Friday, March 8, 2013
Finally bought a property! (Part 1)
The next few posts will document my journey to search for a value property and the thinking process, dilemma I had during the hunt.
The first property showroom I went was Riversail near upper Serangoon Cresent. It was a private condominium developed by Allgreen. The property was about 3KM from where I am staying. I like the property for several reasons.
- Near to my current home. I am familiar with surroundings such as Hougang Mall, Buangkok, Compass point, Nex, Kovan heartland mall.
- Next to park connector that allows cycling to punggol and kallang.
- Efficient internal layout, with very little wastage space.
- Separate living and dining area instead of having to split your living room to dining and living into half.
- Decent pricing of $850 PSF. A 2+ study 915 square feet unit will cost on average $778k. Assuming a modest rental of $2,800 a month, gross yield is 4.3%.Even if rental is $2,500 monthly, gross yield is 3.86% P.A.
- Downpayment of 5% cash will cost only $39,000, the rest 15% of $117k can be paid by CPF since I am a first timer. It is extremely affordable. Monthly installments will be about $2,150 @1.5% interest; $2,460 @ 2.5% interest and $2,800 @ 3.5% interest.
- The furnishings are excellent for a mass market condominium. It comes with marble flooring, marble wall (hotel standard) in the master bedroom toilet, build-in fridge, shoe rack (outside your unit), branded kitchen appliances.
- Choice units are available and not released yet. I can place a blank cheque and be almost assured to secure my high floor 2+study pool view unit.
- Free 2 years shutter bus service to Hougang MRT was available upon TOP, which looks attractive to my fiancée who doesn’t drive.
- Nearby Executive Condominiums (EC) like Heron Bay are selling on average $750 PSF. Just by paying about $100 PSF higher, or about 100k more, I will not be subjected to HDB complex binding rules and regulations. Even completed ECs (park green) are selling for $800 PSF when it is already 10 years old.
Cons of the project
- Too many units of 900+
- Many condominiums under construction, Austville was sold at about $700 PSF, boathouse residences at $900 PSF, Heron Bay at $750 PSF, BTOs and DBSS projects can be seen under construction. It will definitely affect the traffic, rental yield, living quality, resale value of Riversail, in time to come.
However, the main purpose of purchasing a property is to ensure I have a roof over my head when my parents pass on and the current HDB is dividend among my 2 siblings. Hence, my consideration is for own stay rather than investment. Even if I were to sell off 1-2 years upon TOP, it will be of good value given that boathouse residences are selling for above $900 PSF, the ECs and HDB projects cannot be sold until 5 years after TOP.
Despite benefits outweighing the cons, I did not purchase Riversail and purchased another one 3.5KM away.
It will be explained in the next post.