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Portfolio Restructuring
for HDB owners
Strategic Asset Management
(SAM)
If I am 30 years old, have a savings of $30k cash and $300k CPF,
- what is the difference if I fully pay a $300k HDB flat vs taking a 80% bank loan
- What if I were to sell after 10 years
at the same price?
Fully Paid using CPF
• Sell at same price of $300k
= Negative Sale
- $84,000
• Must sell at $384k to Breakeven
$ 300,000
Year 1 $ 307,500
Year 2 $ 315,188
Year 3 $ 323,067
Year 4 $ 331,144
Year 5 $ 339,422
Year 6 $ 347,908
Year 7 $ 356,606
Year 8 $ 365,521
Year 9 $ 374,659
Year 10 $ 384,025
Bank Loan
80% Bank Loan $ 240,000 15% CPF used $ 45,000 Year 1 $ 46,125 Year 2 $ 47,278 Year 3 $ 48,460 Year 4 $ 49,672 Year 5 $ 50,913 Year 6 $ 52,186 Year 7 $ 53,491 Year 8 $ 54,828 Year 9 $ 56,199 Year 10 $ 57,604
• Sell @ $300k
Less $57,604 cpf + accrued
Less $60,000 10yr
Less $175,000 o/s
= $7,396 (positive sales)
+$240k in your CPF earning interest. Government gives you $67,220
$240k in your CPF
$ 240,000
Year 1 $ 246,000
Year 2 $ 252,150
Year 3 $ 258,454
Year 4 $ 264,915
Year 5 $ 271,538
Year 6 $ 278,326
Year 7 $ 285,285
Year 8 $ 292,417
Year 9 $ 299,727
Year 10 $ 307,220
$240k in CPF earning interest
$307,220
Less $240,000
Government give you $67,220
(FREE money)
Comparison$300k Fully paid using CPF
$ 300,000
Year 1 $ 307,500
Year 2 $ 315,188
Year 3 $ 323,067
Year 4 $ 331,144
Year 5 $ 339,422
Year 6 $ 347,908
Year 7 $ 356,606
Year 8 $ 365,521
Year 9 $ 374,659
Year 10 $ 384,025
80% bank loan ($240k)
15% CPF used $ 45,000
Year 1 $ 46,125
Year 2 $ 47,278
Year 3 $ 48,460
Year 4 $ 49,672
Year 5 $ 50,913
Year 6 $ 52,186
Year 7 $ 53,491
Year 8 $ 54,828
Year 9 $ 56,199
Year 10 $ 57,604
What about opportunity cost of investment using the untouched $240,000 in your CPF?
If you can buy a private residential at $800k and sell it in 5 years time at same price, do you make money?
Your Tenant Gives you 100% ROE
Purchase Price $800k
$160k down payment
Rental $3500/month
Sell $800k after 5 years, you get 100% ROE , Total : $163,380
$3500 rental
Interest Principal Passive
$ 777
$ 1,540
$ 1,183
x 60 months
x 60 months
$ 92,400
$ 70,980
Singapore Property Price Index
Singapore Property Price Index and Housing Ratio
Potential of SG property with the influx of population to reach 6.9m?
What will you do if you have $200,000 savings?
- Holiday with family 2 times a year on long haul trips
- Buy luxury items; Car for husband, jewels for ladies
- Save in FD
- Invest in Stocks and Shares
- Buy Unit Trusts
- Buy Forex
- Buy Properties
Savings of $200,000 with a BankAssume 1% per annum
Annual Interest earned if
Every $200,000 gives you interest at $2,000 yearly, 1% p.a.
$2,000 yearly = $166.60per month ($2000/12months)
Only EARN $8,000 ( $2,000 x 4years)
if you were to “park” a SOLID $200,000
savings in the bank
Is this what you want from a Bank or do you think there is a systematic way to grow your wealth?
Down Payment $200k for PropertyAssume $1m property purchase
Assume Rental of $4,000 per month (based on $4.46psf, 2br rental 700sf
Rental : $4,000 x 4 years = $$192,000
Interest : $1,000 x 4 years = $48,000
Principal : $2,000 x 4 years = $96,000
Passive : $1,000 x 4 years = $48,000
Property Investment is the BEST
instrument to HEDGE against Inflation! Earn Passive Income!
$200,000 Bank Savings Vs D/P $1m property
Fixed Deposit for $200,000 (based on 1% p.a.)
1 year = $2,000
4 year = $8,000
4 years savings plan by tenant (base on $4k monthly)
Total Principal + Total Passive
= $96,000 + $48,000
= $$144,000
Property Investment is the BEST
instrument to HEDGE against Inflation! Earn Passive Income!
$8,000 versus $144,000
8 Growth Technique
• Restructuring / refinance of loan
• Guarantor Technique in commercial loan
• Gearing / Term Loan
• E-OPM
• Stretching of loan tenure
• Mortgage Choice
• Pledge / Unpledge
• Decoupling
• HDB Essential Occupier (not valid since 1/4/16)
Why Restructuring
Benefits & Advantages of Restructuring:
- Do not need to fork out huge D/P
- OPM, passive income
- 80% LTV for 2nd property purchase
- Save on min $70,000 ABSD
- Double Property Capital Gain instead of 1 Appreciation
( ie: $200,000 x 2 = $400,000 versus $200,000 x 1 )
Sellers 5 room HDB in Tampines Blk 51x #1x
- HDB Transacted Price: $550,000 ~ $715,000(April 2014 ~ April 2015)
- Outstanding Loan : $200,000- Husband CPF + Accrued : $160,000- Husband OA : $ -- Wife CPF + Accrued : $110,000- Wife OA : $ 10,000
- Breakeven: $470,000 ??
