Estimated Net Worth: $5M for the 3-bedroom old apartment and 3-bedroom condo (excluding capital growth and inflation).
Profession: Remisier (husband) and HR Manager (wife)
Age: Mid-fifties as of 2024
Family: Couple with 3 teenage children (2024)
Net Worth: Fully paid 3-bedroom freehold old apartment in Katong area, worth $2.5M
Target Net Worth (Real Estate) upon Retirement:
Fully paid newer 3-bedroom condominium and 1 investment property in the East.
Immediate Needs:
- Sell existing property to cash out $2.5M for purchasing two properties
- Minimum size of 1400 sqft for the 3-bedroom condominium for own stay
- East coast area only
- Freehold properties only
- Investment property must be either near a mall or MRT station
Budget:
- $2.5M for a 3-bedroom condo (own stay), with sufficient cash and CPF monies to pay down up to $1.75M (including stamp duty) and take a loan of approximately $850k (husband’s name)
- $2.5M for another 3-bedroom condo (investment property), with sufficient cash and CPF monies to pay down up to $750k (including stamp duty) and take a 75% loan (wife’s name)
Concerns & Challenges:
- Short loan tenure due to their age (up to 65 years old)
- On investment property, wife thinks that the price gap between a brand new versus a resale one has narrowed, so she prefers something brand new and ready for immediate rental income
Solution Implemented (After Audit):
- Renovate their existing property and continue living there (2021)
- Wife to de-couple and purchase a new, ready-to-rent freehold 3-bedroom condo at under $2.6M in the East Coast area and partial sea and city views (2021)
Shortfall from Target Net Worth:
- Target Property Cost: $2.5M for a 3-bedroom condo in the East Coast area
- Required Down Payment and Stamp Duty: $750k in cash and CPF monies
- Shortfall: $750k (DP) – $750k (cash/CPF monies) = $0
Future Solutions:
- Sell the old 3-bedroom apartment by 65 years old to fund retirement
- Fully pay down the $2.5M investment property by 65 through rental income and CPF top-ups
- Move into the investment property upon retirement
By following this strategy, the couple could achieve their target net worth upon retirement without having to employ the sell 1 buy 2 method which will incur more stamp duty and avoid the financial burden of maintaining 2 outstanding property loans.
