I’m 53 With A Passive Income Of $4k Monthly: If I Were To Inherit An HDB, Should I Sell My Current HDB Or Condo?

Dear Sir / Madam,

as per my FB messenger request, here’s the details of myself and properties:

Myself

• 53 yo, single
• plan to pursue personal interest at age 55 with a passive income of around $4000 monthly
• insurance maturity mostly around 2030 when I am around 60 yo

(a) 3-room HDB Flat

• Located in Marine Drive
• Fully paid up, current owner me only (my two sisters have their own flat)
• close to amenities like seaside, polyclinic, Parkway Parade and upcoming Downtown East MRT
• Paid $80K in 2013 ABSD for my pte condo.
• Rented out since 2017 to 2023 at an average rental of $2100 monthly
• Planning to return to stay for retirement after renovations in Sep 2024
• strong sentimental value and million-dollars sea view

(b) D14 Boutique Development

• Bought in 2013 June at $1.14m for a 915sqf, 3 bedroom + 1 study corner, dual key
• Rented out one studio room at $1500 on average since 2018 March.  Current rental $1700.    
• fully paid up using CPF ($345k) and accrued int ($30k)
• monthly maintenance $350; expect repair cost to escalate steeply as the building gets older due to its rooftop swimming pool and mechanized parking.
• Near to Indoor Stadium and Kong Hwa Pri, old airport food centre
• last sale within the condo is $1.38m / same stack and floor area as mine

(c) Will be inheriting a 4-room HDB flat at in Tampines

• Flat belongs to 3 aunties in their late 70s and 80s
• fully paid-up
• may need to sell as I already had a HDB
• planning to keep as rental using a niece or nephew’s name.  Eldest niece only 30 yo

Questions.

• Which property should I let go?
• Passive income vs maintenance problems and prospect of appreciating for current pte condo.  Very concerned condo will depreciate instead of appreciating in years ahead.
• Some advice given included selling the pte condo and look for another smaller one for passive income. But I am mindful of the ABSD at my age not sure do I want to continue servicing another loan.

Let me know if this info is sufficient for you to help me with an analysis.

Sincerely thank you very much.

Editor’s Note: Details about the properties mentioned above were removed for privacy reasons.

(This is part of an ongoing series where we answer reader questions about the property market. If you have one of your own, send it to stories@stackedhomes.com.)

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Hi there,

Thanks for reaching out to us. 

For many homeowners, the decision to sell or buy a property is often emotional, especially when a place holds significant sentimental value. Furthermore, I can see how the rarity of a sea view in Singapore may add to your reluctance to part with the unit. 

Let’s start by doing a run-down of your current situation including the passive income you’re receiving, and the performance of your properties. 

Current situation

Monthly passive income 

Description	Amount
Rental income from the studio (D14 condo dual key unit)	$1,700
Rental income from HDB	$2,100
Property tax for both properties	$387
Maintenance fee + Town Council service and conservancy	$422
Estimated monthly passive income	$2,991

Performance of properties

3-Room flat at Marine Drive

Recent 3-room HDB transactions in the cluster:

Year	Your 3-Room Flat	YoY	Marine Parade (3-room)	YoY	All HDB 3-room	YoY
2013	$588		$604		$496
2014	$556	-5.44%	$568	-5.96%	$465	-6.25%
2015	$486	-12.59%	$564	-0.70%	$442	-4.95%
2016			$559	-0.89%	$439	-0.68%
2017	$570		$547	-2.15%	$432	-1.59%
2018	$518	-9.12%	$544	-0.55%	$417	-3.47%
2019	$487	-5.98%	$496	-8.82%	$409	-1.92%
2020	$482	-1.03%	$496	0.00%	$424	3.67%
2021	$525	8.92%	$540	8.87%	$482	13.68%
2022	$520	-0.95%	$564	4.44%	$532	10.37%
2023	$598	15.00%	$599	6.21%	$562	5.64%
Average		-1.40%		0.05%		1.45%

When examining the Year-on-Year growth rate, it’s evident that the 3-room flats in Marine Parade have only exceeded their last high in 2013. This is unlike all 3-room flats in Singapore where the latest figures are much higher than its previous high – in fact, the average growth rate over the past decade is negative.

Of course, as the saying goes, the rising tide of the sea lifts all boats. In this case, the onset of the pandemic fueled property demand, leading to increased prices even for older flats such as yours, though the growth is not spectacular.

Moving forward, there’s very strong uncertainty regarding whether the growth rate witnessed during the pandemic will be sustainable due to the flat’s age.

Given your mention of the sentimental value attached to this property and your intention to return to reside here during your retirement years, I assume that you don’t intend to sell it. This is prudent, as retaining an HDB property entails lower expenses, which helps during retirement. This also means that the lower growth rate shouldn’t be a factor here. Since you have no plans to sell, issues such as lease decay or capital appreciation are unlikely to pose significant concerns.

