I heard on the grapevine that one of my neighbours with an identical unit ton my rental condo unit just sold his unit for about $1.95 million.
I got half exhilarated and half nervous at this news. Exhilarated, because it means my unit is worth about as much; which means that I have a capital appreciation of close to half a million on this unit. Nervous, because I can’t sell my unit for another three years, or I’ll incur the horrendous seller stamp duty to the tune of 12% of my selling price. And goodness only knows what will happen in three years’ time.
If the near-2 million price of the condo unit can hold until I go to sell in 3-4 years time, I get back about SGD 850K. My plan is to purchase a HDB 4-room flat (3-bedrooms) for about $400K-$450K, stay in one room and rent out the other two. If rental prices hold, I can get about $ 1,500 a month in rent to cover a good part of my living expenses and throw close to all my day job salary into savings.
Once I fulfill the minimum occupancy period of 5 years for the HDB flat, I intend to sink the remaining $400K from the earlier condo sale and another $300K in savings into a small private studio apartment for living purposes. The HDB 4-room flat can then be rented out in full, which, if rental prices hold, should net me about $2,500 a month, which is able to cover all my living expenses sans overseas travel.
If all these happen at the correct timing, I can quit my current job in 10 years’ time (at 45), living on rental income. If I want luxuries such as overseas travel or if I need to cover my parents’ expenditure, I can work a small part-time job or use dividend money.
If, if, if. That’s a lot of ifs to base an entire retirement plan on, but I am less confident in my stock market investment abilities than real estate.
This also means that I have to save up at least half a million in cash in 10 years time if I want to buy that second property and still have a substantial enough liquid position (200K) for emergencies. $50,000 a year in cash, and other liquid assets. I think I may be able to swing that provided my company is doing well enough.
I am pretty concern about whether the property market will hold. It seems to me what goes up must come down; it is just a matter of when. And I am very much afraid that I will get hit with a pricing drop by the time I am ready to sell. All my early retirement plans hinge on the returns on this condo. I guess I have committed the investment no-no and went and put all my eggs in one basket – early retirement-wise at least.
Well, at least, it seems like I finally have a plan to get to where I want to be, even if it all seems to hinge on something that is totally out of my control – the property market movement.
And the race to retirement to 45 continues…