We Own An Ang Mo Kio BTO And Have $150k In Cash: Can We Afford To Buy 2 Condos Or Should We Upgrade To An EC?

7 min read

Hi Ryan,

I would like to take this opportunity to thank you and StackHome for providing Singaporeans with in-depth analyses of the Singapore property market. I really appreciate the content you guys are producing.

I am currently facing a dilemma in choosing one of four options for my property journey and would like to hear your opinion. Below are my details and the four options. How would you rank them, and which option do you think would be most suitable for my situation?

Item	Amount
HDB Estimated Sale Price	$900,000
Cash Savings + CPF :	$150,000
Outstanding House Loan:	$300,000
Total remaining Cash +CPF Available:	$750,000

Item	Amount
Husband + Wife Salary [Annual], mid-30s	$177,000
Insurance costs [Annual]	$19,200

Option 1: Two Condos	Down Payment	Estd Property Price
1st Condo [Own-Stay] 2BR	$347,100.00	$1,250,000.00
2nd Condo [Rental]	$303,600.00	$1,100,000.00
Total Cash+CPF	$650,700.00
Remaining Cash for investment	$99,300.00

Option 2: One Condo + Investment	Down Payment	Max Price
Condo [Own-Stay] 3BR	$509,600.00	$1,800,000.00
Total Cash+CPF	$509,600.00
Remaining Cash for investment	$141,100.00

Option 3: Continue to stay in HDB

Option 4: Try for EC as Second timer

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Hello there,

We’re happy to hear that you’ve found our content helpful and appreciate the detailed information you’ve provided. 

From the calculations you’ve shared, all four options could be viable paths, and we’ll be diving deeper into each one in the article to assess them more thoroughly.

Let’s begin by evaluating your affordability.

Affordability

Selling

Estimated Sale Price	$900,000
Outstanding loan	$300,000
Sales proceeds (CPF + cash)	$600,000

Buying

Combined affordability 

Maximum loan based on ages of 33 and 35 with a combined monthly income of $14,750, at 4.8% interest	$1,546,224 (30-year tenure)
CPF + cash	$750,000
Total loan + CPF + cash	$2,296,224
BSD based on $2,296,224	$84,411
Estimated affordability	$2,211,813

Husband’s individual affordability

Maximum loan based on the age of 35 with a monthly income of $8,250, at 4.8% interest	$864,837 (30-year tenure)
CPF + cash*	$375,000
Total loan + CPF + cash	$1,239,837
BSD based on $1,239,837	$34,193
Estimated affordability	$1,205,644

*As we do not know the exact amount of CPF both of you have individually, we are assuming an even split of the funds

Wife’s individual affordability

Maximum loan based on the age of 33 with a monthly income of $6,500, at 4.8% interest	$681,387 (30-year tenure)
CPF + cash*	$375,000
Total loan + CPF + cash	$1,056,387
BSD based on $1,056,387	$26,855
Estimated affordability	$1,029,532

*As we do not know the exact amount of CPF both of you have individually, we are assuming an even split of the funds

Depending on how much cash you have, you can adjust your individual affordability by moving the cash around. 

Now that we better understand your financials, let’s run through the options you’re considering.

Potential pathways

Sell the HDB and buy two condos

Purchasing two condos can offer several advantages, particularly in terms of diversification. By owning multiple properties, you reduce your investment risk—if one property underperforms, the other may balance it out, resulting in a more stable portfolio.

In addition to the potential rental income, owning two condos provides significant flexibility. You could choose to live in one and rent out the other or even rent out both while living in a development that better suits your preferences. This flexibility allows you to adapt your strategy over time, aligning with your personal and financial goals.

However, there are challenges to consider with owning multiple properties. One obvious key drawback is the increased financial commitment. Purchasing two condos doubles your financial obligations, including mortgage payments, property taxes, maintenance fees, and other costs. This can strain your finances, especially if one or both properties don’t perform as expected in terms of rental income or appreciation.

There’s also the risk of vacancy. If both units are rented out, you may face periods when one or both properties are unoccupied. This can disrupt your cash flow and make it difficult to meet your financial commitments.

Liquidity is another concern. Real estate is generally a less liquid investment, meaning it can take time to sell a property and access funds. If you need to sell one of your condos quickly, you may have to accept a lower price, especially in a sluggish market.

Let’s take a look at the potential costs involved.

We will assume that both of you fully utilise your budgets of $1.2M and $1M respectively, with the $1M property intended for investment and generating a 3% rental yield. For calculation purposes, we will use a 10-year timeline. Since your calculations only accounted for the 25% down payment and you’ve allocated the remaining funds for other investments, we will assume that you plan to take out the maximum loan possible.

