Couples Buying First Condo: 4 Commonly Overlooked Factors

Besides money matters, there are many factors to look out for when buying your first private property. For couples or HDB upgraders who have decided on a condo, review these four commonly overlooked factors before buying

=============================

     Table of Content

• Factor 1: Consider 99-1
• Factor 2: Freehold or Older 99yrs Condo
• Factor 3: Rental Yield is not Irrelevant
• Factor 4: Small or Big Condo Development

=============================

📌Factor 1: Consider 99-1

• When a couple buys a first condo together, joint tenancy is usually the default holding option
• In a joint tenancy, when one owner passes away, his/her interest in the property will automatically be passed on to the remaining co-owners.
• This is called the Rights of Survivorship.
• Couples or HDB upgraders should consider holding their first condo in 99%-1% format.
• This option is known as Tenancy-in-common.
• After seeing profit from their first condo, they may decide to decouple and buy a second condo to collect rental income.
• 99%-1% holding has 2 key benefits.
• When decoupling, the buying spouse (99% owner) only pay Buyer Stamp Duty on the 1% value of property
• The outgoing spouse (1% owner) need not pay ABSD on the second property because his/her stake has been sold.
• There are no additional costs for 99-1 arrangement but there must be trust between the couple.
• In the event of conflict, the law will literally recognize what is stated in the contract: 99% vs 1%.

📌Factor 2: Freehold or Older 99yrs Condo

• Couples who are buying to stay in a property themselves are usually attracted to resale condos.
• They may not want to wait for new launches which need a few years for construction or may prefer the bigger space offered by older condos.
• If you intend to stay in the condo for 10 years or longer, you should consider a freehold condo.
• Freehold condos are more expensive but you need not worry about lease decay.
• Alternatively, you can lookout for older condos (around 25-30 years)
• Older condos built in 1990s are more spacious and have stronger en bloc potential.
• A recent study observed a price increase when condominiums reach 31 to 40 years old.
• The game plan is to stay for 10-15 years and wait for a windfall from en bloc/collective sale.
• While en bloc is not guaranteed, there are very few condos in Singapore which have survived beyond 40 years.

📌Factor 3: Rental Yield is not Irrelevant

• I have met many couples who overlooked the rental yield factor when choosing a property.
• Many of them are buying to stay and will think that rentability does not concern them.
• The truth is that a condo with better rental yield will attract more investors and drive-up resale prices.
• Before buying, checkout the masterplan for any future developments that may bring more transformation or employment to the area.
• More employment opportunity means more potential tenants.
• If your condo is well liked by expatriates, you may want to buy a second condo later and rent out the current unit

📌Factor 4: Small or Big Condo Development

• Condos with more 1,000 units are considered big and well-liked by buyers who like to use the facilities that a large development will bring.
• Boutique apartments with less than 100 units attracts buyers who like serenity.
• If you have no strong preferences, I will advise to go for bigger condo projects
• For project with less than 30 units, it is not uncommon to see zero transactions for the past 2 years.
• This may affect your asking price when you want to sell.
• The banks may base their valuation on a transaction in the same project that was sold a few years ago

Like this Article or Video?

Check out more insights for First-Time Buyer