1 00:00:00,009 --> 00:00:02,339 Speaker 1: You're listening to a CNA podcast. 2 00:00:05,300 --> 00:00:08,459 Speaker 2: Hey, this is Andrea Heng and I'm back with the 3 00:00:08,470 --> 00:00:12,310 Speaker 2: Money Talks podcast where we specialize in talking about money. 4 00:00:12,319 --> 00:00:15,630 Speaker 2: More importantly, all the things you can do with it. 5 00:00:15,819 --> 00:00:18,389 Speaker 2: So in the previous episode, we looked at how to 6 00:00:18,399 --> 00:00:22,969 Speaker 2: add resilience to our investment portfolio, especially with a looming 7 00:00:22,979 --> 00:00:26,620 Speaker 2: recession that dreaded our word. Go check out that episode 8 00:00:26,629 --> 00:00:29,329 Speaker 2: on Spotify or Apple podcasts. Will you? 9 00:00:29,559 --> 00:00:34,388 Speaker 2: Now our episode today focuses on a bigger longer term investment, 10 00:00:34,400 --> 00:00:39,369 Speaker 2: owning a second property. It's especially appealing to couples, for example, 11 00:00:39,380 --> 00:00:42,250 Speaker 2: who can choose to take advantage of two income streams 12 00:00:42,259 --> 00:00:46,580 Speaker 2: and turn it into another income generator by owning two properties, right? 13 00:00:46,750 --> 00:00:50,090 Speaker 2: But decoupling has also become a bit of a hot 14 00:00:50,098 --> 00:00:54,009 Speaker 2: button issue, especially with the new A BS D. That's 15 00:00:54,020 --> 00:00:56,389 Speaker 2: the additional buyer stamp duty and 16 00:00:56,473 --> 00:01:00,984 Speaker 2: that was announced in April of 20% for Singaporeans buying 17 00:01:00,993 --> 00:01:04,542 Speaker 2: a second property. Now, some of you might be wondering 18 00:01:04,643 --> 00:01:08,543 Speaker 2: what's decoupling. We'll get into that later. Trust me. So 19 00:01:08,783 --> 00:01:12,583 Speaker 2: is two truly better than one, what should we consider 20 00:01:12,594 --> 00:01:15,524 Speaker 2: before taking the plunge? And should we start thinking of 21 00:01:15,533 --> 00:01:18,924 Speaker 2: a second property as a form of inheritance for kids. 22 00:01:19,103 --> 00:01:21,064 Speaker 2: Let's take a look at some of our options. Now 23 00:01:21,072 --> 00:01:23,213 Speaker 2: with Clive Cheng of Red Brick 24 00:01:23,697 --> 00:01:27,297 Speaker 2: Advisory. Thank you for joining us on the Money Talks podcast. Clive, 25 00:01:27,318 --> 00:01:29,946 Speaker 2: thank you for having me. So, Clive in your line 26 00:01:29,958 --> 00:01:33,357 Speaker 2: of work. How many people have you encountered owning a 27 00:01:33,367 --> 00:01:38,078 Speaker 2: second property? Actually quite a few out of 10 inquiries. 28 00:01:38,087 --> 00:01:40,997 Speaker 2: And with, I mean, private property owners, maybe you get 29 00:01:41,008 --> 00:01:45,468 Speaker 2: 30 40% of them. Wow. Yeah, thinking about owning a 30 00:01:45,477 --> 00:01:48,847 Speaker 2: second property. So whenever someone has a cash or they've 31 00:01:48,858 --> 00:01:50,218 Speaker 2: gotten a windfall from, 32 00:01:50,302 --> 00:01:53,232 Speaker 2: from their work through bonuses, I mean, the immediate thing 33 00:01:53,241 --> 00:01:54,821 Speaker 2: they always think about is I want to own a 34 00:01:54,832 --> 00:01:58,512 Speaker 2: second property and be a land. Yeah, exactly. Ok. So 35 00:01:58,522 --> 00:02:02,281 Speaker 2: what then become their biggest financial concerns when they are 36 00:02:02,291 --> 00:02:06,181 Speaker 2: considering buying that second property, it's always a matter of 37 00:02:06,192 --> 00:02:10,632 Speaker 2: getting the proper financing and trying to avoid as much 38 00:02:10,641 --> 00:02:13,031 Speaker 2: tax as possible, you know, trying to make the purchase 39 00:02:13,042 --> 00:02:16,542 Speaker 2: as streamlined as possible. So when we're talking about buying 40 00:02:16,552 --> 00:02:17,132 Speaker 2: a second property 41 00:02:17,326 --> 00:02:21,496 Speaker 2: in Singapore today, obviously additional buyer stamp duty becomes a 42 00:02:21,505 --> 00:02:25,065 Speaker 2: large topic because like you mentioned earlier, it was revised 43 00:02:25,076 --> 00:02:28,376 Speaker 2: to 20%. So if you're purchasing a million dollar property 44 00:02:28,386 --> 00:02:31,835 Speaker 2: and you have to pay $200,000 of additional buyer stamp 45 00:02:31,845 --> 00:02:34,666 Speaker 2: duty that really burns a hole in your pocket. So 46 00:02:34,675 --> 00:02:37,636 Speaker 2: couples are always thinking of ways to try to make 47 00:02:37,645 --> 00:02:40,945 Speaker 2: their purchases more efficient and that's when you mentioned, rightly 48 00:02:40,955 --> 00:02:44,046 Speaker 2: where this thing called decoupling comes into the picture. 49 00:02:44,330 --> 00:02:47,110 Speaker 2: Perhaps, let me explain a little bit more about that. So, 50 00:02:47,119 --> 00:02:50,960 Speaker 2: decoupling is a process where for example, husband and wife 51 00:02:50,970 --> 00:02:54,329 Speaker 2: owns a private property and now they want to own 52 00:02:54,339 --> 00:02:58,239 Speaker 2: another one. So the husband purchases over the wife's share, right? 53 00:02:58,250 --> 00:03:02,459 Speaker 2: Or vice versa, leaving the wife property less. Right? So 54 00:03:02,470 --> 00:03:04,978 Speaker 2: now that you don't own a property, you purchase your 55 00:03:04,990 --> 00:03:06,320 Speaker 2: own private property, 56 00:03:06,550 --> 00:03:10,529 Speaker 2: you won't have to pay for additional buyer stamp duty. Right? Yeah. 57 00:03:10,538 --> 00:03:13,050 Speaker 2: So if you are Singaporean citizen and you're buying your 58 00:03:13,059 --> 00:03:16,240 Speaker 2: first property, there's no additional buyer stamp duty. Ok. And 59 00:03:16,250 --> 00:03:19,360 Speaker 2: do they tend to be married? Couples do singles do 60 00:03:19,369 --> 00:03:22,429 Speaker 2: this or I guess, parent and child? Yeah, it can 61 00:03:22,440 --> 00:03:25,929 Speaker 2: be in any form of configuration most commonly they usually 62 00:03:25,940 --> 00:03:27,399 Speaker 2: husband and wife. Yeah. 63 00:03:27,649 --> 00:03:29,740 Speaker 2: But yeah, I've seen quite a few cases as well 64 00:03:29,750 --> 00:03:32,179 Speaker 2: where it's a parent and a child or even between 65 00:03:32,190 --> 00:03:36,419 Speaker 2: two friends, there are no restrictions to who can be couple. Ok. 66 00:03:36,429 --> 00:03:39,339 Speaker 2: Before anything else, I believe there are questions that we 67 00:03:39,350 --> 00:03:42,240 Speaker 2: need to ask ourselves as usual as part of our homework. 68 00:03:42,250 --> 00:03:46,339 Speaker 2: When considering buying a second property, I think it's best 69 00:03:46,350 --> 00:03:48,339 Speaker 2: to think about it in three ways. Ok. 70 00:03:49,535 --> 00:03:53,445 Speaker 2: Intent and eligibility. So let's talk about the first one 71 00:03:53,455 --> 00:03:58,294 Speaker 2: and arguably it's the most important affordability, right? What aspects 72 00:03:58,304 --> 00:04:01,255 Speaker 2: of our financial health do we need to look at 73 00:04:01,264 --> 00:04:04,945 Speaker 2: to determine if we can in fact, afford a second 74 00:04:04,955 --> 00:04:09,445 Speaker 2: home basically also what should our financial threshold be, for example. 