How I Cleared $235K Profit In My Own Property Investment

Did I get your attention with the title? 😉

As a property agent – I do practise what I preach.

Some people might say it was luck.

Some people might say I have inside information.

But the truth was actually simpler – I just took decisive action when the time came.

Bought a 3-bedder new launch in Nov 2011

Before I bought The Treasure Trove, I was already staying in my own HDB flat. At that time when I bought it – the ABSD for the 2nd property has yet to be introduced. ABSD for a 2nd property was only introduced in Jan 2013.

Because there was no ABSD that impacted me directly, I chose to retain my HDB flat instead of selling it off.

Here are the numbers:

Bought a 3-bedder unit at The Treasure Trove
Price was $939K
20% cash = $187,800
Stamp Fees = $22,700
80% loan = $751,000

Including the stamp fees, my total cash outlay was about: $210K.

The TOP date was November 2015.

Essentially when I collected my keys, I have already passed the 4-year Seller Stamp Duty (SSD) period and I was free to sell this brand new condo unit with no additional penalties.

However, I didn’t proceed to sell. Instead I made a decision to stay there for the next 2 years.

The main reason? Being in the property business for awhile, I thought I wanted to monitor the prices first and see how far it could go.

So in the meantime, I rented out my HDB flat for $2000 per month and proceeded to move into my condo unit.

I stayed there – this condo was going to be my new home for awhile.

Made a Decision To Exit My Property Investment

In late 2017 and early 2018 – I could see that property prices were getting bullish thanks to the many record en-blocs going on. You would remember the wave of en-bloc news that occured during the first half of 2018.

It was time to exit and take my profits.

Here are the important numbers from the sale:

Selling Price = $1,180,000
Outstanding Loan = $648,000
CPF Usage = $9K
Total Cash Proceeds = $523K

Here are the calculations:

My initial cash outlay when I bought this new launch development was $210K.

I entered the market in Nov 2011 and exited in Apr 2018.

My nett cash proceeds after about 7 years was $235K.

Total returns over 7 years was = $235K/$210K * 100% = 112%

Dividing that over 7 year period = 15.9% returns per year!

This is the impact and returns you can get on a leveraged asset like property investment.

I like to highlight that this type of returns is NOT possible with every property.

Lessons and Takeaways

What is the key lesson you can take from this? Watch what property agents will buy for themselves! 😉

Jokes aside, there are a few important lessons that can be good reminders when it is your turn to invest.

Lesson #1: Take action when it’s time

I was sitting on my cash and ready to pull the trigger when I saw an opportunity. In 2011, the market was becoming more exuberent. The Private Property Price Index was at its all time high.

There was a first round cooling measure that was applied – 3% ABSD for Singaporean buying their 3rd property.

For my case, I was only buying my 2nd property – so ABSD was not applicable yet.

Eventually the ABSD for Singaporeans buying their 2nd property was applied on Jan 2013 – it was 7% ABSD. This rate became 12% in July 2018.

(For a timeline of the cooling measures, check out here: https://www.srx.com.sg/cooling-measures)

For myself, I had a lingering feeling that cooling measures will be tightened further as prices in 2011 was still continuing to increase.

At the same time, the location was at Punggol – a place that I am very familiar with as I handled plenty of transactions in that area. Punggol was an upcoming choice for young couple and interest was rising in this once-ulu area. So my confidence level was high.

With my cash in hand, I took the next step and signed the Option To Purchase.

Lesson #2: Take profit when it’s time

I stayed in The Treasure Trove from 2016 to March 2018.

In late 2017 and early 2018 – the property market was red-hot thanks to a record number of properties going for en-bloc. Developers were willing to pay high prices and the market sentiment was so positive.

Usually this means – another round of cooling measures will be coming up soon!

At the same time, I was concerned that the supply of property was going to increase as an Executive Condo (the Prive) which was nearby was going to reach the 5-year MOP status soon. That could result in an unfavourable situation if I wanted to sell.

