Couples Buying First Condo: 4 Commonly Overlooked Factors

first condo

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


first condo

πŸ“ŒFactor 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%.
first condo

πŸ“ŒFactor 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.
first condo

πŸ“ŒFactor 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
first condo

πŸ“ŒFactor 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
first condo

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Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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