In my line of work, I will sometimes run into potential clients who are very clear on what they want.

Oh, I want a place at this location. I will only go for $XXXX psf. The place must be nearby certain amenities, etc. 

It is always refreshing to meet a client who probably has done some research and is very certain of their requirements. 

But the danger comes in when the research is “half-baked” or not nearly complete. 

To illustrate, I will set the context. 

Let me introduce you to Parc Vera – a 99-year leasehold condo located in Hougang. 

Parc Vera 2017 Transactions

For this particular transaction, the Parc Vera condo was transacted at $1.35 million.

Assuming an 80% loan, this means a principal of $1,080,000. Assuming a 1.5% interest rate, this will result in a $3,700 monthly installment. 

It’s not that bad right? $3,700 monthly installment for a 1410 sq feet, 4-bedroom private condo. 

That is until I saw the following rental figures:

Parc Vera 2017 Rental Contracts

For a 1410 sqft Parc Vera apartment, the rental contract was $3,000 per month.

Now, I like you to stop and ask yourself this question:

Is buying a property where the monthly installment costs more than the potential rental proceeds – a good idea? 

Maybe if you have no other choice and you have to stay there.

But to be honest, if I was in this situation – I would just sell this $1.35 million condo and go rent instead. 

$3000 per month rental is CHEAPER than $3700 monthly installment. 

As a person, we have limited resources and many blindspots

The truth is this – if I have $1.35 million of available funds – I have to be smart and realize that my knowledge is limited.

My funds is also limited.  Also, I might have internal biases which I am unaware about.

I insist I must stay in Hougang and I must have a 4-bedroom condo. 

And I meet an agent who is just eager to have a transaction – who simply follows my instructions.

In hindsight, after everything is completed – I then realized – “Oh! This might not have been a good idea after all.”

This is the danger of proceeding when you don’t know… what you don’t know.

Where I Would Have Put My $1.35 Million

Assuming I have $1.35 million of available funds, I would use it to get a property that can at least cover my monthly installments. 

And because I am a property agent, I have access to the following:

• Data
• Insights on human behaviour
• Context of potential gains and losses
• Experience in handling various types of transactions
• On the ground knowledge that is honed daily

Instead I would put my $1.35 million budget towards purchasing this condo instead:

Soleil @ Sinaran Condo 2017 Transactions

It is an additional $10K above my original budget of $1.35 million. 

But it is still a good buy in any case.

The size is indeed smaller, at only 958 square feet and only with 2 bedrooms. 

The monthly installment might be slightly higher but still comparable to $3700 per month.

The main reason why I would highly recommend Soleil @Sinaran – a private condo located in Novena – is because of this:

Soleil @Sinaran 2017 Rental Contracts

Soleil @Sinaran – being at a highly accessible location – is able to command a much higher monthly rental of $5700. 

This easily covers a monthly installment of $3700 and plus an additional $2000 in rental cashflow.

As an agent, it is scary to see some people buying properties so blindly. This arises because we don’t acknowledge our blindspots and become “too focused” on the goals.

Some call it “missing the forest for the trees” – when you get so caught up in your own details, you miss out the bigger picture.

The Value of Knowing What You Don’t Know You Don’t Know

I call it simply as – you wouldn’t know, what you don’t know.

We rarely (if ever) can accurately assess our thoughts, choices or actions that are counterproductive, distracting, or ineffective.

We think we know (and therefore would make changes if they needed to be made), but we don’t know, so we underestimate our own need for change.

The ironic thing when you start to realize that you don’t know what you don’t know, you actually become more open-minded. 

You start to be accepting that “I might not know everything” and start to find your own knowledge. 

Becoming More Open-Minded To Other Choices

In fact, I have met some people who became so open-minded…. that they start to accept other possibilities might exist.

For instance, I have met people who choose to not own a HDB flat. Instead what they do is to RENT a HDB flat instead.

They decided it is best to pool their resources into buying a private property that has better-yielding returns. 

They rent a flat at $1.5k-$2K and are collecting rental returns from their private properties. 

They possess a certain freedom – they have no feeling of being tied down to stay in 1 specific place.

Their viewpoint on private properties is also rather impassive – it is merely an investment vehicle to park their resources in order to gain the best returns. 

When it is time to sell, they will sell. When it is time to buy, they will buy. No hassles, no weird emotions mucking up the transactions. 

However, I like to highlight – this situation is not suitable for everyone. Not everyone will possess the same temperament of such people. 

How do you avoid falling into the box of “What You Don’t Know, You Don’t Know”?

However well you think you’re doing, you are most likely overestimating what you’re doing well and underestimating what you need to improve.

Rather than mistakenly thinking that you know the nature or the extent of your opportunity, embrace these two key principles:

• Don’t accept your own self-assessment – Seek out and invite feedback and assessment from others (both personally and professionally)
• Assume that your self-assessment is missing some things and you are underestimating others 

Jim Collins once shared instead of believing you always know, be willing to be vulnerable and solicit and thoughtfully accept the feedback, perceptions and assessments others can give you.

There is value to having a high level of awareness on this lack of knowledge. 

I invite you to contact me for a free assessment. Discover how you are doing in terms of your own property portfolio and find whether the numbers are your potential dreams or future nightmares.