Your District 14 boutique condo

Recent 3-bedroom transaction – I am assuming here it was the $1.38M on the second floor of your condo that you were referring to.

Year	Your D14 Condo (Resale)	YoY	D14 Freehold/999y PTE non-landed (Resale)	YoY	All SGP Freehold/999y PTE non-landed (Resale)	YoY
2021	$1,290		$1,226		$1,592
2022	$1,165	-9.69%	$1,316	7.34%	$1,714	7.66%
2023	$1,475	26.61%	$1,417	7.67%	$1,790	4.43%
Average		8.46%		7.51%		6.05%

Despite obtaining its Temporary Occupation Permit (TOP) around 9 years ago, the first resale transaction didn’t occur until 2021.

With limited transactions, it may not accurately reflect the project’s performance, particularly considering there was only one unit sold per year for each of the three years. Notably, in 2021 and 2023, a two-bedder was sold, while in 2022, a three-bedder was sold. As is typical, smaller units often command a higher price PSF, explaining the price disparity over the three years.

Given the insufficient data to draw a definitive conclusion on the development, let’s instead examine the growth rate of your specific unit.

Original purchase price in 2013: $1.1M

Additional Buyer’s Stamp Duty (ABSD) paid: $80K

Estimated current valuation: $1.38M (based on the recent transactions)

Based on this, the average growth rate for your unit over the last 10 years is 2.03%, which is lower than the average growth rate of all non-landed private properties over the same period at 2.9%. If we include the ABSD of $80K, the average growth rate decreases to 1.45%.

Tampines HDB

Recent 4-room HDB transactions in the cluster you highlighted:

As you rightly pointed out, you won’t be able to inherit the HDB unit since you already own an HDB and a private property.

Considering your eldest niece is only 30 years old, unless she is married and doesn’t own any properties, she won’t be eligible to inherit the unit. Single owners must be at least 35 years old to inherit an HDB unit. Even if she meets the eligibility criteria, she won’t be able to rent out the entire unit until the Minimum Occupation Period (MOP) of 5 years is completed. This also means she won’t be able to purchase another property during this period.

Therefore, the most practical option in this scenario would be to sell the HDB unit.

Let’s now address your questions.

Which property should you sell?

You’ll probably need to sell the HDB property you’re inheriting among the three properties. This would result in the entire sale price being returned to you in cash. Given your expressed intention to rent out this property if it can be held by your niece/nephew, I assume that your objective is to generate passive income. If so, you could consider investing the sales proceeds into other avenues that provide a steady flow of passive income.

If you’re deliberating which property to sell between the 3-room HDB and the D14 boutique condo, based on the data, it may be a more favourable option to dispose of the boutique condo. To gain a clearer understanding, let’s examine the potential costs.

As both properties are fully paid for, the expenses only include the Town Council service and conservancy fees for the HDB, maintenance fees for the condo, and property tax for both properties.

Suppose you decide to sell the boutique condo and reside in your HDB flat. For the sake of calculation, I will consider a 10-year timeframe.

Costs incurred from staying in the 3-room flat

Description	Amount
Town Council service and conservancy fees (Assuming $72/month)	$8,640
Property tax	$2,260
Total costs	$10,900

*I’m assuming the property value to be $455,000 which is the average of the 4 recent transactions in the estate

Selling the D14 boutique condo

Description	Amount
Selling price	$1,380,000
CPF to be refunded into OA	$375,000
Cash proceeds	$1,005,000

Assuming that you were to invest the cash proceeds of $1,005,000 into an avenue with a conservative return of 4% per annum.

Time period	Investment amount	Gains
Starting point	$1,005,000	$0
Year 1	$1,045,200	$40,200
Year 2	$1,087,008	$82,008
Year 3	$1,130,488	$125,488
Year 4	$1,175,708	$170,708
Year 5	$1,222,736	$217,736
Year 6	$1,271,646	$266,646
Year 7	$1,322,511	$317,511
Year 8	$1,375,412	$370,412
Year 9	$1,430,428	$425,428
Year 10	$1,487,646	$482,646

Total gains in 10 years: $482,646 – $10,900 = $471,746 (Do note that this is not including the potential gains if you were to invest the funds from the HDB you will be inheriting)

Now let’s look at the potential costs if you were to sell the 3-room flat and continue staying in the condo while renting out the studio. 

Description	Amount
Maintenance fees ($350/month)	$42,000
Property tax*	$16,200
Rental income (Assuming $1,500/month)	$180,000
Total gains	$121,800

*I’m assuming the property value to be $1.38M

Let’s presume you were to sell your HDB at $455K and invest all the cash proceeds into an avenue with a conservative return of 4% per annum.

