The answer to the title of this blog post? Lots of hard work and bravado!
Jokes aside, this was my first foray in property investment.
Let me share with you some of my thoughts and experiences during that process.
My goal is not to show off – but to explain my rationale and my reasoning that led me to this investment.
The year I purchased was 2014 – during my final-year in SMU. I was studying and running a small F&B business on the side that allowed me to earn some income.
The choice of property? Duo Residences.
Studying in SMU, I was passing by the development almost everyday during my commute. So it was a property that I couldn’t get out of my mind.
And I couldn’t help but did more research on it.
Facts about Duo Residences
- Joint venture between Temasek Holdings & Khazanah Nasional
- Launched in 2013 at about $2000 psf
- 99-year leasehold
Above are the typical facts about this iconic development. Normally this would be enough to attract interest.
For me, there were other factors that I recognized… that made me willing to pull the trigger and buy Duo Residences as an investment.
Here are some of the compelling factors that led me to seriously consider:
- Limited supply of private property in the Bugis area
- The attractive vibe of Arab Street which was located nearby – it provided some decent nightlife
- Nearby commercial areas – easier to attract expat tenants
The Challenge of Buying Duo Residences
When something is touted as a good buy and a worthwhile investment, there is bound to be a LOT of interest.
And the interest was plenty!
I wanted to buy much earlier – at the first stage – but my ballot number was 900-something when there were only 660 units.
So I missed out on the first phase.
I thought I would give it a try again at the next phase.
But my ballot number was again too high!
When I finally managed to secure the option to purchase (OTP), the prices had already gone up twice!
At this stage, most people will be thinking 2-3 times about proceeding with the purchase.
I had lost out on a certain amount of capital gains.
Should I proceed?
For starters, I am relatively young and I plan to hold this property as an investment for the long-term.
In addition, Duo Residences is an iconic development near the CBD region in an area with limited supply of private residential condos.
I was also prepared to hold on to it for 10 years or more.
I finally bought a unit at Duo Residences in Feb 2014 at $1.4 million dollars – at the height of the cooling measures.
Unit is currently rented out
Duo Residences received its TOP status in 2017.
I received the keys in Sept 2017 secured an expat tenant who signed a 2-year lease within the next month.
(Yes, I asked for his permission to do a “photoshoot” while he was working. LOL. )
Exit Plan for this property investment
My plan is to exit from this investment once it reaches a valuation of $2 million dollars.
It is currently now valued at $1.5 million dollars. From my calculations, the investment has broke-even and I have a tenant that is currently paying for my monthly mortgage.
So there is no mental stress for me…. for now.
But don’t you think buying a private property is a HUGE commitment?
Of course, I’ve had my fair share of worries and concerns.
The thought of “oh my god, I can only afford to eat bread and plain water after this” did cross my mind.
But I had done my homework – I knew that I could afford the monthly payments.
I was also very confident that I could find a tenant for this property at the rental price range that I want.
Are there risks in every investment? Yes, of course.
There are also risks every time we cross the road, drive a car, eating raw sashimi…
But we calculate that hey – the chances of bad things happening are slim.
Similarly, investing in Duo Residences was a calculated risk that I could handle.
(No. I do not have rich parents to bail me out. I do have a real estate business and confidence that I can do well in that.)
Recent Transactions at Duo Residences
I recently took a look at the latest transactions that has taken place at Duo Residences.
Take note that most of the units were purchased in 2013 (at the height of the cooling measures)
These were units were also sold after the most recent July 2018 cooling measures.
The July 2018 cooling measures can be remembered by the decision to tighten the loan limits from 80% to 75% for all private housing loans.
Location is key – even though the condominium was launched almost at the peak of 2010-2013 cycle, the transactions have proven to be profitable for all who purchased then.
The gains for the 2-bedrooms units beat the 1-br unit. If you have the means, go for a bigger unit size.
For me, I couldn’t afford the 2-br so my choice was limited to the 1-br units.
For some cases, the entry level is crucial; the gains seem to be larger for the lower floors than higher floors when selling in suppressed market.
And if you think about it – the more cooling measures in place, the better for buyers.
Rental market in DUO Residences is strong. Even if the ideal selling price cannot yet be achieved, most owners are still able to collect good rental returns while riding the wave.
Other Positive Factors To Consider
There is an upcoming development that is located nearby Duo Residences.
No details has been released regarding its selling price but Guoco Land bought the land at $1706 PPR in 2017.
This means a possible launch price of between $2800 – $3000 psf for Midtown Suites.
The current PSF value at Duo Residences is about $2500 PSF.
Looking at the plans, it seems that the development will help to add on to the future transformation of the Bugis district.
All these will definitely bode well for the future pricing of Duo Residences.
Hence my optimism that it is possible for my investment to hit $2 million dollars.
Unlike most Singaporeans, my first property was not a HDB flat but a private property.
It was a conscious decision to forego all the privileges associated with a HDB flat.
Was it smart? Maybe.
Was it a good idea? It depends – my investment could also gone the other way.
But what is clear is that I deeply practice what I preach and believe in.
When you see your first investment becoming cash positive, your confidence will definitely grow substantially.
In fact, I have become very comfortable with property investment that I recently just added a SECOND property to my portfolio in 2016 – The Crest.
I will leave that story to another blog post. 🙂
Keen to know more on how I managed to own 2 private properties by the age of 28?
Planning to get started on having a property investment portfolio that can help secure your future retirement?
If so, I invite you to contact me for a private discussion so we can discuss the options open to you.