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
This helped tremendously in building up the cash portion required to make their next purchase.
Plus, in order to avoid paying the ABSD, we have to ensure the existing flat has secured a buyer and exercised copy of the OTP is obtained.
This meant we have to manage the timeline accurately and carefully.
They got a short-term lease for them to stay while waiting for their new home to be ready.
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. 🙂