Own stay property

Purchase price	$1,200,000
BSD	$32,600
Maximum loan	$864,837
Funds required	$367,763
Funds remaining	$7,237

Interest expense (Assuming a 30-year tenure and 4% interest)	$311,980
BSD	$32,600
Property tax	$12,400
Maintenance fee (Assuming $300/month)	$36,000
Total cost	$392,980

Investment property

Purchase price	$1,000,000
BSD	$24,600
Maximum loan	$681,387
Funds required	$343,213
Funds remaining	$31,787

Interest expense (Assuming a 30-year tenure and 4% interest)	$245,802
BSD	$24,600
Property tax	$36,000
Maintenance fee (Assuming $250/month)	$30,000
Rental income	$300,000
Agency fee (Assuming it’s paid once every 2 years)	$13,625
Total cost	$50,027

Total cost if you were to take this pathway: $392,980 + $50,027 = $443,007

Total funds remaining: $7,237 + $31,787 = $39,024

Potential gains from other investment avenues based on varying Return-On-Investment (ROI) if you were to invest the remaining funds:

ROI	Potential gains in 10 years	Total cost after deducting gains
4%	$18,741	$424,266
5%	$24,542	$418,465
6%	$30,862	$412,145
7%	$37,742	$405,265

Sell the HDB and buy a bigger condo 

Even though your maximum affordability is up to $2.2M, you’ve based your calculations on a purchase price of $1.8M, so we’ll proceed with that figure.

Purchase price	$1,800,000
BSD	$59,600
Maximum loan	$1,546,224
Funds required	$313,376
Funds remaining	$436,624

Interest expense (Assuming a 30-year tenure and 4% interest)	$557,782
BSD	$59,600
Property tax	$28,800
Maintenance fee (Assuming $350/month)	$42,000
Total cost	$688,182

Potential gains from other investment avenues based on varying Return-On-Investment (ROI) if you were to invest the remaining funds:

ROI	Potential gains in 10 years	Total cost after deducting gains
4%	$209,686	$478,496
5%	$274,590	$413,592
6%	$345,303	$342,879
7%	$422,281	$265,901

Remain status quo

Given the recent growth rate of HDBs and the prime location of your flat, it’s reasonable to expect that prices will remain stable in the short to mid-term. Compared to the first two options, this pathway is certainly the most affordable and keeps you in an ideal location. 

However, it does limit your ability to unlock profits that could be used for other investments to generate additional funds. Additionally, if you plan to eventually upgrade to a private property, it may become more challenging due to the increasing price gap between HDBs and private properties, as shown in the graph and table below.

Year	HDB (resale)	Non-landed private property (resale)	Price gap
2013	$469	$1,245	165.46%
2014	$441	$1,190	169.84%
2015	$423	$1,191	181.56%
2016	$424	$1,248	194.34%
2017	$425	$1,292	204.00%
2018	$419	$1,325	216.23%
2019	$416	$1,344	223.08%
2020	$431	$1,294	200.23%
2021	$488	$1,345	175.61%
2022	$532	$1,455	173.50%
2023	$564	$1,562	176.95%

Another observation from the table is the decline in HDB prices following the 2013 cooling measures and their subsequent stagnation until the pandemic, while private property prices rebounded more quickly. This isn’t to suggest that private properties are unaffected by cooling measures, but rather that, as government-owned assets, HDBs are more regulated and intended primarily for personal residence rather than investment purposes.

Let’s take a look at the costs involved to keep your HDB. We will assume that you took a bank loan and that the loan tenure remaining is 20 years. 

Interest expense (Assuming a 20-year tenure and 4% interest)	$97,711
Property tax	$7,600
Town council service and conservancy fee (Assuming $71/month)	$8,520
Total cost	$113,831

Since we don’t have details on how much of your $150,000 in available funds is in cash versus CPF, we’ll assume that $100,000 is in cash, which you will allocate towards other investments.

Potential gains from other investment avenues based on varying Return-On-Investment (ROI) if you were to invest your cash savings:

ROI	Potential gains in 10 years	Total cost after deducting gains
4%	$48,024	$67,967
5%	$62,889	$53,102
6%	$79,085	$36,906
7%	$96,715	$19,276

Try for an EC as a second timer

We understand the appeal of purchasing an EC, especially given its strong track record of profitability. Historical data shows that most EC transactions tend to be profitable, even when sold in less favourable market conditions.

Previously, we discussed how timing was the main factor contributing to losses between 1996 and 1999, which you can read about here.