Time period	Investment amount	Gains
Starting point	$455,000	$0
Year 1	$473,200	$18,200
Year 2	$492,128	$37,128
Year 3	$511,813	$56,813
Year 4	$532,286	$77,286
Year 5	$553,577	$98,577
Year 6	$575,720	$120,720
Year 7	$598,749	$143,749
Year 8	$622,699	$167,699
Year 9	$647,607	$192,607
Year 10	$673,511	$218,511

Total gains in 10 years: $218,511 + $121,800 = $340,311 (Do note that this is not including the potential gains if you were to invest the funds from the HDB you will be inheriting)

This suggests that retaining the HDB and investing the cash proceeds from selling the D14 boutique condo could yield higher returns. Naturally, this outcome hinges on your Return On Investment (ROI), although I’ve utilised a conservative estimate of 4%, akin to the interest earned in the CPF Retirement Account.

Given that both properties are fully paid for, another option to contemplate is retaining ownership of both properties. You could relocate to your 3-room flat while renting out both sides of your dual key unit.

Over the last 6 months, there were two 2-bedders that were rented out:

Assuming that you rent out the other side of your dual key at an average price of $2,500, and including the studio rental at an average of $1,500, that will be $4,000/month. 

Monthly passive income:

Description	Amount
Rental income from the D14 condo	$4,000
Property tax for both properties	$638
Maintenance fee + Town Council service and conservancy	$422
Estimated monthly passive income	$2,940

This brings us to your second query: Passive income versus maintenance issues, and the potential appreciation of the D14 condo.

When comparing the disparity in monthly passive income between residing in the HDB and renting out the D14 condo ($2,940), as opposed to the current situation where you stay in the 2-bedroom unit while renting out the studio and HDB ($2,991), the difference is marginal.

Despite being a relatively new development, your concerns regarding maintenance are valid, particularly given its boutique nature. While boutique projects may lack an extensive array of amenities, the maintenance costs divided among a smaller number of units can still be substantial. Moreover, if there are insufficient sinking funds or major repairs needed as the condo ages, this could result in additional expenses.

When assessing the average growth rate of your unit over the past decade, it’s noticeably slower compared to the overall market. Boutique condos in an area already flooded with many other boutique developments (like in D14 where your condo is) face stiff competition as they lack any differentiating factors. Even so, considering its freehold status, the likelihood of the D14 condominium experiencing appreciation is higher compared to that of the ageing Marine Parade HDB.

Suppose that the condominium appreciates at the average growth rate of all non-landed private properties over the last 10 years, which is at 2.9%:

Time period	Property price	Gains
Starting point	$1,380,000	$0
Year 1	$1,420,020	$40,020
Year 2	$1,461,201	$81,201
Year 3	$1,503,575	$123,575
Year 4	$1,547,179	$167,179
Year 5	$1,592,047	$212,047
Year 6	$1,638,217	$258,217
Year 7	$1,685,725	$305,725
Year 8	$1,734,611	$354,611
Year 9	$1,784,915	$404,915
Year 10	$1,836,677	$456,677

By retaining the condominium, there is greater value retention and growth potential. If you later decide to move back to an HDB in Marine Parade, you can sell the condominium and purchase the HDB.

With current elevated HDB prices, it might be a good time to sell and potentially purchase later if the need arises. Today, the HDBs at Marine Parade have 50 years left on the lease, and while prices did go up recently, they certainly grew a lot less than the overall HDB market. In 10 years, they would only have 40 years lease left.

Taking these factors into account, my inclination would be towards retaining the D14 condo and selling the HDB now when its growth potential is low. You can then allocate the proceeds from the HDB into a passive investment strategy.

At some point when you want to retire, you can consider selling your condo and purchasing the HDB back. Even if the 15-month wait out period is still around, it wouldn’t apply to you as you’ll qualify as a senior who is downgrading as long as you purchase a 4-room flat or smaller. If prices do fall, you could even consider buying a bigger flat with a sea view to retire in, such as a 4-room flat.

Of course, this is a personal decision you’ll have to make. Do you want to have that sea view now? Or can this sea view wait, perhaps till you are 63 years old (10 years from now)? Also, there’s always the risk that these HDBs may not be around then too (it could undergo SERS or VERS) and it isn’t something to speculate on.

On the other hand, if your preference is to maintain ownership of both properties, the disparity in passive income between moving into the HDB or remaining at the D14 condo is relatively minor.

Regarding your final inquiry about selling the D14 condo to acquire another property, given the prevailing ABSD, I would advise against this course of action. Excluding the proceeds from the HDB inheritance and assuming you opt not to take out a loan, your budget post-sale of the D14 condo would amount to approximately $1.38M (the unit’s sale price). For a property priced at $1.38M, Buyer’s Stamp Duty (BSD) and ABSD would total $315,800.

Assuming a 3% rental yield for the new property, it would take 6.5 years just to recoup the ABSD of $276,000, which is a substantial timeframe and probably not worth your while.