Positive factors that pushed me towards selling were:

Incoming en-bloc beneficiaries who are looking to buy and move in immediately. There was a flood of “homeless” en-bloc millionaires entering the property market during the 2017-2018 period.
Potential HDB upgraders whose flat has hit MOP and looking to buy a private condo in the Punggol area. My unit will be attractive to those who are not willing to wait.

I made the decision to sell when buyers were busy entering the market and I received a very decent offer.

My unit was on the lower floor and I received an offer which was higher than previous similar units.

It was also the point when my unit’s PSF crossed $11XX instead of remaining at $10XX.

I took up the offer and completed the closing within 1 month.

About 3 months later – the most punitive cooling measures was applied – 12% ABSD on the 2nd property for Singaporeans.

Did I have inside news? Of course not.

But I have years of experience in the Singapore property market and my instincts have been sharpened thanks to handling a large volume of transactions.

If I had waited to sell – I would have run directly into the July 2018 cooling measures.

That would mean a very challenging scenario where either I can’t get buyers or a decent offer for the property.

It would have been tough to exit and make the profits I did.

Lesson #3: Never become emotionally attached to your investments

I have been enjoying the condo lifestyle for 2 years. It was a nice place to stay but that was it.

It was essentially an investment.

At the same time – I have essentially downgraded back from that condo lifestyle and now back to my original HDB home.

Now, for some people – selling your condo and living back in a HDB flat seems like a “loss of face.” This is especially applicable for us Asians.

Imagine the questions from people around you: “Eh! I thought you stayed in condo. How come you are back in HDB?”

There exists people who will not be able to accept the fact that they have to return back to living in a HDB flat.

But for me? A home is the address on my NRIC. It is a place to stay.

More importantly, I exited a property investment with substantial 6-figure returns. On my own terms.

That’s money in the bank and peace in my mind.

Let go when it is time to let go.

Lesson #4: Learn to live with less

Being a property agent with no fixed income – I have learnt how to manage my money well.

I learnt how to live below my means and not spend on frivolous items to set aside my initial capital.

When you take so much effort to set aside your initial capital – it then becomes very important for me to understand thoroughly ANY investment that I will take up.

It could have easily gone the other way if I wasn’t careful in taking care of the potential downsides.

I managed to make substantial gains because I learnt how to live with less.

The main reason I was able to exit the investment because I have accepted the idea of returning and living in my HDB flat.

I don’t really care what others might think – “oh his real estate biz must not doing well” / “oh he can’t afford the monthly instalments” etc.

What I learnt from my life experience – don’t care what others think of you.

Even CEOs stay in HDB flats – and me? Just a property agent.

“Be who you are and say what you feel, because those who mind don’t matter and those who matter don’t mind.”

Lesson #5: Heed the lessons from others

Over the years, I have seen so many difficult property transactions. People are selling because of circumstances that happened and are forced to take action.

It is so important that you exit from your property on your own terms. But for some people – it is because they literally have no other choices!

It becomes harder especially when I realized had they done something earlier – it wouldn’t have come to this bad situation.

So I learnt from the hard lessons of other people and make sure it is not repeated.

Never procrastinate and take things for granted – always be aware of the consequences.

I have seen the challenges of selling a property during the tough times so I know I wouldn’t want that to happen to me.

If I sell, it should be on my own terms and not because I was forced to.

Conclusion

Success in investing is more due to mindset and a willingness to pay the price.

The mindset here was believing this is just an investment with no emotional connection.

The price here was taking action quickly and not be too greedy.

Having a logical plan protects you from making emotionally-driven dangerous decisions.

Sometimes it helps to talk to a 3rd-party about your financial goals who can ask the hard questions regarding your approach.

It might be uncomfortable at the beginning but that is the price of getting clarity on your choices.

If you are thinking of entering the property market and unsure of what your options are, do contact me for a no-obligation discussion. After our discussion, there is no obligation for you to take action.

At the very least, you will be very clear on your current financial situation.