A Cautionary Tale – A True Story Of Property Investment Gone Wrong

*The names of the characters in this story have been changed for privacy reasons*


Mr and Mrs. Tan are a regular couple in Singapore. They have a two-year old boy named Ben. Both are working professionals, drawing a combined monthly income of $8,000. They live in a 4-room BTO flat in Sengkang.

Regular family. Regular life. Regular scenario. There was nothing out of the ordinary about this assuming couple…until their BTO flat reached its 5-year MOP period.

That was when the Tan family did something totally irregular to most – They decided to sell the flat.

Why? Because they wanted to upgrade to a condo instead, and needed the funds for this upgrade.

And why not? A condo has better facilities. Swimming pool, gym, day care etc. It would provide a good environment for Ben.

They felt that it was a good investment in terms of future returns too.

Finances-wise, an $8,000 monthly income was decent. Could be higher of course, but they were comfortable. Besides, they had saved around $100,000 over the years, which should be enough (or so they thought).

So the ordinary family decided to do something out-of-the-ordinary, to give themselves and future generations a better quality of life, and to secure their financial future.

Noble intentions. But ultimately, the wrong decision.

 

The Moment The Dream Began To Unravel

Mr and Mrs. Tan went ahead to purchase a condo at Katong area. It was a good neighborhood with lots of entertainment and food options.

In order to afford the condo, they had to sell the BTO flat first. However, the condo was a new launch, and it would take 4-5 years before the keys can be collected.

So where would the Tan family stay in the meantime?

They considered renting a flat. It would cost them around $3,000 per month. Added to the strain of paying back the condo loan, it was an expense they could do without.

Ultimately, they decided to move in with Mr Tan’s parents.

On paper, it sounded good. “3 generations under one roof”. That’s what the Singaporean dream is all about, or is it?

Well, the dream turned ugly very quickly. The Tan family were not used to sharing a space with 2 elderlies. The elderlies were not happy to change their comfortable lifestyles to accommodate more people in the house.

Even though they were family and they loved each other, conflict was inevitable.

After around 9 months of bickering and in-fighting, the situation became untenable. Mr and Mrs. Tan decided to move out.

 

The Final Straw

There was little choice but to take the rental option. It was an additional $3,000 a month. It hurt the pockets, but they were confident their salaries + savings could cover this cost.

For a while, it looked like it could. But life has a tendency to throw curveballs when you least expect it.

And that was exactly what happened to the unlucky Tan family…

Due to a corporate reshuffle, Mr Tan lost his job. He eventually found a new one, but it paid significantly lesser.

Baby Ben was growing up rapidly too. And raising a child in Singapore will progressively get more expensive, as they found out to their chagrin.

Their 6-figure savings were dwindling by the month. Not much was left.

These financially-crippling events conspired to force the Tan family to sell their condo at a slight loss, in order to keep their heads above water. It had not even TOP yet!

They had to continue staying in the rental flat, while waiting for a new HDB flat. Definitely not an ideal situation.

 

The Moral Of The Story

All that is gold does not glitter. Upgrading from a HDB to a condo may seem appealing to many. But beneath the dreamy scenario, lies a very real and potentially harsh reality: Don’t do it if you can’t afford it.

Mr and Mrs. Tan are friends with one of One Global Property Services’ sales executives. They shared the story with him while asking for advice, who in turn shared it during a team discussion. We felt compelled to write this to you, so you won’t make the same mistake.

Don’t get us wrong. We’re not saying it’s wrong to upgrade to a condo. Just ensure that finances-wise, you prepare for every possible scenario, so you won’t get blindsided by unforeseen circumstances.

 

A More Financially-Cautious Option

Singapore property is expensive. Everyone knows that. An expensive purchase usually carries higher risk, and potentially higher losses if things go wrong.

So if you like to explore the possibility of a lower risk and lower capital outlay option, you may want to consider overseas property instead.

We’re talking about posh, high-end homes in the UK, Australia and other developed countries.

You may be surprised to know that for the price of a condo, let’s say SGD1 million, you can easily afford 2 or 3 equally good properties in those countries.

And many of them (at least the ones we recommend) have high capital appreciation rates, with even higher potential for perpetual rental income!

Keen to find out more? Fill in your details below, and we’ll send you a “master list” of overseas properties that are much more value-for-money than Singapore condos.

Looking forward to share more with you soon!

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