I recently had a catch-up session with my clients whom I first met in 2017.

Back then, they saw my FB post about upgrading to private condo.

We went through the numbers, created the plan and executed it that year.

5 years on, I still keep in regular contact with them to keep them updated on market conditions.

During the most recent discussion, I found out that their 2 properties have made paper gains of about $400K – in just 5 years.

$400K Paper Gains In 5 Years

To be clear, these are paper gains. It is not actually cash yet.

But they are in a good position to exit from at least 1 of the properties this year especially.

And since they have 2 properties, selling 1 is not that difficult as they still have another place to stay.

They can sell high and need not worry about buying high yet.

Comfortable position.

Was it easy for them to be where they are currently?

Not really.

They had to give up a comfortable Toa Payoh HDB home in order to get started.

Below are the financial numbers from the sale of their Toa Payoh HDB flat in 2017.

The cash proceeds was only $43,672.

You can see that they used their CPF monies quite a fair bit and have accumulated significant accrued interest.

This would have been a negative sale easily if their HDB selling price has been just a little bit lower.

But I managed to secure a higher selling price which pushed them towards a sale with cash proceeds.

Have You Tested Your Property Through The 30-Year Timeline?

For this couple, I have to say they were quite ready to proceed with upgrading to private property.

But what really sealed the decision for them was when I presented the 30-year timeline.

Essentially, I shared with them the costs of continuing to hold on to their HDB flat for the next 30 years.

The CPF accrued interest would continue to build up and their HDB price would eventually depreciate.

As they continued to pull money out from their CPF OA to park it inside their HDB, they would have to give up on the 2.5% interest rate provided by the CPF Board.

So the question we have to ask ourselves: What if our HDB starts to depreciate?

Not only do we lose out on the CPF interest rate, our monies are also stuck inside our HDB flat.

After 30 years, that number will be scary.

Scary because a majority of our retirement monies are stuck in an aging HDB flat.

Hence, that’s why it is necessary to park our funds in a property that is at least able to provide returns that is greater than 2.5%.

I Helped Them Identify 2 Property Choices

Once they understood the need to “reset” their CPF usage and park into worthy properties – we sat down to identify suitable properties to consider.

They were:

• Parc Riviera
• Sims Urban Oasis

Why Parc Riviera – A Quick Analysis Based on 2017 Context

Parc Riviera is located in a freehold enclave area.

And to purchase a freehold 2 bedroom, one would need to pay at least above $1M in 2017.

I do agree that they is also a huge potential in these freehold properties as well but the upfront cost of paying a $1.x mil vs $7xxk is quite significant.

But since we are looking at similar amounts of potential gains between freehold and leasehold, I believed the leasehold Parc Riviera would be a better choice.

Moreover there is an advantage in terms of the price gap between the price of a 2 bedroom in Parc Riviera vs the other freehold 2 bedroom properties.

This is the master plan.

And Parc Riviera was the first 99-years leasehold property that was launched in that area.

So following my advice, they purchased a 2-bedder unit at Parc Riviera.

Subsequently, there were 2 other plots of land that was slated for residential and the land bids became more expensive.

The 2 developments that occupied the neighbouring land plots are:

• Twin Vew
• Whistler Grand

Here are Parc Riviera’s most recent 2022 transactions of similar-sized units.

Based on the current prices, their unit is now sitting on paper gains of about $170K.

Parc Riviera is their investment property which is currently being tenanted out.

It is a source of passive income for them.

Why Sims Urban Oasis – A Quick Analysis Based on 2017 Context

The other unit I recommended was a 3-bedder unit at Sims Urban Oasis.

In 2017, a 1033 sqft 3 bedroom premium would cost them around $1.4XM.

But the main reason I felt so positive about this condo was because it was one of the biggest development in the area with a total 1024 units.

A big development has its benefits especially in terms of resale value in the future.

At the same time, the supply of new condos in the Aljunied area was quite limited.

There were only:

• Central Grove (262 units, lease began in 1997)
• Simsville (522 units, lease began in 1994)

These condo developments were more than 20 years old and would not be very attractive for people who are seeking for brand new condos with fresh 99-year leases to live in.

Today, the 3-bedder units at Sims Urban Oasis condos are now transacting upwards of $1.8M.

So the paper gains would be about an estimated $350K.

My 2 choices that I shortlisted for them would have meant a total paper gains of $170K +$350K = $520K.

That would mean gains of about $500K within just 5 years.

Gains from Parc Riviera + Sims Urban Oasis from buying in 2017

However… They Chose Another New Launch Development Instead

As much as I like to show you that they indeed bought a unit at Sims Urban Oasis – they did not proceed with my advice to go for it.

Instead, they bought another new launch unit which they entered at a higher price almost $1.6M.

This development was not one of my choices – hence it was not handled by me.

From our last discussion, the paper gains for this unit was about about $200K.

Similar units at that development are also transacting at around $1.8M in 2022.

There were certain reasons why they did not proceed with my all of my recommendations.

In any case, I respect their decision to buy something else altogether for their own stay.

But the paper gains from that unit are not as much as the appreciation gains made by Sims Urban Oasis.

So their official paper gains from the past 5 years are $170K + $200K = $370K

Not as high as $500K but still a respectable amount.

Final Words

Selling your comfortable and spacious HDB flat to unlock its value as a stepping stone to a condo is hardly comfortable.

But the journey to wealth creation has always been uncomfortable.

Because it is about stepping outside of our comfort zone.

You have to be prepared to take up some discomfort in order to fully take advantage of the value that has been built up in your property.

Imagine if you had made $500K in 5 years.

It is actually quite significant.

It can mean you can retire 5 years earlier.

It can mean a bigger retirement nest egg.

It can mean many other things because it unlocks more choices for you and your family.

When I first met them, their goals was about building a stream of passive income and securing their retirement.

Today, the gains they made have allowed them to have a lot more confidence for their financial future.

Now they have even more options and choices available to them.

If you are keen to explore your options and choices in this current market, do drop me a message via whatsapp.

All our discussions are no-obligation.