When I was 27-year-old I bought a first condo. At that time I was renting a 3 room HDB that was a nice place to live and life was so happy-go-lucky, I was happily working, enjoying life and for the life of me I had zero interest in buying a house. That was because I bought into the idea that at 27-year-old I was way too young to buy one. For starters, I did not have the finances available and I really didn’t understand the market. So what was the point?
Take Action: Mother knows best
And, as so often in my life, it was my mother who made me see sense and take action that would forever alter the path of my life. She came from a humble background where she worked hard for many years and purchased property from all her earnings.
In a no-nonsense way that mothers tend to do, she quickly slapped me around to get my act together, stop paying someone else’s mortgage via rent, and find a house to grow my wealth. Back in those days there were no cooling measures and purchasing a house required a 10% deposit. Of course, I still had to scrounge together all my lousy savings and borrow the money from my parents to make it happen.
So eventually I bought my first condo at Century Mansion, Jalan Remaja, at the tender age of 27 for $472,000. For me, it was a beautiful 2 bedroom plus Study 936 ft² condo with lovely marble floors and floor to ceiling windows. At the time, this was considered small but by today’s standard it’s the size of a 3 bedroom condo.
I didn’t educate myself
Buying your first condo at 27 sounds great, doesn’t it? However, looking back, I made so many mistakes that cost me in lost opportunities. First of all, at that time I knew absolutely nothing about real estate, the Hillview area, the difference between freehold or leasehold. But more importantly, I didn’t have a general grand plan to use real estate to grow my wealt
Location, Location, Location
While I found the Hillview area to be a beautiful, quiet place to stay, near a nature park with some quaint neighbourhood coffee shops and small restaurants; my wife, who hails from the East of Singapore, found the 20 minutes bus ride from Bukit Batok MRT to be house rather tedious. That was back in 1999. Today, so much has changed it’s become a convenient village of sorts.
I bought a small development
When I was younger, I really enjoyed the idea of staying in a small development. It reminded me of the places I grew up in. So Century mansions with its 64 units offered me the privacy and the small development feel I wanted. But here’s an interesting thing I learned the hard way about small developments.
With only 64 units. The number of people who are willing to sell at any moment in time was very few so as it turns out, there wasn’t enough transactional volume to push up the price. Thus, the price per square feet languished pretty much near the price I borrowed for almost a decade.
The other thing I noticed was with a small development the number of facilities were pretty paltry. For example, my first condo had a small pool, a fairly cramped basement parking and a guardhouse. Oh yes, I remember there was a sauna, but it tended to break down more frequently than I would have liked.
Freehold to behold!
With my lack of knowledge at the time, I was told and believed, that buying freehold would be a surefire winner. But in reality, there were so many freehold properties along Hillview Avenue that the competition kept prices subdued. It grew, but not at an exciting rate.
I had no idea what the Masterplan was
The other mistake I made what I did not delve into the masterplan of the surrounding area that could maintain and grow the value of my property. ie, What grand plan did the government have in developing Bukit Batok, Hillview, an MRT, educational facilities etc. So going in without this knowledge, in a leap of faith, resulted in a very costly lesson.
I was told that Hillview Avenue would have its own MRT station. And, true enough, it arrived but 16 years later! I was also told that the factory next to century Mansion would have en bloc potential and therefore the new development would pull up my house price. This too also arrived, but alas 19 years later.
Yes, so the interest rate was 6%!
So, not knowing anything about real estate and timing, the late 90s was also the era of high mortgage interest rates. I recall the interest rate was around 6%. After every annual consolidated report on my loan, I resigned myself to seeing the principal loan not budging at all, but the interest rate was all I was paying. Having a sense of humour helps during these times.
And then I just sat on it
So I bought a house and got on with my life. If I knew back then what I know now, I would have quickly sold the unit and put my money to work in a property that would grow.
I had no trusted agent to help me
I would also advise getting to know a trustworthy agent, who knows his stuff about the market, the masterplan, financing methods and who really works with your interest at heart. Because if you don’t have one, and if you’re not too familiar with the market, you could end up making an expensive decision based on gut feel. For some people, this gut feel works for them but these are very few and far between.
So what would I do now?
After selling that first unit at no profits, I then bought a leasehold condo in Tanah Merah that has performed much better. Moving forward, I have a penchant for:
- large developments with 1000 to 2000 units,
- I would choose leasehold over freehold and
- I would buy a new condo under construction so that I would be the first owner buying at the lowest price. I like the idea of being the first owner; and being the one to enjoy the first pot of gold.
A Silver Lining
The above sounds terrible as a property investment to grow your wealth. But the good things that came out of this was the hard lessons learned and getting my foot on the property ladder at a young age. If you can and you’re financially safe to do so, get onto the ladder early. That’s probably half the battle won already.