75 00:04:10,160 --> 00:04:14,089 Speaker 2: So mes and the banks have put in regulations to 76 00:04:14,100 --> 00:04:17,089 Speaker 2: prevent someone from over leveraging. Now on the topic of 77 00:04:17,100 --> 00:04:22,190 Speaker 2: affordability commitments are usually the biggest thing that we think about, right, 78 00:04:22,459 --> 00:04:25,409 Speaker 2: how much you spend on your credit cards, whether you 79 00:04:25,420 --> 00:04:29,929 Speaker 2: own a car or multiple cars, whether you have personal loans, 80 00:04:29,940 --> 00:04:33,950 Speaker 2: all these commitments greatly impact the amount of loan you 81 00:04:33,959 --> 00:04:36,140 Speaker 2: can actually obtain from the banks when you're looking to 82 00:04:36,149 --> 00:04:39,589 Speaker 2: purchase a property. So affordability, if you're looking to purchase 83 00:04:39,600 --> 00:04:42,209 Speaker 2: a property, you would want to always make sure that 84 00:04:42,220 --> 00:04:44,549 Speaker 2: you keep your commitments to, you know, 85 00:04:44,899 --> 00:04:47,790 Speaker 2: a low, right? Make sure that in check, make sure 86 00:04:47,799 --> 00:04:50,399 Speaker 2: there are no late payments. You don't default on any, 87 00:04:50,410 --> 00:04:52,589 Speaker 2: any payments because that's what you mean by low, not 88 00:04:52,600 --> 00:04:55,700 Speaker 2: necessarily volume but just making sure you pay your bills 89 00:04:55,709 --> 00:04:57,829 Speaker 2: on time. Yeah, I mean volume does come into play 90 00:04:57,839 --> 00:04:59,589 Speaker 2: as well because if I have a car and the 91 00:04:59,600 --> 00:05:02,190 Speaker 2: monthly installments on the car is like $3000 a month, 92 00:05:02,670 --> 00:05:06,320 Speaker 2: that is going to substantially bring down your loan eligibility, right? 93 00:05:06,500 --> 00:05:10,640 Speaker 2: And if you also make late payments that would show up. 94 00:05:10,649 --> 00:05:13,969 Speaker 2: So whenever the banks determine your loan eligibility, they would 95 00:05:13,980 --> 00:05:17,089 Speaker 2: always run a credit bureau search that basically gives an 96 00:05:17,100 --> 00:05:20,750 Speaker 2: indication to the bank of your repayment history. So if 97 00:05:20,760 --> 00:05:21,339 Speaker 2: you've been late 98 00:05:21,424 --> 00:05:23,964 Speaker 2: on certain credit cards for like 30 or 60 days 99 00:05:23,975 --> 00:05:26,635 Speaker 2: doesn't look too good. And because of that, they may 100 00:05:26,644 --> 00:05:30,265 Speaker 2: impose some stricter conditions, like, instead of being able to 101 00:05:30,274 --> 00:05:33,325 Speaker 2: grant you the maximum of 75% loan, they probably say 102 00:05:33,334 --> 00:05:38,075 Speaker 2: I grant you 60%. What about thinking about time frames? 103 00:05:38,084 --> 00:05:39,725 Speaker 2: I mean, I don't want to be servicing a home 104 00:05:39,734 --> 00:05:40,094 Speaker 2: loan 105 00:05:40,410 --> 00:05:43,410 Speaker 2: well into my seventies and my eighties as well. Right. 106 00:05:43,420 --> 00:05:45,709 Speaker 2: Isn't that something to consider as well? Yeah. Well, the 107 00:05:45,720 --> 00:05:48,799 Speaker 2: cap today, I mean, if you're an investor, you would 108 00:05:48,809 --> 00:05:52,059 Speaker 2: actually think a little bit differently. You won't mind serving 109 00:05:52,070 --> 00:05:54,079 Speaker 2: the loan until you like at the age of 75 110 00:05:54,089 --> 00:05:57,209 Speaker 2: for example, and here's why. So when someone buys a 111 00:05:57,220 --> 00:06:00,570 Speaker 2: property today, the banks would always grant you a loan 112 00:06:00,579 --> 00:06:04,029 Speaker 2: tenure up to the age of 65. So for example, 113 00:06:04,040 --> 00:06:07,140 Speaker 2: if I'm 50 years old, I'll get a 15 year 114 00:06:07,149 --> 00:06:08,510 Speaker 2: loan tenure, right? 115 00:06:08,760 --> 00:06:11,799 Speaker 2: Some people get even imagine I'm 60 years old, for example, 116 00:06:11,809 --> 00:06:15,290 Speaker 2: extreme case, my loan tenant is five years and because 117 00:06:15,299 --> 00:06:18,420 Speaker 2: the loan tenant is five years, my monthly installments tend 118 00:06:18,428 --> 00:06:21,059 Speaker 2: to be quite high, right? And that eats a lot 119 00:06:21,070 --> 00:06:23,920 Speaker 2: into my cash flow. So some people will be like, hey, Clive, 120 00:06:23,928 --> 00:06:25,839 Speaker 2: I actually want to get a longer loan tenant, you know, 121 00:06:25,859 --> 00:06:28,089 Speaker 2: because if I can extend my loan tenant by 10 122 00:06:28,100 --> 00:06:30,308 Speaker 2: years from 5 to 15 years, 123 00:06:30,700 --> 00:06:33,519 Speaker 2: the commitments drop by more than 50% and it doesn't 124 00:06:33,529 --> 00:06:35,510 Speaker 2: hurt your cash flow. Yeah, so it's better for me 125 00:06:35,519 --> 00:06:39,730 Speaker 2: because the cash that I save can potentially be reinvested 126 00:06:39,850 --> 00:06:42,679 Speaker 2: into something that gives me a better return. Exactly right. So, 127 00:06:42,690 --> 00:06:44,820 Speaker 2: so there are a lot of considerations when you know, 128 00:06:44,829 --> 00:06:47,269 Speaker 2: deciding on how much loan you want to take, how 129 00:06:47,279 --> 00:06:48,899 Speaker 2: much CPF you want to use, how long of a 130 00:06:48,910 --> 00:06:51,459 Speaker 2: loan tenure you would like to take really depends on 131 00:06:51,470 --> 00:06:53,679 Speaker 2: the requirements at that point of time. But the good 132 00:06:53,690 --> 00:06:55,670 Speaker 2: thing is that, you know, you get to review your 133 00:06:55,678 --> 00:06:58,850 Speaker 2: mortgage portfolio every two or three years, it's necessary 134 00:06:59,100 --> 00:07:01,470 Speaker 2: and you can always make some changes along the way 135 00:07:01,480 --> 00:07:03,559 Speaker 2: in terms of like your loan tenure. Or if you're 136 00:07:03,570 --> 00:07:05,618 Speaker 2: looking to make a lump sum repayment, you can actually 137 00:07:05,630 --> 00:07:09,238 Speaker 2: basically refinance the mortgage. You have a lot of flexibility 138 00:07:09,250 --> 00:07:12,510 Speaker 2: when you refinance your mortgage. Ok? So there are also 139 00:07:12,519 --> 00:07:15,399 Speaker 2: certain laws and regulations that we need to consider when 140 00:07:15,410 --> 00:07:18,679 Speaker 2: working out affordability. Of course, I'm going to bring into 141 00:07:18,690 --> 00:07:21,579 Speaker 2: the picture. Now, the new A BS D and we 142 00:07:21,589 --> 00:07:23,910 Speaker 2: have to think about that in mind. There's something in 143 00:07:23,920 --> 00:07:25,450 Speaker 2: there about the A BS D 144 00:07:25,519 --> 00:07:30,100 Speaker 2: involved in the transference of property into a living trust, ok? 145 00:07:30,109 --> 00:07:33,140 Speaker 2: You need to average man this out for me like, ok, 146 00:07:33,290 --> 00:07:36,720 Speaker 2: so now let me start off by saying, ok, recently 147 00:07:36,730 --> 00:07:39,679 Speaker 2: the government has introduced this thing called an A BS 148 00:07:39,690 --> 00:07:43,149 Speaker 2: D trust. So if