Facing the ultimate dilemma: Do I go for an existing resale condo or a brand-new one fresh from the TOP date? But before diving into the factors, there's a crucial decision: Are you buying for your own stay or as an investment? The first step sets the tone for the rest of your real estate journey.
Do you plan to live in the house or buy it as an investment?
Are you looking for a place to call home or aiming for a solid investment? Knowing your intention is crucial in this major life decision. Your property purchase journey will be smoother with a clear direction and goal. Why? Because it determines whether a new launch or resale condo aligns better with your needs. Clarify your purpose, and the path becomes clearer.
When purchasing a house for personal use
If you're buying a home for yourself, think long-term. Anticipate life changes like a new addition to the family or elderly parents moving in. Whether it's a new launch or resale, ensure your chosen home has enough space to accommodate everyone comfortably. Plan for the future, and let your home grow with you.
When choosing a home, think about the neighborhood too. Quiet areas might be farther from town centers, potentially bringing your child closer to school but moving you farther from work. Living closer to city centers might have its drawbacks. Consider the balance between proximity to school, work, and the lifestyle you desire when deciding on the right neighborhood.
When purchasing a house as an investment
When buying an investment property, the game changes. Your priority shifts to checking if the property can generate steady rental income – payments when you lease it out. Rental yield, indicating the annual rental income as a percentage of the property's price, becomes crucial. The focus is on financial returns rather than personal comfort.
Understanding your intentions – own-stay or investment – is crucial in the property-buying journey. It guides your choice between a new launch or a resale condo based on your needs.
Additionally, consider the capital growth potential of the area. Capital appreciation, the increase in property value over time, is key. Lower purchase prices often mean a higher potential upside, emphasizing the importance of finding a property with a favorable entry price point.
These are some other factors that are crucial in making an informed decision. Here's a quick rundown of what to consider:
Location: Choose a spot that suits your lifestyle and needs.
Property Tenure: Understand the lease duration and implications.
Public Transport: Accessible modes and proximity to MRT stations matter.
Condition: Evaluate the unit's state and the condition of facilities.
Amenities: Nearby schools, malls, and conveniences are vital.
Infrastructure Developments: Note any ongoing or upcoming projects.
URA Master Plan: Check urban planning for potential changes.
Once you've got your priorities straight, weigh the pros and cons of resale or new launch condos based on your purpose – own-stay or investment.
Benefits and drawbacks of purchasing a new launch condo:
Benefits of purchasing a new launch condo:
Developer Incentives: Developers often offer attractive deals, like luxurious furnishings and exclusive discounts, making new launches enticing from the get-go.
Fresh Start: No historical rental data means you set the benchmark for selling and rental prices. Requires seasoned investors with good real estate acumen.
Brand New Condition: Everything is pristine and untouched, from fixtures to facilities. Unlike resale condos, gym equipment and swimming pools are shiny and unused. The appeal lies in the newness.
Drawbacks of purchasing a new launch condo:
Financial Lockup: Securing a loan means being financially locked up before experiencing life in your new home.
Longer Waiting Period: Patience is key. It takes two to three years for your new home to be completed. If urgent relocation is on your agenda, a new launch might not fit.
Rental Competition: Expect competition from other investors for tenants. Prices might take time to stabilize, and correction could be gradual.
Benefits and drawbacks of buying a resale condo
Benefits of purchasing a resale condo:
What You See Is What You Get: No need to visualize, as the resale condo is already there. Prospective buyers get a clear understanding of the layout, repair costs, and furnishings.
Accurate Rental Rates: Existing rental rates offer financial planning insights and help calculate returns. Past rental transactions, accessible through property agents, aid in estimating vacancy rates.
Ready to Rent or Move-In Condition: Immediate move-in or rental possibilities. No waiting for a Temporary Occupancy Permit (TOP), which can take two years for new launches. The resale condo might even come with existing tenants if the previous owner was a landlord.
When it comes to resale condos, no need to play the visualization game – what you see is what you get. For many investors, using rental income to cover mortgage payments is the strategy. The faster the property is rented out, the smoother it is to cover or subsidize loans. A clear, tangible start with less guesswork.
Drawbacks of purchasing a resale condo:
Higher Upfront Cost for Immediate Repairs: No one-year defects-liability period like new launches. Older resale condos are more likely to have maintenance issues, leading to higher immediate repair costs.
Missing Out on Developer Incentives: Developers often offer discounts, vouchers, or incentives for early buyers. Missing these incentives can impact the overall cost of purchasing a resale condo.
"Used" Condition: Resale condos come in a "used" condition. Unlike the brand-new appeal of new launches, resale units might show signs of wear and tear. Pristine conditions and modern features are not guaranteed.
Whether it's a resale or a new launch, home repairs and potential issues can be concerns. Dig into the development's history, checking for regular facility maintenance and addressing complaints.