Strategy 1
Sell 1 buy 2 is a strategy for homeowners who want to upgrade and invest in the property market. The idea is to sell their existing flat and use the proceeds to buy two condominium units, one for their own stay and one for rental income. The benefits of this strategy are:
- Avoid paying additional buyer's stamp duty (ABSD) by buying the first property under each spouse's name
- Enjoy higher loan-to-value (LTV) ratio of 75% by buying the first property under each spouse's name
- Diversify their property portfolio and increase their asset value
- Generate passive income from renting out the second property
- Have the option to sell the second property later for capital gain or retirement fund
Benefits and Risks
However, this strategy also comes with some risks and challenges, such as:
- Higher monthly mortgage payments for two properties, if the investment unit do not get rented soon enough
- Higher property tax for the investment propertie
- Higher interest rates and tighter loan regulations due to the cooling measures
- Lower rental yield and occupancy rate due to the oversupply of condominium units
- Potential negative equity or loss if the property prices fall based on the wrong choices of property
- Fear of newer cooling measures hitting our shores
Hence, these benefits are not guaranteed and depend on various factors such as market conditions, personal circumstances and future plans. Therefore, homeowners should weigh the pros and cons carefully before deciding on this strategy.
Reaching Out
To aid you in preparation prior getting your new purchase, please click here to check your Loan TDSR Eligibility and Tailored Strategy for purchasing.
Should you be looking to sell your property, click here for FOC Home Valuation.
Click here to find about how much you can loan from banks for free and your loan eligibility.
For Investors like to know how we can help you plan an Asset Progression, click here.
Fill up the contact form in this page to register for the show flat preview and receive the full brochure with floor plans complimentary from us.
P.S. Be ahead of the game and stay in the know circle to receive first hand info by joining our whatsapp broadcast list here.