Rent out HDB and stay in condo
 

Hi, I stumbled upon this interesting forum. I have an immediate question that I think is relevant here:

If I buy a condo, can I rent out my entire HDB flat and stay in my new condo?

Thanks in advance.

My advice is to do the opposite, however: Rent out your condo & stay in your HDB...

Reason being this: You fetch a better rental rate with a condo.

My 2 cents worth...

Yes, it's possible. You just need to get permission from HDB in advance. I believe there's also a certain minimum number of years of occupancy you're required to fulfill before you can rent out the whole flat, ie you need to stay in your flat for X number of years.

From this link: HDB InfoWEB : Subletting Your Flat / Room - Policies - Subletting of Whole Flat

I have a couple of good friends who are already doing this.

Thanks to all. The link is exactly what I'm looking for.

I plan to move to condo for a better quality of living - better security, good private facilities like gym and pool. At the same time, I wish to keep my HDB as there's still the very low-cost HPIS which is a form of life insurance. With the HPIS, it's as if my husband and I are each insured for a couple of hundred K. Now, speaking of this, does anyone know if the HPIS will be voided if we rent our flat out? Logical reasoning tells me no, unless there's some black and white stating this (I couldn't find any so far).

sorry i just started out and i'm not familiar with HDB matters.

what does HPIS stand for?

Very good plan indeed! I've invested previously in a condo (sold off since) and this never crossed my mind - move to condo (enjoy better living) and rent out HDB while keeping the HPS insurance. But this only works if you have sufficient moolah... ;)

Yes, my husband and I worked the sums. As our jobs are very stable, we're confident we have sufficient CPF contributions in the OA account to continue to pay for our HDB. We'll use our cash savings, supplemented with a little of our existing OA balances, to fund the down payment for the condo, borrowing the rest. For the monthly loan repayment, part of it will come from the rent we collect, and the rest will come from our pockets. :)

I just learned of a new "trick".

Some HDB upgraders are selling their flats now and renting a place to stay, in anticipation of a correction in condo prices.

Since HDB resale prices are at a record high, they sell to lock in the high cash over valuation (COV), collecting a tidy sum in cash. Their CPF accounts also get refunded with what they owe CPF (i.e. how much they have withdrawn + interest they could've earned, blah). And some of them may even get extra cash if there is remaining from the sales proceed after repaying CPF.

Condo prices on the other hand have been on the decline, but recently saw an upswing due to over-eager speculators.

What is not clear is whether condo prices can sustain this recovery. So the abovementioned upgraders are betting that the prices may correct after some time, especially post-hungry ghost season or when the IR opens with lacklustre visitor arrivals (like HK disneyland did when they opened).

So they rent a place to stay for the moment.

Once the condo prices fall to an acceptable level, these upgraders will buy and move in to their swanky new abodes.

Who says HDB dwellers are not savvy?

I also started a thread to talk about the crazy HDB record prices:
https://forums.salary.sg/investments-...ly-2009-a.html

Even better, a friend of mine is moving to stay with his parents!

I believe parental support compliments accumulation of wealth (despite the stigma... :P) heck, how did our Dick Lee become so great if not for parental support?

You have something against Dick Lee? Or just envious he's born with silver spoon? Btw, I like his Mad Chinaman album. He's damn talented.

why is everyone so sure of the demand in the rental market (hdb/condos/etc) in the coming years?

" angie why is everyone so sure of the demand in the rental market (hdb/condos/etc) in the coming years? "

Because garment says Singapore is the best place to live in the world and the whole world wants to come live in Singapore. Those foreigners who says they don't want to are just not truthful. More people = more demand for land and rental.

Easy. We have the TWO integrated resorts, F1 for the next 4 years, Youth Olympics, and soon, more funds in our Temasek Sovereign Fund which in the long term can generate respectable profits.

Even at this "worst" recession since independence (or since great depression depending on where you're from), our unemployment is only 3.3%. This shows our government is doing a superb job in making our economy extremely resilient.

Furthermore, look at the condo showroom crowds. The people can't be wrong. If they are wrong, they will be screwed. Will the government allow this to happen?

We should all stock up on stocks and property NOW when they are still cheap. When the economy recovers, we are sure to reap HUGE profits.

