I first met Mr & Mrs Chen when they contacted me through one of my marketing flyers.
They are a young couple who are in their mid-30s and seemed very savvy and knowledgeable on property issues.
Their 5-room HDB flat have yet to hit the 5-year MOP but they were keen to sell it off to upgrade to the next property.
It was an interesting experience to be interviewed by them… Personally I thought they were going to engage someone else.
But they did engage me based on these 2 reasons: They thought I was detailed and organized. 😉
So Many Choices! What One To Choose?
For Mr & Mrs Chen – they were open to both resale and brand new landed properties.
But as they are a 3-generation family – they have elderly parents and young children – space will be very important. Hence the focus on landed property.
After a few weeks of viewing landed and terrace properties on sale, they realized they got their heart fixated on a new residential development that came with their own private lift.
They finally decided to buy a BUC (Building Under Construction) unit – the main reason being the older resale units did not have a lift inside. In the long run, the convenience will be immensely useful especially living with the elderly.
This BUC unit was a landed property located in District 19.
Here are the numbers:
- Sold their HDB 5Rm at Punggol upon the 5-year MOP at $590k
- Cash Proceeds was $107k
- Total CPF (Returned + Existing) = $338k
They then proceeded to:
- Purchase Freehold Landed 5-Bedder at District 19 at $2.6 million in 2017
- 5% Cash = $129K
- 15% CPF = $390K
- Monthly Cash Installment = $4.6K
For this landed property, they have their own internal private lift. This is usually seen in the newer landed units. It will be a brand new unit with furnishings.
Potential Pitfalls Avoided By Strategic Planning
In 2019 – a similar sized unit was sold at $3.2 million. They will be making a paper gain of about $600K if they choose to sell now.
This meant their existing private property has attained a capital appreciation of approximately 23% growth in just 2 years.
For their HDB flat, similar units has transacted at $650K in 2019 – which was $60K more than what they sold in 2017.
Reflecting back, this couple could have procrastinated and delayed selling their flat in order to obtain a higher price.
But they would also have missed the chance to purchase this landed property at $2.6 million.
In this particular case, Mr & Mrs Chen had purchased a “Star Buy” unit. A “Star Buy” unit is basically a unit that has been heavily discounted by the developer.
It is usually a very good buy but available only for a short limited time. The key is – you must be ready to make the purchase the moment it is offered.
The gains made for the landed property has easily overshadowed the “opportunity loss” of $60K.
The lesson from this – the rewards of taking fast decisive action upon MOP can be a handsome $600K. 🙂