which is by far the largest cost).
No probs. "garbage in garbage out" wasnt meant to be offensive. It was more to signify the assumptions are too hard to nail and will vary too widely
I think owning a property is not about money. It is the sense of security. I have a family with two kids. I need a place without worrying owner Chase me out because owner want sell the property etc
Fully agree
I think there are too many valuables, so cannot be easily concluded. Agreed that garbage in garbage.
Ok can hear now
Advantage, own a land by investing in land & pay by returns 15% annually by 7 years free plus principal.
600k buy a 4 room at kallang area is hard. Unless it's a very old unit
Serious? Ok I’d dig some data if I can conceptualize a topic
@@joshconsultancy New 4 room btos in kallang whampoa are 600-700k+
I am not really sure a property of 2M will be able to appreciate to 7+ M..is that doable?
Thats at 2.2% for 60years. V conservative. Confirm can. Its just $ amount in 60y, its difficult ot wrap out heads around
@@joshconsultancy are you sure.... come one.. 99year - 60yrs = 39year will still worth 7million ? I dont think so
I agree with Mike Aaron. Do explore that option more. Do also include an alternative: a condo owner renting out his condo, and renting another place to live in.
Vote noted james!
How come rental does not increase over 60 years?
It does, factored in 1.8%pa
If I can, I may want to rent out my premium HDB at $2.5k, then find a more remote and lower rental HDB. That way I get true savings into my pocket every month. Question is whether the savings is worth the trouble.
don't bother - not worth it.
if you include additional income tax payable, additional property tax payable, maintenance, vacant periods and possibly agent fees the tiny amount of arbitrage will evaporate...
I think I agree with ocs. When renting out flat theres a lot of hassle and potential problems
On top of that, the number of people in a flat is only limited to six. It’s also a downside to have headcount when renting out.
If I’m not wrong, u can’t rent a HDB flat if u already owned one unless there is special approval from HDB.
One cannot put a price on the security of knowing you own the roof over your head, and do not need to worry about not finding a suitable and affordable place to rent!
I agree
Cannot hear you
In terms of numbers Rental is better now if you cant buy HDB.
very few people have $700k net. Likely a mid-career couple. How about doing a scenario of a young couple first home, with all the HDB subsidies, does it still make sense to buy HDB or rent & invest the rest? Sounds like buy term and invest rather than life insurance. haha. I guess after minimum occupation period, the playing field becomes more level.
Hey tcs, ya it does sound abit like the debate on buy term and invest vs wholelife. The conclusions are likely the same and the risk too
@@joshconsultancy i think it is because in the past as SG had tremendous economic growth, so home assets too enjoyed that spurt. Going forward, a mature city with shrinking population will only see slow econ growth. So the attitude towards home as investment will have to shift and be updated
If you have 60yrs for the analysis, it means the person is 20yrs old or less than 30 yrs having 700k in savings🤔. I would rather compare using the mortgage loan years which relates to the age of the person too. At the end of the mortgage loan, compare both the property and reits in value and growth.🙂
Maybe we live to 100y when start at 40y, possible? Haha
The good side of buying 1. You take effort instament (force saving) into future asset owning when sold a lump sum of money 2. Nobody can suddenly avict you and waste precious time moving everything inside the house. 3. The constact feeling of fear being suddenly chaseoutby home owner.
Agree
Bad advice again. Rentals are at 24 year highs. Anyone who did not buy and is renting is regretting.
#yaawy
I hate condos mcst rules… HDB more liberal
haha erm. HDB has rules actually le. Like Cannot install cctv in corridor without special permission for one?
FYI...U can install cctv if it's within your HDB home. If not need the town council's approval.
Yours are wrong la.. just buy simple hdb will do .. renting will be big trouble and u are helping out to pay installment for other people .. why so silly want to rent and want to stay whole life with a lot of trouble..
If it is true whole sg island no one want to own properties and some even own second and third
in 60 years,bye bye liao.