you're buying a trust, a property 149 00:07:43,160 --> 00:07:45,989 Speaker 2: under trust, you would have to pay for the additional 150 00:07:46,000 --> 00:07:50,920 Speaker 2: buyer of 35%. It's 35% now. So let's rewind this 151 00:07:50,929 --> 00:07:51,450 Speaker 2: a little bit 152 00:07:52,209 --> 00:07:54,179 Speaker 2: if I don't want to have to pay for additional 153 00:07:54,190 --> 00:07:56,959 Speaker 2: buyer stamp duty. When I, you know, buy multiple properties, 154 00:07:56,970 --> 00:08:01,200 Speaker 2: one of the ways of acquiring properties is through my 155 00:08:01,209 --> 00:08:05,059 Speaker 2: sons and my daughters. Of course, being of legal adult age, 156 00:08:05,920 --> 00:08:08,660 Speaker 2: you don't have to be, you don't necessarily, I can 157 00:08:08,670 --> 00:08:10,450 Speaker 2: even set up a trust for my kid who is 158 00:08:10,459 --> 00:08:12,850 Speaker 2: three years old. Oh, wow. Ok. Now, here's the thing 159 00:08:12,859 --> 00:08:14,640 Speaker 2: when you buy a property under trust 160 00:08:14,739 --> 00:08:18,100 Speaker 2: for someone who is a minor. Uh, the property, number one, 161 00:08:18,109 --> 00:08:20,040 Speaker 2: you can't take a loan on the property. The property 162 00:08:20,049 --> 00:08:22,839 Speaker 2: has to be fully paid for in cash. Ok, let's 163 00:08:22,850 --> 00:08:25,850 Speaker 2: assume a property purchase price of a million dollars. So 164 00:08:25,859 --> 00:08:28,769 Speaker 2: you buy a million dollars in cash. On top of that, 165 00:08:28,779 --> 00:08:33,319 Speaker 2: the government will charge you 35% additional buyer stamp duty. Now, 166 00:08:33,599 --> 00:08:36,840 Speaker 2: is there a way to get this 35% back? Yes, 167 00:08:37,270 --> 00:08:41,099 Speaker 2: that a win. Now, why is there even a 35% additional? Let's, 168 00:08:41,109 --> 00:08:44,449 Speaker 2: let's talk about that for a moment. Everyone likes to 169 00:08:44,460 --> 00:08:48,479 Speaker 2: find loopholes when it comes to investing in the property market. Absolutely. 170 00:08:48,710 --> 00:08:51,200 Speaker 2: And in the past, there have been people who have 171 00:08:51,210 --> 00:08:55,419 Speaker 2: bought properties under the kids name under trust and when 172 00:08:55,429 --> 00:08:59,039 Speaker 2: the property has appreciated in its value, they sell off 173 00:08:59,049 --> 00:08:59,739 Speaker 2: the property 174 00:08:59,960 --> 00:09:04,468 Speaker 2: when it's actually meant for the kid. So they purchase 175 00:09:04,479 --> 00:09:07,729 Speaker 2: a property for an investment under the disguise that I 176 00:09:07,739 --> 00:09:09,968 Speaker 2: would like to buy this for my kid in future. 177 00:09:09,979 --> 00:09:14,319 Speaker 2: And that's perfectly legal in the past. So of course, 178 00:09:14,330 --> 00:09:16,400 Speaker 2: it's going to be a problem because, you know, you 179 00:09:16,409 --> 00:09:19,070 Speaker 2: get a lot of rich Singaporeans or even pr or 180 00:09:19,080 --> 00:09:21,449 Speaker 2: foreigners buying, stepping up properties because they have a lot 181 00:09:21,460 --> 00:09:23,590 Speaker 2: of cash and then just flipping it when the time 182 00:09:23,599 --> 00:09:26,650 Speaker 2: is right. So now this the government because of this 183 00:09:26,659 --> 00:09:29,669 Speaker 2: has imposed this 35%. Ok. If you want to do this, 184 00:09:29,914 --> 00:09:32,934 Speaker 2: you pay an additional, I mean, if you can afford 185 00:09:32,945 --> 00:09:36,525 Speaker 2: a million dollars in cash, you can't afford another 350 K. Yeah, 186 00:09:36,534 --> 00:09:38,465 Speaker 2: you might be right. But I mean when it comes 187 00:09:38,474 --> 00:09:41,114 Speaker 2: to that level, you know, do you think it's been 188 00:09:41,385 --> 00:09:47,835 Speaker 2: effective though? It has so, so paying another 35% and 189 00:09:47,844 --> 00:09:49,965 Speaker 2: we're not talking about, you know, a million dollar purchase, 190 00:09:49,974 --> 00:09:52,174 Speaker 2: usually the purchases tend to be a bit larger of 191 00:09:52,544 --> 00:09:56,843 Speaker 2: 234 million number paying 35% of that is going to 192 00:09:56,854 --> 00:09:59,244 Speaker 2: be painful, right? So 193 00:09:59,809 --> 00:10:01,989 Speaker 2: they've put in place this additional bias and duty, but 194 00:10:02,000 --> 00:10:04,299 Speaker 2: there is a way of getting it back provided that 195 00:10:04,309 --> 00:10:08,419 Speaker 2: you fulfill certain requirements, right? So the requirements for example 196 00:10:08,429 --> 00:10:11,460 Speaker 2: would be, oh, ok, you cannot sell the property, you 197 00:10:11,469 --> 00:10:13,280 Speaker 2: cannot be the one selling of the property, the property 198 00:10:13,289 --> 00:10:16,690 Speaker 2: has to be left for your kid, right? You cannot 199 00:10:16,700 --> 00:10:17,520 Speaker 2: make and you cannot put it 200 00:10:17,619 --> 00:10:20,869 Speaker 2: any additional clauses saying that, ok, I still have the 201 00:10:20,880 --> 00:10:23,010 Speaker 2: power to sell away the property, for example, because it 202 00:10:23,020 --> 00:10:25,909 Speaker 2: is technically not yours. Yeah, exactly. So I won't go 203 00:10:25,919 --> 00:10:28,349 Speaker 2: into the real technical details. I think that can be 204 00:10:28,359 --> 00:10:31,169 Speaker 2: found online as well. But there are certain requirements have 205 00:10:31,179 --> 00:10:33,940 Speaker 2: been set up to ensure that in the bid to 206 00:10:33,950 --> 00:10:35,169 Speaker 2: ensure that you are just 207 00:10:35,710 --> 00:10:39,020 Speaker 2: legitimately buying this property and leaving it for your kid 208 00:10:39,030 --> 00:10:41,760 Speaker 2: and not any other funny business, but you can prove 209 00:10:41,770 --> 00:10:45,598 Speaker 2: that that's the case. You will get your 35% back. Wow, 210 00:10:45,609 --> 00:10:48,880 Speaker 2: talk to us also about the taxes involved and using 211 00:10:48,929 --> 00:10:53,320 Speaker 2: CPF for your second property. Yeah. Ok, great. So now 212 00:10:53,330 --> 00:10:57,718 Speaker 2: assuming that I intend to hold the first property and 213 00:10:57,729 --> 00:11:00,669 Speaker 2: continue to purchase the second property. So it's a second 214 00:11:00,679 --> 00:11:02,880 Speaker 2: property that I'm going to own under my own name. Now, 215 00:11:02,890 --> 00:11:03,619 Speaker 2: number one, 216 00:11:03,989 --> 00:11:07,709 Speaker 2: if I have an existing mortgage on property, number one, 217 00:11:07,830 --> 00:11:09,789 Speaker 2: and now I'm looking to get a mortgage on property. 218 00:11:09,799 --> 00:11:12,718 Speaker 2: Number two, the maximum loan the banks will grant me 219 00:11:12,729 --> 00:11:15,840 Speaker 2: is only 45% right? So we have to take note 220 00:11:15,849 --> 00:11:18,689 Speaker 2: of that. Whereas when you buy a first property, you 221 00:11:18,700 --> 00:11:22,090 Speaker 2: can get a maximum loan of 75%. So that's additional 222 00:11:22,099 --> 00:11:24,450 Speaker 2: cash that you have to come up with. That's number one, 223 00:11:24,700 --> 00:11:28,369 Speaker 2: number two, if I intend to use CPF on the 224 00:11:28,380 --> 00:11:29,530 Speaker 2: second property 225 00:11:29,900 --> 00:11:33,119 Speaker 2: and I have already used CPF on the first property. 