Property Life Stage Planning – Times when I recommended ‘no’ to their property plans

Many of my clients have approached me with the intent is to hear what I would advise for their property needs. Sitting down and running through with them using the Property life stage approach, there were numerous instances when I recommended not to proceed with their initial plan. Again, I need to highlight that there is no right or wrong in life style or property choice but importantly, a holistic understanding of its impact

Case 1

Clients’ profile

Married couples both in early 30s
Combined monthly household income of 12k
One works in an NGO with a stable income, the other, as a strategist in an upcoming and high demand industry
Savvy investors of stocks and shares

Initial Property Plan:

Looking for matrimony home in close to central area ideally a private property. Why not? I realised that they have a very high expenditure due to their desired quality of life. Unlike Norm, they are not able to build up a safety net for their mortgage which a new launch would allow them to, as they desired to have a new home as soon as possible.

Moreover, their high expenditure would mean a significant reduction of quality of life should they buy a private property and a 1-bedder condo (that would give them a good financial buffer yet retain a good quality of life) would not fit their need for space and family planning since they also would like to have kids within 1 year of getting married. They are able to net good investment returns from their stocks hence there is opportunity cost on top trading off their quality of life as well as space.

RESULT:

Advised them to buy a resale HDB flat in Central area. Sold his inheritance house and bought a resale 4-room HDB at a very high floor, 2-3 min walk to MRT. Continue to invest in stocks/shares.

Case 2

Clients’ profile

Married couples in mid 40s. With a teenaged kid
Household monthly income of about 20k
Husband holds a senior position in a publishing house; wife is housewife

Initial Property Plan:

Looking to upgrade from a 2 bedder condo to a 3 or 4 bedder condo. Doing a comprehensive financial analysis when upon selling their 2 bedder, they could afford to pay for the downpayment with some spare cash/CPF. However, upon further chat with the client, his organisation is seeing a double digital dropped in revenue for the past few quarters which makes his job position unstable especially when the overall sentimental for his industry is not too positive as well. Moreover, he has the intention to support his child to have his tertiary education aboard.

RESULT:

He did not upgrade while taking up a ‘defensive’ approach to build a stronger financial safety net so that he would not have to sell his 2-bedder condo in an urgent manner should he ever encounter a loss of income.

Case 3

Clients’ profile

Married couple, 30s. no kids
Monthly household income of 14k
Husband is an aviation engineer while wife is a child care centre Principal

Initial Property Plan:

Looking to upgrade from their 4-room HDB to condo.While this couple has been prudent in their spending and their HDB will fetch good cash/cpf to buffer for them, it ended up as a ‘no’ for them. Firstly, the husband is keen to switch to a social service sector which will likely see a massive reduction of income.Secondly, they are planning to have children sooner than later which will impact their cashflow while they have always been a very low risk taker (they have no investments and all cash are kept in the bank). However, I did advise them that they might want to cash out at some stage due to CPF accrued interest.

RESULT:

Continued to stay put at their current HDB while continue to monitor market and prices.

Case 4

Clients’ profile

Married couple, 30s with 2 kids
Monthly household income of 8k
Have good investment portfolio; currently staying in a 5 room HDB which has less than 60 years remaining lease
Wife is working full time; husband is contributing as a stay-home dad with irregular freelance assignments.

Initial Property Plan:

Wanted to upgrade to a 2-bedder condo to stay in the same project as her very close friend. Paying for the downpayment and stamp duty would need them to sell their 5-room HDB while liquidating all of their investments which are fetching very good returns at the moment. Expenses are high with the two kids that they have while the freelance assignments for the husband are not of a stable and predictable nature.

RESULT:

While they are not encouraged to upgrade, they are advised to move from a highly depreciating HDB to a better valued HDB or to consider BTO or Sales of Balance flat.

Case 5

Clients’ profile

Married couple, 30s with 2 kids
Monthly household income of 8k
Have good investment portfolio; currently staying in a 5 room HDB which has less than 60 years remaining lease
Wife is working full time; husband is contributing as a stay-home dad with irregular freelance assignments.

Initial Property Plan:

RESULT:

While they are not encouraged to upgrade, they are advised to move from a highly depreciating HDB to a better valued HDB or to consider BTO or Sales of Balance flat.

Conclusion:

You might find some parallels to some of the cases highlighted above but having said that, every family will have their priorities, life and career plans as well as financial commitments. It is always recommended to have a holistic approach to your own personal property plans. Our Property Life stage planning framework is design to map all these out for you and your families. Speak to us if you would like to know more.