I had previously briefly written about my lucky break in Property, and how we stumbled our way into becoming “property investors”. It has since become known as the “sell 1 buy 2 property” approach by property agents, and in the next few minutes I’ll elaborate more on this approach and the overarching strategy in mind when selecting the properties.

In summary, the past decade was about how we went from 1 HDB (the usual singaporean couple route) and parlayed our way into 2 private properties, with a huge dose of luck, of course.

The Premiere at Tampines, DBSS, 2007

Before my wife and I got married, we accompanied a few other coupe friends who were definitely more in the market for housing, to a viewing of Singapore’s first DBSS (Design, Build and Sell Scheme). This was touted as a designer HDB, where it was designed and built by private developers, but meant as public housing. This implied a certain premium, whether it was in the finishing or the design elements.

The Premiere at Tampines was the pilot of the DBSS flats. And it was beautiful. We went in, we were sold, and even though I hadn’t proposed then, we decided to put our names on it and balloted. (Call this the typical Singaporean courtship. Get a house, get married)

A few of our friends also fell in love with the place and balloted for it. As luck would have it, we were the only ones who managed to get a ballot ticket, and a rather good (front) number at that!

So we got our first dream house at Premiere.

Being the pilot development, I think they didn’t know how much of a premium to place the flat, and so we got a 5-room 8th storey unit for $371,000 at the time. We got married and moved into the flat in 2009.

Demand for DBSS

Demand for DBSS was high, as it was perceived to be a class above the normal BTO HDB flats. So as time rolled on, and more projects were announced, developers developed a bigger appetite, pricing the flats progressively higher.

Sell 1 Buy 2 Properties

My wife and I were simple folks. Give us a nice flat to live in, a goodish job, a little bundle of joy in Oliver, and we were happy.

But then one day, a friend and I got to chatting, and we were talking about investments and stuff. And he said, it’s great that your HDB has appreciated in value, but how can you extract that value?

I had no idea.

And he planted a seed in my mind. He said, with the current valuation of your flat, you can look into selling your flat, and buying 2 private properties, and increase your net worth with leverage.

My mind was blown. Can this be done? Won’t we be crushed to death by debt? What about ABSD (Additional Buyer Stamp Duty)? I dug a little deeper, especially into the financial viability of the idea, and we got some validation from our amazing property agent/friends. (Seriously, they are amazing. If anyone reading is in the market and need an agent, do reach out and I can set up an introduction)

The value of our DBSS at the time of sale in 2016? $700,000. In the space of 7 years of living in the flat, it very nearly doubled in value.

Property investment strategy in Singapore

Upon confirming the viability of the above plan, we kicked it into action, and put our place up for sale, and started shopping for our primary residence property, which was to be bought in my name.

Our strategy was to look for older projects, within the east. We’ve lived in the eastern part of Singapore our entire lives, and wouldn’t want to leave it. Older projects gave us 2 important points:

• Older projects tended to be bigger, and more spacious
• Older projects have an en bloc opportunity (always, always, plan your exit. Or “how do I extract value?”)

Luckily, within a few months, we managed to find a property that checked all the boxes, and proceeded to sell our HDB, and buy our new home.

Once we were done with the moves and settled into our new home, we proceeded to look for our investment property. For our investment property, we then looked to an area that would be undergoing revamp and renewal, so that businesses will be centered at that region, and we can have a good rental yield. Location would then be more important, and we wanted somewhere that was in the city fringe.

Another aspect we wanted, was for it to be already tenanted, so that we wouldn’t have to waste any time and incur mortgage costs while looking for a tenant. We managed to find a 10 year old condo unit at the time, that was near the city fringe, within our budget, and tenanted! We wasted no time in taking it.

Buy one get one property?

With this strategy, the name of the game is of course, to get one property entirely by funding it with other people’s money by renting it out. At the end of the mortgage, assuming it was rented out the entire time, we would have gotten an asset free, and can be used to gift or fund our children’s future.

The other property will be one in which we can live in.

On the upside, one, or both properties may get an en Bloc sale. Speaking of en bloc..

The perfect en bloc plan

We moved into our current home in 2016. One of the reasons we’d bought it, besides it being totally perfect, was that it was also ripe for an en bloc attempt. And incidentally, in 2018, we did have an en bloc attempt!

Unfortunately, we’d only signed up 70% of the residents, and failed in the en bloc bid. But that was a good exercise, and we’re looking forward to trying again in the near future, when the economy picks back up.

Uncertain times ahead

As we look toward 2021, it seems like we’re headed into a new world of uncertainty, with new norms and new industries coming out of the ashes of Covid-19. So far, our strategy seems to be working OK, but that’s based on the assumption that we can both continue to work and afford the mortgage payments, and that the 2nd property continues to be rented out.

My best case is ultimately for both properties to end up getting en bloc, so that we can cash out of this investment and come out of this positive, and then reinvest into something else.

I’m not a property investor by the strictest definition, and coming into this, I credit mainly luck, and a good friend’s advice and conversation. I also think it was extremely lucky on my part to have gotten on the first DBSS, which amazingly doubled in its value in less than 10 years, which was what set us on this path of realising the paper profit before it stagnated or worse, reversed.

I personally don’t think this property appreciation rate can, and will persist. So I’m not going to give advice on what you should or should not do.

Take this as me sharing my story, and my perspective. Property’s a long, long game, and it isn’t over by any stretch. But I’ll definitely share more on this site as we go along.

Do share your stories in the comments as well.

Even if nothing comes out of the en bloc potential, I don’t mind living here for a long, long while and soaking up views like this.