226 00:11:33,210 --> 00:11:36,189 Speaker 2: That's a limitation as to how much CPF I can 227 00:11:36,200 --> 00:11:39,159 Speaker 2: actually use. Right. I have to set aside to make 228 00:11:39,169 --> 00:11:41,799 Speaker 2: sure that I have the basic retirement sum. That's right 229 00:11:41,809 --> 00:11:44,270 Speaker 2: in the O A and the A combined and anything 230 00:11:44,280 --> 00:11:46,669 Speaker 2: in excess of that I can then deploy in my 231 00:11:46,679 --> 00:11:50,059 Speaker 2: second property because it's technically seen as an investment. You 232 00:11:50,070 --> 00:11:52,109 Speaker 2: would do the same with your investment money, right? In 233 00:11:52,119 --> 00:11:55,520 Speaker 2: your CPF. Ok. Ok. So when it comes to buying 234 00:11:55,530 --> 00:11:57,570 Speaker 2: a second property, you would realize because of the 235 00:11:57,640 --> 00:12:01,750 Speaker 2: lower loan to valuation and the lower amount of CPF usage, 236 00:12:01,760 --> 00:12:03,760 Speaker 2: you tend to have to come up with a lot 237 00:12:03,770 --> 00:12:07,460 Speaker 2: of cash adding on to that. Besides your regular buyer 238 00:12:07,469 --> 00:12:10,219 Speaker 2: stamp duty, you would have to pay for additional buyer, 239 00:12:10,229 --> 00:12:12,569 Speaker 2: stamp duty as well. 20% if you are a Singapore 240 00:12:12,580 --> 00:12:16,450 Speaker 2: and it gets higher if you are apr Oh yeah, definitely. 20% 241 00:12:16,460 --> 00:12:19,729 Speaker 2: is like the already in the second property. Yeah. So 242 00:12:19,739 --> 00:12:21,718 Speaker 2: you would have to fork out quite a fair bit 243 00:12:21,729 --> 00:12:25,309 Speaker 2: of cash you realize on the second property itself, right? 244 00:12:25,530 --> 00:12:27,789 Speaker 2: So, and that's the reason why, you know, people are 245 00:12:27,799 --> 00:12:31,359 Speaker 2: embarking on if they have an opportunity to decouple on the, 246 00:12:31,369 --> 00:12:34,099 Speaker 2: on the right? Ok. That makes a whole lot of sense. Yeah. 247 00:12:34,109 --> 00:12:35,950 Speaker 2: But if you are a single owner and you're looking 248 00:12:35,960 --> 00:12:38,630 Speaker 2: to purchase the second one, I'm sorry. I mean, those 249 00:12:38,640 --> 00:12:41,039 Speaker 2: are the options either if you, if you're looking to 250 00:12:41,349 --> 00:12:44,479 Speaker 2: you know, leverage at the maximum loan because sometimes if 251 00:12:44,489 --> 00:12:46,559 Speaker 2: I own a condo under my sole name and let's 252 00:12:46,570 --> 00:12:48,098 Speaker 2: say I've been owning it for a few years now, 253 00:12:48,109 --> 00:12:48,880 Speaker 2: my outstanding 254 00:12:48,950 --> 00:12:51,039 Speaker 2: loan might have come down quite a fair bit. Right. 255 00:12:51,049 --> 00:12:54,150 Speaker 2: I may consider just paying off the loan on my 256 00:12:54,159 --> 00:12:56,640 Speaker 2: first property. So that on property number two, I can 257 00:12:56,650 --> 00:13:00,569 Speaker 2: leverage at 75%. Got it. Yeah, that's a smart move. 258 00:13:00,700 --> 00:13:03,159 Speaker 2: So another financial assessment that we need to think about 259 00:13:03,169 --> 00:13:07,919 Speaker 2: is thresholds because I mean property here is notoriously expensive 260 00:13:07,929 --> 00:13:11,079 Speaker 2: and all those really strict rules and regulations and limitations 261 00:13:11,090 --> 00:13:12,299 Speaker 2: that you were just talking about. 262 00:13:12,500 --> 00:13:17,130 Speaker 2: So second homes are not always attainable to many of us. 263 00:13:17,520 --> 00:13:22,429 Speaker 2: So what should our financial threshold be in the first place? Ok, 264 00:13:22,590 --> 00:13:27,429 Speaker 2: so let's talk about eligibility, right? Whenever you purchase a property, 265 00:13:27,440 --> 00:13:30,619 Speaker 2: let's talk about a private property, you immediately get subjected 266 00:13:30,630 --> 00:13:34,599 Speaker 2: to this thing called the total debt servicing ratio. Sr right, 267 00:13:34,729 --> 00:13:35,809 Speaker 2: simply put it, 268 00:13:36,119 --> 00:13:41,689 Speaker 2: your total commitments cannot exceed 55% of your total income. 269 00:13:41,830 --> 00:13:46,089 Speaker 2: So for instance, if I'm earning $10,000 a month, my 270 00:13:46,099 --> 00:13:49,440 Speaker 2: entire liabilities including the property or whatever car loans or 271 00:13:49,450 --> 00:13:54,329 Speaker 2: personal loans, I have cannot exceed $5500. Right? So if 272 00:13:54,340 --> 00:13:56,109 Speaker 2: I'm looking to buy a second property 273 00:13:56,510 --> 00:13:59,919 Speaker 2: and I already have an existing mortgage that eats into 274 00:13:59,929 --> 00:14:03,059 Speaker 2: my 55% of course, and let's say I only have 275 00:14:03,090 --> 00:14:06,020 Speaker 2: $1000 left, right. To be able to obtain a mortgage. 276 00:14:06,030 --> 00:14:08,460 Speaker 2: I would realize that I actually can't borrow much from 277 00:14:08,469 --> 00:14:11,030 Speaker 2: the bank. Yeah, a lot. Yeah. So either I have 278 00:14:11,039 --> 00:14:12,848 Speaker 2: a lot of cash, you know, to throw into the 279 00:14:12,859 --> 00:14:15,440 Speaker 2: property or because of my loan is small or 280 00:14:15,880 --> 00:14:21,799 Speaker 2: I embark of maybe purchasing commercial properties instead because commercial properties, 281 00:14:22,039 --> 00:14:24,559 Speaker 2: the regulations are a little bit different as compared to 282 00:14:24,570 --> 00:14:28,979 Speaker 2: residential properties, you still can get 70 or 75% loan 283 00:14:28,989 --> 00:14:31,200 Speaker 2: if you own a residential property and you're looking to 284 00:14:31,210 --> 00:14:35,809 Speaker 2: buy a commercial property and commercial properties doesn't come with 285 00:14:35,820 --> 00:14:40,039 Speaker 2: additional buyer stamp duty. Yeah, so that's usually when you 286 00:14:40,049 --> 00:14:44,469 Speaker 2: have an investor who has maximized their residential portfolio, 287 00:14:44,679 --> 00:14:48,469 Speaker 2: then you would realize they start moving into the commercial space. Ok. 288 00:14:48,479 --> 00:14:52,880 Speaker 2: So that brings us to our next consideration intent. So 289 00:14:52,890 --> 00:14:55,200 Speaker 2: what questions do we need to ask ourselves with regard 290 00:14:55,210 --> 00:14:59,049 Speaker 2: to the purpose, the objective, the goal of buying a 291 00:14:59,059 --> 00:15:04,169 Speaker 2: second property is passive income. The only reason worth doing it. Well, 292 00:15:04,179 --> 00:15:07,039 Speaker 2: that's usually the first thing that people think about, but 293 00:15:07,049 --> 00:15:09,710 Speaker 2: we always have to remember. Yes, you are 294 00:15:09,796 --> 00:15:12,866 Speaker 2: a landlord. Your tenant is paying you, but you have 295 00:15:12,875 --> 00:15:16,536 Speaker 2: to make your monthly mortgage payments. So if your monthly 296 00:15:16,546 --> 00:15:21,486 Speaker 2: mortgage payments are $5000 and your tenant is paying you 5005, 297 00:15:21,495 --> 00:15:24,726 Speaker 2: your passive income is $500 every month. And, and that is, 298 00:15:24,736 --> 00:15:30,366 Speaker 2: and we haven't also considered property taxes, maintenance fees, for example. 