Sellers Plan: Upgrade to Condo, Joint Purchase
After Sales of HDB @ $708,000
- CPF Total Returns : $270,000
- Total Cash Proceeds : $238,000
Available Funds for $1.2m Purchase
- CPF Available : $280,000
- Cash Proceeds : $238,000
- H Monthly OA contribution : $1,050
- W Monthly OA contribution : $1,050
Financial Calculation for $1.2m Condo
Available Funds after $1.2m Purchase- CPF Available : $280,000 - $240,000
- $ 30,600 = $ 9,400- Cash Proceeds : $238,000 - $60,000 = $178,000
- Cash Top Up : $3,599 - $2,100 = $1,499
Why Restructuring
Benefits & Advantages of Restructuring:
- Do not need to fork out huge D/P
- OPM, passive income
- 80% LTV for 2nd property purchase
- Save on min $70,000 ABSD
- Double Property Capital Gain instead of 1 Appreciation
( ie: $200,000 x 2 = $400,000 versus $200,000 x 1 )
Portfolio Restructuring
Husband own 1st property Own StayWife own 2nd property for investment (rental)
Husband Profile:- 37 year old- Monthly income: $8,000- CPF Available: $160,000- Monthly Contribution: $1,050
Wife Profile:- 36 year old- Monthly income: $5,000- CPF Available: $120,000- Monthly Contribution: $1,050
Portfolio Restructuring - Husband
Available Funds after $1.2m 3br Own Stay Purchase- Total CPF Available : $280,000 - $160,000 = $120,000- Cash Proceeds : $238,000 - $60,000
- $20,000 - $30,600= $127,400
- Cash Top Up : $3,839 - $1,050 = $2,789
Portfolio Restructuring
Husband own 1st property Own StayWife own 2nd property for investment (rental)
Husband Profile:- 34 year old- Monthly income: $8,000- CPF Available: $160,000- Monthly Contribution: $1,050
Wife Profile:- 32 year old- Monthly income: $5,000- CPF Available: $120,000- Monthly Contribution: $1,050
Portfolio Restructuring - Wife
Available Funds after $700k Investment 1br Purchase- Total CPF Available : $120,000 - $105,000 = $ 15,000- Cash Proceeds : $127,400 - $35,000 - $600
= $ 91,800- Cash Top Up : $2,240 - $1,050 = $1,190
$2,500 - $1,190 = $1,310 (monthly passive)
ComparisonAfter Sales of HDB Own 1 x $1.2m (Joint Purchase) Husband 1st Purchase $1.2m Wife 2nd Purchase $700k
Husband OA $ - $ - $ - NA
Husband CPF + accrued $ 160,000 $ - $ - NA
Monthly OA contribution $ 1,050 $ 1,050 $ 1,050 NA
Wife OA $ 10,000 $ 9,400 NA $ -
Wife CPF + accrued $ 110,000 $ - NA $ -
Monthly OA contribution $ 1,050 $ 1,050 NA $ 1,050
Stamp Duty NA $ 30,600 $ 30,600 $ 15,600
Oustanding loan $ 200,000 $ 900,000 $ 960,000 $ 560,000
Cash on Hand $ 200,000 $ 190,000 $ 127,400 $ 91,800
Cash Profits $ 238,000 NA
Loan Tenure 7 years 25 years 25 years 25 years
Monthly Instalment $ 2,606 $ 3,599 $ 3,839 $ 2,239
Cash TOP UP $ 506 $ 1,499 $ 2,789 $ 1,189
Rental Income NA No Chance NA $ 2,500
Passive Income NA No Chance NA $ 1,311
TOP Up per month Difference $ 1,499 $ 1,478
( $2789 - $1311 )
Summary
After having own 2 property
- Spare cash: $91,800
- Has 2 property that has capital appreciation in 5
years time
( $200,000 x 2 = $400,000 versus $200,000 x 1 )
- Able to stretch tenure again *
- Able to bring down mortgage *
What If …..
1) Interest Rates Goes Up
2) 5 year later sell at today price
3) Husband / Wife is Jobless
What If …..
1) Interest Rates Goes Up
Base on $960,000 loan, 25 years tenure
- 1.5% : $3,839- 3.5% : $4,805
Difference of $1,000 if 2% interest climb
Solutions:- Stretch Tenure- Bring Down Mortgage ( 2 years )
What If …..2) 5 year later sell at today price
Based on $700k 2nd condo purchase
D/P : $140,000Rental : $2,500Interest : $ 700Principal : $1,539Passive : $ 261
Assume 5 years laterTotal Principal = ( $1,539 x 12 x 5 ) = $92,340Total Passive = ( $261 x 12 x 5 ) = $15,660Total Savings = $108,000
FD for $140,000 ( based on 1% Per annum ) = $1,4005 years FD = $7,000
Vs
5 years Saving by Tenant = $108,000
What If …..
3) Husband / Wife is Jobless
Reserve Fund of $91,800 ( spare cash from sales proceeds)
Monthly Mortgage of $1.2m: $3,839
Monthly Mortgage of $700k: $2,239
Total Monthly Mortgage : $6,078
Can tied up to 1 year jobless period
CPF contribution
Thank You for Your time to view this report, do contact me if
you like to find out how you too can benefit from this
purchase
Millionaires become Millionaires not by
saving pennies, BUT by INVESTING in
REAL ESTATE