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I updated a blog on the CPF-MA yesterday: "For those under 65, the Basic Healthcare Sum next year will be S$54,500, up from S$52,000 ...

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This condo investment has been a drag.

Thursday, June 8, 2017

Is cash flow sufficient to service debt?

Hello AK, I read many of your interesting articles on your blog on financial matters. I would greatly appreciate some advice to manage my finances. I turned 55 and am still working. I live in a 3 room HDB flat fully paid for. I purchased a 2-bedder private condo in the east for investment purpose and renting it out since mid 2015. The rental is covering my mortgage loan but the other expenses such as property tax, home/fire insurance and maintenance/sinking fund amount to $7000. I am thinking of letting go this property...

If you are concerned with investing for income to fund your retirement, it seems that this condo is more a drain than a pump. 

If the home loan is going to be paid up soon, then, less to worry about. 

If the home loan has another 10 years (or more) to go, at 55, I might be worried.

Know your motivations and you will know if something is the right tool for you.

Related post:
Buy a condo or stocks?


Spur said...

Hmmm, at 55 I wouldn't want to rack up huge debts/liabilities. Hair already turn white ... scarly all also drop off... :O

Even if can get 1% mortgage, I would still make sure got enough funds to fully pay up if necessary.

I think many still tend to over-estimate potential (rental & capital gains) and under-estimate costs/efforts. Not a pretty combo when we're still in the middle of new condo over-supply surge all the way into 2019.

AK71 said...

Hi Spur,

Those who bought condos in NE Singapore in recent years are the worst hit.

Buy shoebox apartment in NE Singapore?

I did so much worrying in my 20 years as a working adult, especially the early years. In my retirement, I try to keep things simple and as worry free as possible.

Of course, I cannot assume that this is what everybody wants in retirement. ;p

Wong said...

Hi Spur,
obviously there is no free lunch. If you can find a property with the rent covering all the costs, you as a private person will be the last person to get your hand on it.

Such properties you hope for are available in the post crash areas like USA in 2008/9 but then everyone is worrying about the job and finding tenants that will pay rent.

If the price of properties increases rapidly as you hope, our next generation will be the ones that will bear the load. In fact, the millennials are already carrying the problem.

Good luck!

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