299 00:15:30,375 --> 00:15:33,135 Speaker 2: So you might end up with a negative cash flow 300 00:15:33,145 --> 00:15:34,726 Speaker 2: even though you're a landlord. 301 00:15:34,911 --> 00:15:37,081 Speaker 2: So that's not the only thing that one would consider 302 00:15:37,091 --> 00:15:40,442 Speaker 2: when purchasing a second property to get passive income. We 303 00:15:40,452 --> 00:15:43,921 Speaker 2: are also looking at capital appreciation, right? You buy a 304 00:15:43,932 --> 00:15:46,921 Speaker 2: property now or you buy a property when it's new 305 00:15:46,932 --> 00:15:50,710 Speaker 2: after five years, most probably the property is appreciated in 306 00:15:50,721 --> 00:15:53,481 Speaker 2: its value. And then you sell and then you realize 307 00:15:53,492 --> 00:15:56,202 Speaker 2: the returns after that and if you get a positive 308 00:15:56,211 --> 00:15:59,211 Speaker 2: cash flow on your tenancy, great, right. Good for you. 309 00:15:59,221 --> 00:15:59,942 Speaker 2: That's a bonus, 310 00:16:00,200 --> 00:16:02,570 Speaker 2: but you're not just going to ride off how much 311 00:16:02,580 --> 00:16:05,400 Speaker 2: you're getting in terms of your, your rental and just 312 00:16:05,409 --> 00:16:08,190 Speaker 2: bank on that in making an investment decision, you always 313 00:16:08,200 --> 00:16:10,559 Speaker 2: want a greater upside. So that's the other upside, you know, 314 00:16:10,570 --> 00:16:12,190 Speaker 2: capital appreciation. 315 00:16:12,599 --> 00:16:14,770 Speaker 2: And I mean, if you're owning a property in Singapore, 316 00:16:14,780 --> 00:16:18,750 Speaker 2: chances are the property would retain its value. You wouldn't 317 00:16:18,760 --> 00:16:22,359 Speaker 2: see property prices just come crashing down. So to many 318 00:16:22,369 --> 00:16:24,729 Speaker 2: people that is like a safe bet, you know, uh 319 00:16:24,739 --> 00:16:28,330 Speaker 2: as compared to putting my money into the equities market 320 00:16:28,340 --> 00:16:31,200 Speaker 2: and you know, the Cryptocurrency market. So, so that's a 321 00:16:31,210 --> 00:16:34,530 Speaker 2: different thing altogether. But yeah, I think that's the consideration, 322 00:16:34,539 --> 00:16:36,849 Speaker 2: the intent cannot just be purely ok. I just want 323 00:16:36,859 --> 00:16:39,750 Speaker 2: to get passive income, but you're thinking longer term, fine. 324 00:16:39,840 --> 00:16:41,950 Speaker 2: Five years, seven years. What are you gonna do with that? 325 00:16:41,960 --> 00:16:45,010 Speaker 2: As if I'm going to dispose of that asset how 326 00:16:45,020 --> 00:16:47,239 Speaker 2: much am I going to get in return? Right. And 327 00:16:47,250 --> 00:16:50,179 Speaker 2: if you analyze it, am I getting 2 3% per 328 00:16:50,190 --> 00:16:53,400 Speaker 2: annum or am I able to get 6 7%? Because 329 00:16:53,409 --> 00:16:56,179 Speaker 2: if I'm only gonna get 2 3% I may be 330 00:16:56,190 --> 00:16:58,619 Speaker 2: better off also trying to diversify and put my money 331 00:16:58,630 --> 00:17:00,919 Speaker 2: into different. Exactly. I mean, from what you're saying, it 332 00:17:00,929 --> 00:17:02,929 Speaker 2: really feels as if we need to look at it 333 00:17:02,940 --> 00:17:06,989 Speaker 2: as we look at any portfolio asset in there. 334 00:17:10,119 --> 00:17:13,119 Speaker 2: Hello, my name is Steve and I'm Theresa Tang and 335 00:17:13,130 --> 00:17:16,619 Speaker 2: we are the hosts of CNN correspondent, a podcast that 336 00:17:16,630 --> 00:17:19,609 Speaker 2: takes you to the heart of the work our correspondents 337 00:17:19,619 --> 00:17:23,399 Speaker 2: do across the globe from China's COVID response to the 338 00:17:23,410 --> 00:17:26,319 Speaker 2: Childcare Center massacre in Thailand and 339 00:17:26,489 --> 00:17:28,979 Speaker 2: the fall of Najib Razak to the rise of Anwar 340 00:17:28,989 --> 00:17:32,609 Speaker 2: Ibrahim as Malaysia's Prime Minister, we speak to the people 341 00:17:32,619 --> 00:17:35,489 Speaker 2: at the reporting front lines. So if you want to 342 00:17:35,500 --> 00:17:39,030 Speaker 2: know how the biggest global stories unfold, make sure you 343 00:17:39,040 --> 00:17:42,780 Speaker 2: follow or subscribe to us wherever you get your podcasts. 344 00:17:46,849 --> 00:17:50,760 Speaker 2: Ok. So here's what I understand. Some people say that 345 00:17:50,770 --> 00:17:54,020 Speaker 2: you can afford to and want to leave your child 346 00:17:54,030 --> 00:17:57,869 Speaker 2: with an inheritance. It's best to buy a second home now, 347 00:17:57,880 --> 00:18:02,349 Speaker 2: while prices are relatively within reach, what do we need 348 00:18:02,359 --> 00:18:04,849 Speaker 2: to know before we secure property for our Children? We 349 00:18:04,859 --> 00:18:09,550 Speaker 2: touched on this briefly from the trust point of view. 350 00:18:09,560 --> 00:18:11,479 Speaker 2: What what else do we need to think about? 351 00:18:11,920 --> 00:18:13,910 Speaker 2: I think at the end of the day you must 352 00:18:13,920 --> 00:18:16,369 Speaker 2: have a will set up. Yeah. I mean, that's important 353 00:18:16,380 --> 00:18:18,739 Speaker 2: because if I purchase a second property and I'm not 354 00:18:18,750 --> 00:18:20,849 Speaker 2: buying it under the trust because I'm not rich enough 355 00:18:20,859 --> 00:18:23,300 Speaker 2: to buy a property fully in cash. And I buy 356 00:18:23,310 --> 00:18:25,699 Speaker 2: a second property today. If I'm going to leave it 357 00:18:25,709 --> 00:18:28,329 Speaker 2: for my kids. Number one, I need to make sure 358 00:18:28,339 --> 00:18:30,060 Speaker 2: that I have a w will set up. Oh, yeah, yeah, 359 00:18:30,069 --> 00:18:31,790 Speaker 2: because if I don't have a will then, you know, 360 00:18:31,800 --> 00:18:31,909 Speaker 2: the 361 00:18:31,979 --> 00:18:36,180 Speaker 2: it it gets distributed to people who I may not 362 00:18:36,189 --> 00:18:38,139 Speaker 2: have the intent to, you know, in the first place, 363 00:18:38,150 --> 00:18:40,869 Speaker 2: have them have the property, so have a will set 364 00:18:40,880 --> 00:18:43,750 Speaker 2: up most importantly as well. I think get insurance if 365 00:18:43,760 --> 00:18:46,849 Speaker 2: you buy a second property and you know, halfway through you, 366 00:18:46,859 --> 00:18:49,680 Speaker 2: you meet up with a life changing accident or worst 367 00:18:49,689 --> 00:18:51,969 Speaker 2: case scenario, you no longer on the face of the planet, 368 00:18:52,290 --> 00:18:54,540 Speaker 2: what's going to happen to the mortgage, right? If, if 369 00:18:54,550 --> 00:18:58,819 Speaker 2: your kid inherits the property with the mortgage, you know, 370 00:18:58,829 --> 00:19:00,770 Speaker 2: that's going to be an issue as well. So a 371 00:19:00,780 --> 00:19:02,959 Speaker 2: lot of people tend to forget this and I've seen 372 00:19:02,969 --> 00:19:06,020 