Buying A Property When You’re Young

Many young adults in Singapore envision themselves to own a property only after they are married. The first property that they are planning to buy is usually a Build-To-Order(BTO) HDB flat. It is cheaper than a private property and the government even provide you with grants. However, is BTO flat worth it over the long term? Are you able to make money from a HDB flat? If you are unable to get married, what are you going to do? What age are you going to purchase your first home?

I will explain to you why a condo is a much better choice for investment and wealth accumulation. I will also mention why you should buy a private property when you’re as young as possible. The post will also include methods that you can use to finance your private property.

Can I Actually Afford A Private Property?

It is a fact that not everyone can afford a private property due to the high prices. However, there are always methods to make it affordable for you. I will share with you ways to finance in the later section. If you plan well, it is doable. But first, keep an open mind, we will need to know the benefits and importance of purchasing a condo when we are young.

What Is The Rush To Purchase A Condo Now? 

The rush is that, right now, you have no baggage on you. What I mean is that, when we are young, we may not have found our soul mate yet. We may not have children yet. We may still be staying with our parents. This is so important because we have more capacity to invest. When you are older and you have to pay for your car, household expenses, children’s needs and wants, your family needs and wants, you will have little capacity to invest.

When you start young and invest in real estate, you gain wealth. You do not even have to use your own money to finance the property but rather using other people money. This wealth portion will be further explained in the later sections.

Forced Savings

singapore retirement property

Ask yourself this, how much have you saved over the course of your life? Is it easy to save money? Have you even record how much you have spent? Ever thought to yourself, if I have saved $100 every month my bank account would be… You have this urge to spend money on a “want” every month and after spending you regret telling yourself you will not do that again but end up repeating. We have many wants when we are young but who is going to force us to save?

When you buy a property, you pay mortgages every month, there is a certain amount you need to pay every month because you took a loan. By paying, you are actually saving up the money in the property. Later I will talk about how you may not even need to come up with the monthly payment. Saving up this money is so important because you do not want to end up 10 years later finding out that you do not have any savings at all. You cannot move on to the next stage in life and is always stuck in the rat race.

Building Up Your Net Worth

I have always wondered why people invest in a private property and after I understood this concept it finally made sense to me. We will talk about the majority of Singaporeans.

Let’s say your parents own a 5 room HDB worth $500K. What is their net worth right now? It should be $500K plus some savings or other investments.

What if your parents diligently paid for a condo and now the condo is worth $1.2 Million. What is their net worth right now? It should be $1.2 Million plus some savings or other investment.

Can you see the difference? When you tell yourself that you want to save more by buying a HDB, will you really save that extra money? In the end where has the money gone to? If you had diligently forced yourself to save in the condo, even if you do not have any investment you would be worth $1.2 Million.

Benefits Of A Private Property VS HDB

Can you buy a HDB whenever you want to? HDB is highly regulated, even if you can afford you may not even get the HDB you want. If you are single and below age 35, the choices are limited. Whereas for private property as long as you are 21 years of age your name can be in the private property as an owner.

Let’s say you are 25 this year, are you going to wait till you are 35 or when you get married. These few years you tell yourself that you will save up all you can, why not save up in the private property, you can even rent it out because you are staying with your parents at the moment, use your tenant’s money to co-save with you and fund for the property. You can also earn when the private property appreciates.

Limitations of A HDB

Real estate wealth planning Singapore

Look at our older generation, has HDB made them rich? Are they able to retire comfortably? They have a fully paid HDB but the money is all stuck in the property. If they need $10K, they will need to ask their children because the money is stuck in the property.

Compared to a private property, which is worth $1.2 Million, if you need the money you have a choice to downgrade, buy a $300K HDB and cash out $900K to use for your enjoyment.

HDB, A Controlled Property

You can never make it big with a HDB. Will you purchase a HDB worth $900K? HDB prices are always controlled by the government, it will never rise too high because it is a public housing. If you are a newlywed planning to buy a HDB, will you buy a BTO or a resale HDB? When Singapore homeownership rate is at 90%, the population is not rising and the government is continuously coming up with BTO’s, where are you going to find your buyers?

A private property is unregulated, the buyer pool is also larger, anyone can purchase a private property, even foreigners.

Property Timeline For Buying Property 

I need to emphasise greatly on the importance of time when buying a private property. If you can do it now, do it now. Would you want to pay for your mortgage at a very old age? The bank may not also loan you much if you are older. This reduces the use of leverage. Many owners realise the importance of a private property at an older age of 40 plus, but I do not want you to be that person. I want to path out the journey for you earlier so that you can have more choices in future.

You need to understand that when you buy a private property, you do not stick to the private property for life. The private property will help you to gain “money” or a better word is equity/capital. You use the private property to gain wealth and you use the wealth gained over the years to upgrade and restructure and gain even more assets. That is the reason why you have to start, or else, where do you find the capital?

Next section, I will share with you creative ways to finance the property.

How Can You Finance Your Private Property?

No investment is free of charge, same for real estate. The banks will not loan you 100% as such you will need to come up with some capital. The good thing is that you can make use of your CPF OA if you have it. You will also need to have an income to get a bank loan. If you are having a variable income, you need to file your income tax and have at least 1-year record of your income. This is to allow the bank to qualify you and lend you money.

Taking a loan is very important because real estate is very expensive, it is not wise to come up with full cash even if you have it. You want to leverage on the loan. You need proper planning, the suggestions given here are very brief and you will need in-depth financial calculation, it will be touched on during my personal consultation.

Using Your Own Money

If you are earning a salary or have the cash to fund for your property. Start paying for the property. In the later section, you will find out how you can use a tenant to fund for your property. Another way is that, if you can only loan up to 60%, the other 40% can be borrowed from your parents and partly paid by you. You will eventually return them the money. If you want your parent’s name in the property to get a larger loan, you may need to take note of additional buyer stamp duty.

Find A Partner

If your salary is too low to get the loan required, find another friend who understands property wealth creation, who wants to embark on this journey. The bank will loan you more because there is two person’s name in the property and both of your salaries added up is more. In this case, you will also be paying less for the property. This is a good start, starting small is better than not starting. Any returns will be split among your partners.

Using “Other People Money”

This section will be about using your tenant’s rental to fund for your property. Even though you have come up with the down payment, you may not need to pay for the mortgage payments. This is what I call using “other people money”. Since you and your partners are young, you would already have a place to stay right now. Therefore, the investment property can be rented out. This rental can be used to cover the mortgage payments. Even if the rental cannot match up to the mortgage payment you will still be earning money, learn why here. Furthermore, you only need to come up with a bit more because it is split with your partners. Over time, your property gains equity and more money will be stored in the property. Using the property to make money for you.


An investment in real estate is not to make you rich overnight. When you invest in real estate you make use of leverage and at the same time make use of the property to work for you, by renting it out. It is never to early to start, by starting early you start accumulating wealth. One concern that you may have is whether you can afford a private property. Contact me now, I can help you to do an in-depth financial analysis, at the same time clarify other doubts that you have and give you more real estate investment tips. Feel free to contact me.

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