Buying an EC, much like a BTO, is often considered a “Singaporean Privilege.” The exclusivity is heightened by the fact that the income ceiling for ECs is only $2,000 higher than for BTOs, and the mortgage is assessed based on the Mortgage Servicing Ratio (MSR), similar to HDBs, rather than the Total Debt Servicing Ratio (TDSR) used for private properties. This often results in a higher initial payment due to the reduced loan amount available.

Since you’ve already purchased a subsidised flat, buying a new EC will require you to pay a resale levy.

Furthermore, as a second-time applicant, your likelihood of securing a unit may be reduced, as only 30% of the units in an EC new launch are allocated to second-time buyers.

This will be your revised affordability for the purchase of an EC, presuming that your current HDB is a 4-room flat:

Maximum loan based on ages of 33 and 35 with a combined monthly income of $14,750, at 4.8% interest	$843,395 (30-year tenure)
CPF + cash	$750,000
Total loan + CPF + cash	$1,593,395
BSD based on $1,593,395	$49,269
Resale levy	$40,000
Estimated affordability	$1,504,126

Looking at the recent EC launches, with a budget of $1.5M, you should be able to get a 3-bedroom unit. Let’s take a look at the costs involved assuming you max out your budget.

Purchase price	$1,500,000
BSD	$44,600
Resale levy	$40,000
Maximum loan	$843,395
Funds required	$741,205
Funds remaining	$8,795

Interest expense (Assuming a 30-year tenure and 4% interest)	$304,245
BSD	$44,600
Resale levy	$40,000
Property tax	$19,800
Maintenance fee (Assuming $300/month)	$36,000
Total cost	$444,645

Potential gains from other investment avenues based on varying Return-On-Investment (ROI) if you were to invest the remaining funds:

ROI	Potential gains in 10 years	Total cost after deducting gains
4%	$4,224	$440,421
5%	$5,531	$439,114
6%	$6,956	$437,689
7%	$8,506	$436,139

What should you do?

Let’s do a quick summary of the 4 pathways:

Potential pathways	Cost incurred	Funds remaining	Potential gains at 7% ROI
Sell the HDB and buy two condos	$443,007	$39,024	$37,742
Sell the HDB and buy a bigger condo	$688,182	$436,624	$422,281
Remain status quo	$113,831	$150,000	$96,715
Try for an EC as a second timer	$444,645	$8,795	$8,506

Among the four options, maintaining the current status quo incurs the least cost but also forgoes the potential opportunity to cash out and reinvest your funds in higher-yield investments. Given you are still relatively young, you have the advantage of leveraging a more substantial loan, making this the least favourable option.

While purchasing an EC presents a good opportunity for profit, the lower loan quantum means you will need to use most of your CPF and cash savings for the purchase. This approach will significantly deplete your funds available for other investments or emergencies, which might not be as suitable. 

Between the first two pathways, it ultimately depends on your personal preference and risk tolerance. Do you prefer to make your profits through rental income and potential capital appreciation of a property, or through other financial investments?

Option 1 will leave you with fewer funds for further investment, but the rental income could help offset some of your expenses. This approach could leave you in a tight cash position. However, if you choose not to act right away, you’ll have the opportunity to save up first. Since the leftover funds are limited, be mindful of the smaller transaction costs, like conveyancing and agency fees, which haven’t been factored into our calculations. Moreover, the limited funds could limit your investment options. We wouldn’t jump into investing in a second property for the sake of it if you are unable to find one that meets your goals – we recommend consulting an agent on this.

On the other hand, Option 2, while preserving more capital for other uses, involves a higher overall cost. The significant cost difference between Option 1 and Option 2 only becomes notable with a 6% ROI or higher.

ROI	Sell the HDB and buy two condos		Sell the HDB and buy a bigger condo
	Potential gains in 10 years	Total cost after deducting gains	Potential gains in 10 years	Total cost after deducting gains
4%	$18,741	$424,266	$209,686	$478,496
5%	$24,542	$418,465	$274,590	$413,592
6%	$30,862	$412,145	$345,303	$342,879
7%	$37,742	$405,265	$422,281	$265,901

For Option 2 to be advantageous, your investments would need to yield more than 6%, which is feasible. Since you’re unlikely to manage the investments yourself, this option may be simpler compared to Option 1, which involves tenant management. Additionally, the only extra cost would likely be the broker’s fee, whereas owning a property requires ongoing maintenance and management between tenancies.

We hope that our analysis will help you in your decision-making. If you’d like to get in touch for a more in-depth consultation, you can do so here.