Speaker 2: many cases like that too where, you know, owners buy 373 00:19:06,030 --> 00:19:07,910 Speaker 2: a second property with the intent to, you know, oh, 374 00:19:07,920 --> 00:19:10,540 Speaker 2: you know, when my kids grow older, they can eventually, 375 00:19:10,599 --> 00:19:12,319 Speaker 2: I will eventually give them the property, 376 00:19:12,560 --> 00:19:14,389 Speaker 2: have them transfer under the name if they want to 377 00:19:14,400 --> 00:19:18,859 Speaker 2: sell it. But sometimes sad cases, I've seen them quite 378 00:19:18,869 --> 00:19:23,020 Speaker 2: a few where the main sole breadwinner passes on. Right, 379 00:19:23,329 --> 00:19:26,790 Speaker 2: the property gets down to, for example, like the spouse 380 00:19:26,800 --> 00:19:29,239 Speaker 2: in this instance, for example, but the spouse is not 381 00:19:29,250 --> 00:19:34,089 Speaker 2: working and there's a mortgage on the property, there is 382 00:19:34,099 --> 00:19:37,890 Speaker 2: no insurance. So the wife is left burden in this 383 00:19:37,900 --> 00:19:40,770 Speaker 2: case with a second property. I mean, of course, you know, 384 00:19:40,780 --> 00:19:41,829 Speaker 2: you can sell it off. But 385 00:19:41,915 --> 00:19:44,064 Speaker 2: in the meantime, if you fail to meet the payment, 386 00:19:44,074 --> 00:19:45,915 Speaker 2: I mean, the mortgage is still running and that you 387 00:19:45,925 --> 00:19:48,635 Speaker 2: don't sell a house overnight. Exactly. So if you want 388 00:19:48,645 --> 00:19:51,765 Speaker 2: to think of inheritance, you've probably got that thing holistically, 389 00:19:51,775 --> 00:19:54,964 Speaker 2: get a will set up and ensure that you have insurance, right? 390 00:19:55,114 --> 00:19:57,055 Speaker 2: So all these things are not like, oh, buying a property, 391 00:19:57,064 --> 00:19:58,755 Speaker 2: real estate, we just talk about real estate. You really 392 00:19:58,765 --> 00:20:00,405 Speaker 2: have to think about the whole picture 393 00:20:00,699 --> 00:20:02,750 Speaker 2: when you're planning for the, you know, if you're living 394 00:20:02,760 --> 00:20:05,669 Speaker 2: a property to your kids. No, that, that's fantastic advice. 395 00:20:05,680 --> 00:20:08,949 Speaker 2: It's very easy to get caught up in the moment of, oh, hey, ok, 396 00:20:08,959 --> 00:20:11,239 Speaker 2: here's my windfall. I'm going to go and invest in 397 00:20:11,250 --> 00:20:12,550 Speaker 2: this second piece of property. 398 00:20:12,819 --> 00:20:14,869 Speaker 2: Let's go buy one and then you don't think about 399 00:20:14,880 --> 00:20:17,310 Speaker 2: the longer term impact of what that's going to be 400 00:20:17,319 --> 00:20:20,280 Speaker 2: like when you pass it on. What kind of property 401 00:20:20,290 --> 00:20:25,329 Speaker 2: specifically should we be looking at for investment versus a 402 00:20:25,339 --> 00:20:28,290 Speaker 2: second home to love and to have a child. I 403 00:20:28,300 --> 00:20:31,099 Speaker 2: think it's really different kind of requirements because if you're 404 00:20:31,109 --> 00:20:34,629 Speaker 2: looking at purchasing a home you need to look at. Oh, 405 00:20:34,640 --> 00:20:37,708 Speaker 2: do I like the view? Do you like my neighbors? 406 00:20:37,719 --> 00:20:38,369 Speaker 2: Do you like the community? 407 00:20:38,890 --> 00:20:41,739 Speaker 2: Yeah. Is the development, you know, like some developments, a 408 00:20:41,750 --> 00:20:44,739 Speaker 2: lot of experts are attracted to certain developments. Oh, and 409 00:20:44,750 --> 00:20:47,380 Speaker 2: I like that feel, you know, is it convenient to 410 00:20:47,390 --> 00:20:49,869 Speaker 2: the bus stops and the M RT stations? But when 411 00:20:49,880 --> 00:20:53,169 Speaker 2: you're buying a property for investment, primarily, you're just looking 412 00:20:53,180 --> 00:20:56,400 Speaker 2: at the numbers as well. Is it easy to rent out? 413 00:20:56,550 --> 00:20:58,930 Speaker 2: How many rentals are there in a year if I 414 00:20:58,939 --> 00:21:01,589 Speaker 2: lose my tenant today? How fast am I able to 415 00:21:01,599 --> 00:21:04,680 Speaker 2: find another tenant for the replacement rate? Is it going 416 00:21:04,689 --> 00:21:04,879 Speaker 2: to be? 417 00:21:04,959 --> 00:21:06,250 Speaker 2: Of course, you know, if you're, if you're near an 418 00:21:06,260 --> 00:21:08,739 Speaker 2: M RT or good because, you know, if you sell it, 419 00:21:08,750 --> 00:21:11,670 Speaker 2: chances are you sell it at a slightly nicer price, 420 00:21:11,800 --> 00:21:14,139 Speaker 2: but the considerations are quite different. You're primarily looking at 421 00:21:14,150 --> 00:21:17,170 Speaker 2: the numbers right to decide whether you would move into 422 00:21:17,180 --> 00:21:20,569 Speaker 2: that particular development or not, whether it's ability to basically 423 00:21:20,579 --> 00:21:23,270 Speaker 2: appreciate in capital. Whereas like I said, if you're buying 424 00:21:23,280 --> 00:21:25,020 Speaker 2: a home, you may just like it, but 10 years 425 00:21:25,030 --> 00:21:27,479 Speaker 2: down the road, you may not make a lot of money. Yeah. Yeah, 426 00:21:27,489 --> 00:21:29,419 Speaker 2: I mean, I think if you're going in with the 427 00:21:29,430 --> 00:21:30,949 Speaker 2: objective of living there, 428 00:21:31,489 --> 00:21:34,819 Speaker 2: then it shouldn't bother you too much Well, Singaporeans, when 429 00:21:34,829 --> 00:21:37,949 Speaker 2: we always ask this question, we are too pragmatic for, oh, 430 00:21:37,989 --> 00:21:40,130 Speaker 2: you buy your own home? Yes. But I also like 431 00:21:40,140 --> 00:21:43,188 Speaker 2: to have it as a good investment. You cannot have 432 00:21:43,199 --> 00:21:45,050 Speaker 2: your cake and eat it all the time. I mean, 433 00:21:45,060 --> 00:21:48,410 Speaker 2: are there properties like that that meet the requirements of 434 00:21:48,420 --> 00:21:50,938 Speaker 2: you calling it a home and also having, having it 435 00:21:50,949 --> 00:21:52,920 Speaker 2: a good investment? I mean, there are some properties like 436 00:21:52,930 --> 00:21:53,560 Speaker 2: that as well. 437 00:21:53,810 --> 00:21:57,040 Speaker 2: But yeah, generally if you're looking like an investment property, 438 00:21:57,050 --> 00:22:01,579 Speaker 2: um chances are, you know, unless the requirements coincide with 439 00:22:01,589 --> 00:22:04,270 Speaker 2: that property then great. But otherwise the requirements are the 440 00:22:04,280 --> 00:22:07,270 Speaker 2: properties you're gonna get are quite different. Sure. Sure. Ok. Right. 