Agent Sha helps couple with median combined income exchange their HDB flat for luxurious condo unit

Making real estate investments to reap profits when you are already struggling with day-to-day expenses might seem like a distant dream. But what if this is not the impossible feat that you think it is?

Agent Sha, Senior Associate Marketing Director of PropNex, says that middle-class earners can own multiple properties without incurring any additional financial strain, as long as they have the right guidance and a proper plan in place. Previously the owner of a start-up specialising in Real Estate Data Analytics, Agent Sha is now a Singapore-based asset progression realtor who helps clients achieve their financial goals. He recalls one memorable case that has stuck with him till today.

The case dates back to three years ago, when a former client introduced Agent Sha to Mr. & Mrs. Lawrence. Like many others, the married couple sought to lay a foundation of financial stability for their family’s future. However, they were hesitant to capitalise on a new investment strategy due to many understandable questions, concerns and fears.

The Problem: An “Unattainable” Dream

Mr. & Mrs. Lawrence had been living in a 5-room HDB flat in Sengkang ever since getting married 12 years ago. With a combined household income of $7,350 and three young children to raise, they struggled to put aside significant cash savings due to the rising costs of living.

In fact, 80% of their life savings actually went into their HDB property — a property that had stopped appreciating over the past five years — leaving Mr. & Mrs. Lawrence feeling financially trapped.

Although surrounding private properties were increasing in value year after year, Mr. & Mrs. Lawrence were focused solely on paying the bills and providing for their children. Therefore, the couple assumed that profitable investment in private property would always remain unattainable for them.

In 2017, Mr. Lawrence was shocked to learn that one of his colleagues, who was working under him and drawing a lower salary, had sold a private property. His colleague was walking away with $220,000 in cash profits after only four years.

Witnessing his colleague’s good fortune led Mr. Lawrence to wonder whether he and his wife had the means to invest in private property. However, his motivation quickly faded when he learned about the seemingly sizable downpayment and overwhelming monthly instalments that a private property investment would require. Discouraged, he dropped the idea once more.

A few months later, Mr. Lawrence saw that one of his neighbours, Mr. William, was moving to a 3-bedroom unit in a luxurious private development. Again, Mr. Lawrence wondered how his neighbour could afford the purchase without significant financial stress. When asked about how this investment was possible, Mr. William referred Mr. Lawrence to Agent Sha.

Meeting with Agent Sha in 2017 was a turning point for the couple, who shared with him some of the most common fears among HDB owners. When it came to investing in private property, Mr. & Mrs. Lawrence were concerned about the high downpayment, their inability to pay higher monthly instalments and possibly over-stretching their finances beyond their comfort zone. They also wondered what would happen if their salary dropped, if they lost their jobs or if the cost of living kept increasing.

At 45 years old and with three children depending on them, the couple did not want to risk entering into a new purchase. Furthermore, their current HDB would be fully paid in just three years, allowing them to finally be “debt-free.” The risk seemed too high to justify such a bold move. These fears prevented Mr. & Mrs. Lawrence from exploring investments beyond their HDB property.

The Solution: A Brighter Future for the Lawrence Family

Having worked with other couples just like Mr. & Mrs. Lawrence, Agent Sha understood their varied concerns and desire to make a positive investment move.

Agent Sha recalled: “During our first consultation, I vowed to give Mr. & Mrs. Lawrence solutions rather than excuses for not moving forward, and I delivered on that promise.”

He first begun by analysing the couple’s financial status. Because they had only $28,000 in cash savings, Agent Sha was determined to come up with a solution that would not require the couple to touch their cash reserves.

“I went back to their biggest sleeping asset: their HDB flat,” said Agent Sha. “I reviewed its performance and found that, just as Mr. Lawrence had said, it had stopped appreciating over the past five years. In conducting more research, I was able to determine the reason for his HDB’s plateau and found that the property could depreciate over the coming years as well.”

A meticulous plan by Agent Sha allowed Mr. & Mrs. Lawrence to move forward in peace and excitement about their financial future. He also suggested that they unlock the true potential of their 5-room HDB flat in Sengkang. Additionally, in-depth financial calculations by Agent Sha helped him to find the ideal solution that addressed the couple’s deep-seated concerns.

Mr. & Mrs. Lawrence soon found themselves upgraded into a new home: A 3-bedroom condominium unit in Punggol. Not only did they not have to dip into their savings for the downpayment, their monthly instalments were also reduced by almost 27% through an unconventional tweak. This was despite them borrowing virtually the same amount for their new loan. Agent Sha also helped the couple to generate close to $180,000 in reserve funds using his field-tested strategies.

These reserve funds, coupled with Mr. Lawrence’s mandatory Central Provident Fund (CPF) monthly contributions, allowed the couple to service their monthly instalments for the next ten years without relinquishing any cash from their own pockets.

The Results: Financial Peace and Security

With a solid and workable plan in place, Mr. & Mrs. Lawrence were able to make a sound investment in their family’s future. They exchanged their HDB flat for a newer 3-bedroom premium unit in a luxurious condo development in Punggol without touching their savings. Nor do they have to worry about paying their monthly instalments for the next 10 years. Instead, they can spend the next decade saving for their retirement with peace of mind, knowing that their property is working for them instead of against them.

During an annual review with Agent Sha in July 2019, it was determined that the couple’s Punggol property had risen by $175,000 in valuation in the two years since they started their investment. Mr. & Mrs. Lawrence are now preparing to invest in a second property without paying the Additional Buyer Stamp Duty (ABSD) by utilising the clear asset progression roadmap that Agent Sha has planned for them.

Agent Sha shared: “Mr. & Mrs. Lawrence are grateful that they decided to explore their options -- a decision which has led to immeasurable financial peace and security for them and their family.”

Disclaimer: The views, suggestions and opinions expressed here are the sole responsibility of the experts. No Forbes India journalist was involved in the writing and production of this article.