I am currently staying in an HDB massionette in Toa Payoh. The recent selling price of similar flats is now about $140K above what I purchased it for. I am still eligible to purchase a new HDB subsidised flat but will probably not be eligible in 1 or 2 years time due to the household income restrictions. I am considering the following options

1) Do nothing and hopefully the price of my flat will increase further
2) Buy a small condo and rent out my flat
3) Sell the flat and buy a smaller new subsidised flat

What would you do or are there any other better options? thanks for the advice.

If I am in your position, I will buy a small condo and rent it out. Use the rent to pay for (at least part of) the mortgage.

But really depends on your priorities in life. If you think you have slogged enough and want to "enjoy" some fruits of your labour. Rent out your flat, buy a condo to live in.

be conservative
 

I would pick (3). Since you are not a high income earner, it's better to be conservative. Do not overstretch. I'm of the view that the housing market - both HDB and condo - is frothy and bubbly now. Whether the bubble will burst soon is anyone's guess, but why take the risk? You're already up 140k and still have a shot at the second cherry bite. Take it!

My 2 cents.

i totally agree!
you are eligible for it before it expired. grab another new unit and start to make another 140k. unless you are enough with 140k you've made and life is not good with HDB.

Hpis
 

Hi Magdeline, HPIS will not void if you rent out your flat. HPIS from HDB follows the flat not the owner. It will expire if you sell your flat and you have to buy new one for your next flat at a higher premium due to older age or higher loan amount.

Hope this help.

Hpis
 

HPIS stand for Home Protection Insurance Scheme and is a mortgage-reducing insurance scheme which helps the insured members and their families pay off their outstanding housing loans in the event of the insured members' permanent incapacity or premature death before age 65.

Members who are using CPF to pay their monthly housing loan installments on their HDB/HUDC flat under the Public Housing Scheme (PHS) have to be insured under HPIS, provided they are in good health at the time they apply for cover. Members who are not using CPF to pay their monthly housing loan repayment may choose not to be insured. However it is not recommended as housing loan is usually the largest liability a person has.

You can read more on HPIS on the following CPF weblink:
CPF Board - Ask Us - Explore FAQ

Yes, I have friends doing that. There is nothing wrong, our parents and granny time they used to live together, more loving and concern, better relationships. Another thing you can accumulate passive income for better future for all, why not?So I vote that you rent out the condo, do your maths, be wise with money.. play cashflow game

Hi Guys,

Read this thread with interest. I am at he same crossroads. I will be qualified to rent out my 5 room flat come Feb 2010 (fulfilled the 5 years MOP) and have been thinking renting it out while i scout for a small boutique condo.

Just like more opinions on whether this is a wise move.

Regards

yes, it is a good choice to rent out your HDB unit/common to earn a decent income stream to supplement your lifestyle and needs.
I am doing that now and living with my parents. the extra cash is very useful.
also if u need an agent for this manner, drop a me msg at [email protected] because i am in this industry servicing clients ranging from students to working professionals.

Pls take note though...
to buy the 2nd property, you will have to fulfill CPF Multiple Property Rules .
It basically states:
- if you're below 55yo, you'll have to put half of Min Sum (around S$55k currently) in your CPF (combined OA & SA) before you can purchase the 2nd property. Note: Each husband & wife must put half of Min Sum (husband $55k, wife $55k)
- if you're 55yo and above, you'll have to put full Min Sum in your CPF

ONLY the excess of the amount can be used to finance your 2nd property.

If I don't satisfy the CPF requirement, can I still buy a condo, pay down payment with cash and pay installment in cash, stay in the condo and rent out the HDB? From what I heard and read so far, the answer seems to be yes. Can anyone confirm?

Confirmed - you can do all cash. I've a condo and HDB flat, condo is all cash.
Once your CPF hits the 50% Min sum (OA+SA+SRS = ~55k), you can get the bank (or actually lawfirm) to apply for 2nd property financing under CPF, which I did recently, thanks to some market run up and emptying my CPF into the market before buying flat earlier.

Thanks.
 

Thanks to all contributors. [Very insightful and relevant.]

My contribution: To remind the importance of Financial Ratios.
[Melting pot: Debt, equity, cashflow, Cost of capital, WACC, Gearing/leverage, etc]

Rhetorical question:
"Will you gamble the 'shirt' on your back". [In context: house where you are presently staying. Roof over your head.]