441 00:22:07,280 --> 00:22:09,708 Speaker 2: So if the second property is then a piece of 442 00:22:09,719 --> 00:22:12,359 Speaker 2: investment purely versus the second home, 443 00:22:12,819 --> 00:22:15,159 Speaker 2: should we think about an exit plan? You talked about 444 00:22:15,170 --> 00:22:18,339 Speaker 2: this in terms of asset disposal, right? So what should 445 00:22:18,349 --> 00:22:21,919 Speaker 2: this exit plan look like? Yes, it's an important point 446 00:22:21,930 --> 00:22:24,800 Speaker 2: that you just brought up a lot of people purchase 447 00:22:24,810 --> 00:22:28,260 Speaker 2: a property not knowing when to exit, right. They may 448 00:22:28,270 --> 00:22:30,869 Speaker 2: have like a vague plan like, ok, I think, but 449 00:22:30,880 --> 00:22:33,060 Speaker 2: they always say, ok, client, whenever it hits this value, 450 00:22:33,069 --> 00:22:36,099 Speaker 2: I just sell it right? So simple. But thinking we 451 00:22:36,109 --> 00:22:37,660 Speaker 2: have to think deeper than that, we have to come 452 00:22:37,670 --> 00:22:39,250 Speaker 2: up with our cash flow as well because 453 00:22:39,650 --> 00:22:41,770 Speaker 2: now along the way, let's say you buy a property 454 00:22:41,780 --> 00:22:44,639 Speaker 2: and the kind of rental that you're getting is not fantastic. 455 00:22:44,650 --> 00:22:47,198 Speaker 2: And interest rates right now in the market are quite high, 456 00:22:47,349 --> 00:22:48,920 Speaker 2: you have to fork out quite a bit of cash. 457 00:22:49,229 --> 00:22:51,760 Speaker 2: So all these are expenses, right? And if you sell 458 00:22:51,770 --> 00:22:53,979 Speaker 2: the property five years later at a certain price, let's 459 00:22:53,989 --> 00:22:56,239 Speaker 2: say at a 10% gain, 20% gain. 460 00:22:57,079 --> 00:22:59,609 Speaker 2: If you do the math, you may not get a 461 00:22:59,619 --> 00:23:01,400 Speaker 2: lot of returns at the end of the day. Right? 462 00:23:01,579 --> 00:23:04,930 Speaker 2: So it's important to at the get go plan. Ok, 463 00:23:04,939 --> 00:23:08,270 Speaker 2: if I buy this property, have my cash flow ready, 464 00:23:08,339 --> 00:23:11,510 Speaker 2: what kind of expected rental am I going to get? Yes. 465 00:23:11,660 --> 00:23:12,189 Speaker 2: What is my 466 00:23:12,275 --> 00:23:16,714 Speaker 2: maintenance fee? What is my property taxes? Especially property taxes? 467 00:23:16,724 --> 00:23:18,515 Speaker 2: You know, because they're going to basically what your outflow 468 00:23:18,525 --> 00:23:22,754 Speaker 2: is exactly. Consider all your outflows, factor them into part 469 00:23:22,765 --> 00:23:25,214 Speaker 2: of the expenses and then you plan. Ok, if I 470 00:23:25,224 --> 00:23:27,604 Speaker 2: exit after five years, what is a realistic 471 00:23:27,959 --> 00:23:31,329 Speaker 2: amount I can sell my property yet? Based on current trends. So, ok, 472 00:23:31,339 --> 00:23:34,949 Speaker 2: let's do a two or three or maybe 4% appreciation 473 00:23:34,959 --> 00:23:36,819 Speaker 2: per year and we sell it after five years at 474 00:23:36,829 --> 00:23:40,540 Speaker 2: this price. Work the numbers out plan ahead and say, ok, 475 00:23:40,550 --> 00:23:42,020 Speaker 2: if I sell it at this price, what kind of 476 00:23:42,030 --> 00:23:44,409 Speaker 2: returns am I gonna get? A lot of people fail 477 00:23:44,420 --> 00:23:47,369 Speaker 2: to do this? Everyone is just drawn into the hype of. Oh, 478 00:23:47,380 --> 00:23:50,530 Speaker 2: it's a new launch. Sure. Make money. Yeah, exactly. My first, 479 00:23:50,540 --> 00:23:51,219 Speaker 2: my first because 480 00:23:51,594 --> 00:23:53,045 Speaker 2: one is buying I can't get a queue number. I 481 00:23:53,055 --> 00:23:56,505 Speaker 2: better just four more, four more, four more, but not 482 00:23:56,515 --> 00:23:59,145 Speaker 2: all new launches do well. Right. As we've seen in 483 00:23:59,155 --> 00:24:02,584 Speaker 2: the headlines and you may not at the end of 484 00:24:02,594 --> 00:24:05,313 Speaker 2: the day, make money from, from this investment if you 485 00:24:05,324 --> 00:24:08,005 Speaker 2: haven't really done the numbers. No, you're absolutely right. You're 486 00:24:08,015 --> 00:24:10,984 Speaker 2: hitting the nail on the head right there. So we 487 00:24:10,994 --> 00:24:15,165 Speaker 2: talked about decoupling earlier and I loved your explanation of decoupling. 488 00:24:15,395 --> 00:24:18,515 Speaker 2: So now I read that a factor to consider when 489 00:24:18,525 --> 00:24:19,784 Speaker 2: it comes to decoupling. 490 00:24:19,979 --> 00:24:21,709 Speaker 2: And of course, before you go ahead and buy the 491 00:24:21,719 --> 00:24:25,500 Speaker 2: second property is the type of holding or the type 492 00:24:25,510 --> 00:24:30,619 Speaker 2: of tenancy. Ok. Help me understand this. Ok. So we 493 00:24:30,630 --> 00:24:33,669 Speaker 2: call this the manner of holding. Now, basically, let's say 494 00:24:33,680 --> 00:24:36,800 Speaker 2: you're buying a property with your spouse or a friend. Ok. 495 00:24:36,810 --> 00:24:38,869 Speaker 2: So two, at least two parties involved, 496 00:24:39,640 --> 00:24:42,800 Speaker 2: you can buy the property under two different ways. You 497 00:24:42,810 --> 00:24:45,660 Speaker 2: can buy it under joint tenancy or you can buy 498 00:24:45,670 --> 00:24:48,339 Speaker 2: it under this thing called the tenancy in common. Ok? 499 00:24:48,619 --> 00:24:51,709 Speaker 2: So now let's assume me and my wife, we purchase 500 00:24:51,719 --> 00:24:54,229 Speaker 2: a property and we hold it in joint tenancies. So 501 00:24:54,239 --> 00:24:57,198 Speaker 2: joint tenancy just means we own equal shares. Now, the 502 00:24:57,209 --> 00:25:00,290 Speaker 2: deeper meaning behind the joint tenancy is if I pass 503 00:25:00,300 --> 00:25:03,939 Speaker 2: away my shares automatically go to my wife, right? She 504 00:25:03,949 --> 00:25:07,250 Speaker 2: inherits the property. It's a rule of survivorship. 505 00:25:07,650 --> 00:25:09,718 Speaker 2: Now, there is another way of holding it, which is 506 00:25:09,729 --> 00:25:12,920 Speaker 2: in tenancy in common and tenancy in common allows us 507 00:25:12,930 --> 00:25:15,949 Speaker 2: to alter the percentage that we hold in the property. 508 00:25:16,150 --> 00:25:18,689 Speaker 2: Can it still be 50 50? Of course, it can, 509 00:25:18,699 --> 00:25:22,109 Speaker 2: so I can hold the property in a tenancy in common. 50% 510 00:25:22,119 --> 00:25:24,900 Speaker 2: with my wife and 50% myself. And what happens if 511 00:25:24,910 --> 00:25:27,688 Speaker 2: I pass away if I pass away my stress get 512 00:25:27,699 --> 00:25:31,909 Speaker 2: distributed according to my will, it, it doesn't automatically go 513 00:25:31,979 --> 00:25:34,239 Speaker 2: to right now. That's one thing. 514 00:25:34,520 --> 00:25:36,739 Speaker 2: The second thing that usually people talk about when it 515 00:25:36,750 --> 00:25:40,219 Speaker 2: comes to manner of holding more commonly heard as 99 516 00:25:40,229 --> 00:25:45,339 Speaker 2: 1 this term. What is this entire 99 demystify this 517 00:25:45,349 --> 00:25:47,130 Speaker 2: for me, please? Ok. So here it goes, 518 00:25:48,089 --> 00:25:50,780 Speaker 2: I own the property with my wife in equal shares. 