I met Mr & Mrs Lim through his elder brother’s recommendation.
Previously, I had helped his elder brother sell his Fernvale flat at a record price.
Through their elder brother’s recommendation, they decided to engage my service to help them in their property upgrading journey.
For this couple, they have 2 children who are both under 5 years old. So they make a family unit of 4 people.
Mr Lim has set a goal of buying a District 9 condo.
Their main motivations were driven by:
- wanting a place that was nearer to their workplace
- planning to enroll their older child in a school within that area
- the need for a property that could perform better than their existing HDB flat
All transactions were done in 2017.
Here were the numbers:
- Sold their HDB 5-room at Fernvale upon 5 years MOP at $535k
- Cash Proceeds $112k
- Total CPF Available (Returned + Existing) = $311k
The next step was:
- Purchased 3-bedroom freehold resale condo at River Valley at $1.88mil
- 5% Cash = $94K
- 15% CPF = $282K
- Monthly Cash Installment = $2.7K
In this case, all cash proceeds was channelled from their HDB to the purchase of their private property.
Capital Appreciation Within 2 Years
In 2019, I revisited the same development where Mr & Mrs Lim bought their freehold condo. A similar sized unit was sold at $2.1 million.
This meant the existing private property has attained a capital appreciation of approximately 12% growth.
Considerations of Buying a Freehold Resale Condo
There are certain potential pitfalls when buying a freehold resale condo unit. Here are the important points to take note.
#1: Bridging Loan Might Be Needed
For their financial situation, we understand most of their funds were stuck within their existing HDB flat. Hence this was why a bridging loan was needed.
#2: Avoid ABSD
When we were in the process of selling their flat, we helped them to avoid ABSD by securing a buyer for their flat before buying the condo.
#3: Fast Execution to Avoid Potential Price Increases
At the same time, we also wanted to make sure that we can secure the condo unit at the price of $1.88 million.
Had we waited, the price could have gone up to $2 million and beyond – which eventually happened in 2019.
#4: Smooth Transition
With the bridging loan in place, we managed to do the sale completion of the private condo in a very smooth way.
#5: No Additional Cash To Be Incurred For Short-Term Rental
In this case, we managed the timeline so well that they needed to move only once – directly from the HDB to their new freehold condo. There was no need to find temporary housing or rent another unit in the meantime.
This meant additional cash savings with very minimal inconvenience for their family.