519 00:25:50,790 --> 00:25:54,689 Speaker 2: The property is worth a million dollars today. Now I 520 00:25:54,699 --> 00:25:57,109 Speaker 2: want to perform a decoupling where I buy my wife's 521 00:25:57,119 --> 00:26:01,119 Speaker 2: share so that my wife can buy another property and 522 00:26:01,130 --> 00:26:03,050 Speaker 2: being the first property that she doesn't have to pay 523 00:26:03,060 --> 00:26:06,030 Speaker 2: for an additional buyer. That that's my intent. So now 524 00:26:06,040 --> 00:26:08,938 Speaker 2: I buy over my wife's share. My wife owns 50% 525 00:26:08,949 --> 00:26:12,109 Speaker 2: of the share. So that's 500 K, right? I have 526 00:26:12,119 --> 00:26:15,619 Speaker 2: to pay for buyers stamp duty on 500 K. Ok. 527 00:26:15,890 --> 00:26:16,500 Speaker 2: So 528 00:26:17,099 --> 00:26:21,589 Speaker 2: what's the other scenario if I own the property in 99%? 529 00:26:21,599 --> 00:26:26,569 Speaker 2: And my wife owns 1% I buy over my wife's share. 1% 530 00:26:26,579 --> 00:26:32,228 Speaker 2: of a million dollars is $10,000. Much more affordable than 500,000. 531 00:26:32,239 --> 00:26:35,510 Speaker 2: When I buy that $10,000 I'll pay buyer stamp duty 532 00:26:35,520 --> 00:26:40,510 Speaker 2: on $10,000 which is $100. That's genius as compared to 533 00:26:40,520 --> 00:26:40,790 Speaker 2: paying 534 00:26:40,925 --> 00:26:44,275 Speaker 2: bias MDT on that 500 K, which is like 9006. 535 00:26:44,285 --> 00:26:47,573 Speaker 2: So I save some money in that buyers M duty. Right. 536 00:26:47,734 --> 00:26:50,055 Speaker 2: So that's the reason why you go about and like 537 00:26:50,064 --> 00:26:52,935 Speaker 2: everyone is telling you, hey, 99 1, 99 1, it's 538 00:26:52,944 --> 00:26:56,343 Speaker 2: efficient in that manner because you save a lot on 539 00:26:56,354 --> 00:26:57,854 Speaker 2: bias M duty. Right? 540 00:26:58,119 --> 00:27:01,040 Speaker 2: But there are some downsides to it. I was thinking about, they, 541 00:27:01,239 --> 00:27:06,020 Speaker 2: they often don't consider now, let's assume this. My wife 542 00:27:06,030 --> 00:27:09,699 Speaker 2: owns 1% of the property and she has used CPF 543 00:27:09,709 --> 00:27:12,060 Speaker 2: on the property as well. Let's assume that she has 544 00:27:12,069 --> 00:27:17,229 Speaker 2: used $250,000 of CPF. When she sells her share to me, 545 00:27:17,489 --> 00:27:20,800 Speaker 2: she has to refund that $250,000 back to CPF. Right. 546 00:27:20,810 --> 00:27:24,139 Speaker 2: How is she going to do that? She has to 547 00:27:24,150 --> 00:27:27,459 Speaker 2: come up with cash from her pocket, put it back 548 00:27:27,469 --> 00:27:30,239 Speaker 2: into CPF. And when the moment comes, when the couple 549 00:27:30,250 --> 00:27:33,339 Speaker 2: realizes that, ok, I'm safe on buyer stamp duty, but 550 00:27:33,349 --> 00:27:35,920 Speaker 2: now I have to forgo $250,000 and put it back 551 00:27:35,930 --> 00:27:37,050 Speaker 2: into the CPF. Where am I going to get the 552 00:27:37,060 --> 00:27:41,609 Speaker 2: money from? Forgot to think about. Exactly. Exactly. So if 553 00:27:41,619 --> 00:27:43,819 Speaker 2: you don't have the means or sometimes people say I 554 00:27:43,829 --> 00:27:45,420 Speaker 2: do have that 250 K, 555 00:27:45,719 --> 00:27:47,540 Speaker 2: but it's supposed to be used for the deposit on 556 00:27:47,550 --> 00:27:49,699 Speaker 2: my new property. And now if I put it back 557 00:27:49,709 --> 00:27:52,459 Speaker 2: in the CPF, where do I get the cash? Two 558 00:27:52,469 --> 00:27:55,550 Speaker 2: steps forward, one step back. Exactly. So it has to 559 00:27:55,560 --> 00:27:58,959 Speaker 2: be considered and it's not always the case that the 560 00:27:58,969 --> 00:28:02,510 Speaker 2: couple would go for a 99% 1% ownership. It might 561 00:28:02,520 --> 00:28:06,030 Speaker 2: be varying like 70 30 there are some reasons behind that. 562 00:28:06,300 --> 00:28:09,109 Speaker 2: But yeah, just to break down simply what this manner 563 00:28:09,119 --> 00:28:12,510 Speaker 2: of holding is about and how it's actually utilized. Hm, 564 00:28:12,520 --> 00:28:14,959 Speaker 2: I think that's exactly it. And then there's so many 565 00:28:14,969 --> 00:28:17,579 Speaker 2: strategies to think about this. When you're doing the 99 566 00:28:17,589 --> 00:28:21,189 Speaker 2: 1 70 30 you calculate what you have in hand 567 00:28:21,579 --> 00:28:23,430 Speaker 2: and what you're going to get in the future. But 568 00:28:23,439 --> 00:28:26,629 Speaker 2: the most important thing is how you're going to finance 569 00:28:26,640 --> 00:28:30,579 Speaker 2: it right at the get go without overstretching yourself. Really? 570 00:28:30,589 --> 00:28:33,390 Speaker 2: Because like we've been talking about, you know, it's great 571 00:28:33,400 --> 00:28:35,379 Speaker 2: to think about the future to think about. Ok, this 572 00:28:35,390 --> 00:28:36,770 Speaker 2: is what I'm going to get out of it. 573 00:28:37,069 --> 00:28:40,459 Speaker 2: But what's the, now, what can you afford now? Because 574 00:28:40,469 --> 00:28:42,729 Speaker 2: that's going to be able to stretch you into the 575 00:28:42,739 --> 00:28:45,420 Speaker 2: decades as you get older. It's a very common thing 576 00:28:45,430 --> 00:28:47,839 Speaker 2: that you brought up. Andrea, that people. Really? Yeah, they 577 00:28:47,849 --> 00:28:50,479 Speaker 2: think of the now. Ok. Oh, I have money now. 578 00:28:50,489 --> 00:28:52,920 Speaker 2: Let's do this and let's hold it in 99 1 579 00:28:52,930 --> 00:28:54,880 Speaker 2: in the hopes of getting a second property. But they 580 00:28:54,890 --> 00:28:57,890 Speaker 2: don't think of like down the road eligibility. If I'm 581 00:28:57,900 --> 00:29:00,310 Speaker 2: going to buy over my wife's share, can my wife afford? 582 00:29:00,319 --> 00:29:01,699 Speaker 2: Based on eligibility? The new property? 583 00:29:02,003 --> 00:29:05,892 Speaker 2: Oh, we haven't thought about it yet. Let's not make 584 00:29:05,902 --> 00:29:10,223 Speaker 2: that painful mistake and all the other mistakes that you noted. So, 585 00:29:10,233 --> 00:29:13,422 Speaker 2: buying a property in Singapore, it sounds complicated. Right. But 586 00:29:13,432 --> 00:29:16,703 Speaker 2: if the time is right, if you time it right, 587 00:29:16,713 --> 00:29:19,463 Speaker 2: and you've done your calculations. Well, as Clive has pointed 588 00:29:19,473 --> 00:29:23,623 Speaker 2: out that asset could serve you and your family well, 589 00:29:23,633 --> 00:29:26,302 Speaker 2: in the long run, thanks, once again, Clive for walking 590 00:29:26,333 --> 00:29:26,402 Speaker 2: us 591 00:29:26,475 --> 00:29:29,296 Speaker 2: the consideration and it was great to have you on 592 00:29:29,306 --> 00:29:31,776 Speaker 2: the show. Thanks for having me and thank you to you, 593 00:29:31,786 --> 00:29:34,816 Speaker 2: our listener. If you've enjoyed this episode of Money Talks, 594 00:29:34,826 --> 00:29:37,456 Speaker 2: there is always more content for you to enjoy. Just 595 00:29:37,465 --> 00:29:40,975 Speaker 2: follow us on Apple podcasts or Spotify. Give us five stars. 596 00:29:40,985 --> 00:29:43,696 Speaker 2: Don't forget to leave a review. The team behind Money 597 00:29:43,706 --> 00:29:47,765 Speaker 2: Talks is Jacqueline Chan, Joanne Chan Tiffany, Ang Christina Roberta, 598 00:29:48,015 --> 00:29:50,776 Speaker 2: Wind Jess and I'm Andrea. He.