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Hi,  Would like to seek your advice.  I would like to buy a property for rental income now, and in future capital appreciation/to stay.  Im currently staying with a friend and doesn’t need a place. In future, if I need to move out, I would like to stay at Bedok Central Area.  I’m currently 47 with a stable job but would prefer not to take a loan. If need be, very small loan.  I have about near to $600k in my cpf and about $1.5m cash.  I’m wondering which is a better financial decision. To buy a hdb or a private condo so that I can earn rental now and in future, for capital appreciation or to stay. And whether buying Bedok central is a good decision as the price is high compared to other nearby areas.  Thank you.  Yours Sincerely, Hi there, When considering property investment, it’s important to recognise the dual benefits of rental income and potential capital appreciation. Traditionally, leveraging a loan to purchase property allows investors to maximise their returns. However, in today’s environment of high interest rates, the cost of borrowing has increased significantly. This makes the prospect of paying for a property in cash more appealing if you have the means, as it avoids the burden of high-interest payments and reduces financial risk. Your situation is quite favourable with nearly $600k in CPF and $1.5m in cash. Given your preference to avoid substantial loans and your interest in generating rental income while planning for future capital appreciation or personal residence, there are a few key considerations to address. Since you prefer not to take a loan, we’ll assume your budget is $2M after reserving $100K for the Buyer’s Stamp Duty (BSD) and other expenses. Let’s begin by looking at the performance of properties in Bedok Central. When considering private condominiums in the area, there are only two options: Bedok Residences and . The latter is a new launch expected to be completed in 2026, but it is nearly sold out, with the remaining units exceeding your budget. Therefore, we will just be looking at Bedok Residences. The average growth rate for Bedok Residences appears subpar compared to other 99-year leasehold non-landed properties. This is mainly due to the price drop from 2015 to 2016. However, when you look at the transactions more closely, it doesn’t quite paint the full picture. In 2015, there were five transactions, four of which involved smaller units that typically have a higher price per square foot (PSF). In 2016, there were just four transactions, two of which were larger units with a lower PSF. This discrepancy could explain the significant drop. As a result, it’s hard to say that this accurately represents its price movements due to the low transaction volume. Apart from this period, prices have been moving in line with the overall market. The average transacted price PSF for Sky Eden is $2,118, which is considerably higher than that of Bedok Residences. Given that they share the same convenience and amenities, the demand for Bedok Residences is likely to remain strong. You also mentioned the high prices at Bedok Central and whether it’s safe to purchase. Here’s a look at the $PSF of resale transactions since 2023 Q2 till now: If we look at District 16, you’ll find that it has an average $PSF of around $1,400+ over the past year. This is lower than the average across Singapore across all periods. As such, we wouldn’t say that Bedok is priced highly. Its maturity and large HDB population would also provide support for private condos in the area. Since you mentioned that you plan to rent out the property in the initial years, let’s also look at its rental yield. With a $2M budget, you can afford a 2 or 3-bedroom unit. Here are some recent transactions: 2-bedroom units 3-bedroom units Based on rental transactions from February to April 2024, the average rent for a 2-bedroom unit is $4,334, and $5,857 for a 3-bedroom unit. Using the average sale price from the past year (May 2023 – May 2024), the rental yield is approximately 3.51% for a 2-bedroom and 3.83% for a 3-bedroom unit, which is relatively decent. Now, let’s move on to HDBs. Since you’ve mentioned capital appreciation, we’ll focus on the newer clusters in the area to reduce the effect of depreciation on price. Within 15 minutes of Bedok MRT station, there are only two clusters completed after 2000: Linear Green, completed in 2010, and Ping Yi Greens, completed in 2016. Since Ping Yi Greens only recently met its Minimum Occupation Period (MOP), there isn’t much historical data available, so we will focus on Linear Green. The table shows that Linear Green’s average growth rate is on par with HDBs across the island and better than those in Bedok. Its location is advantageous, being less than a 5-minute walk from all the action and the youngest cluster this close to the MRT station and amenities. With your budget, you can purchase any unit type here – from 3-room to 5-room flats. Next, let’s examine its rental yield. These are some of the recent transactions: 3-room flat 4-room flat 5-room flat Based on rental transactions from February to April 2024, the average rent is $2,813 for a 3-room flat, $3,342 for a 4-room flat, and $3,950 for a 5-room flat. Using the average sale price from the past year (May 2023 – May 2024), the rental yield is 5.99% for a 3-room flat, 4.87% for a 4-room flat, and 4.82% for a 5-room flat. HDBs typically have a higher rental yield compared to private properties. However, there are restrictions, such as being unable to rent out the entire unit until it reaches its Minimum Occupation Period (MOP). For the first 5 years, you can only rent out the additional bedrooms (eg. if it’s a 4-room flat, you can only rent out 2 bedrooms), which means the property is not maximising its full rental potential.  With a better understanding of how properties in Bedok Central are performing, let’s examine the costs involved for the two property types. For calculation purposes, let’s assume you purchase a 3-bedroom unit at the average price of $1,836,000 (based on the past year) and rent it out for $5,857 per month. We will consider a 10-year holding period, during which you rent out the property for the first 5 years and live in it for the following 5 years. Costs involved For calculation purposes, let’s assume you purchase a 4-room flat at the average price of $823,732 (based on the past year) and rent out two of the bedrooms for $1,000 per month each. As before, we’ll consider a 10-year holding period, with you renting out the bedrooms for the first 5 years and having the place to yourself for the next 5 years. As mentioned at the beginning, when it comes to property investment, one advantage is the ability to leverage a loan. However, given the current high-interest environment, it might be beneficial to avoid taking a loan. In both scenarios, even if you only rent out the property for 5 years, you will still see a decent amount of profit since you’re not incurring any interest expense. With the first option of buying a condo, although the gains are higher, the initial outlay is also greater. Another option to consider is buying an investment property first (not necessarily in Bedok Central) with a good rental yield. Later, when you decide to move into a place of your own, you can purchase a property in Bedok Central. If that property is going to be your forever home, you might even consider an older flat since lease decay won’t be an issue for you. The investment property can be in any location as long as the rental yield is good and there’s good demand for such a property so that you do not face issues when trying to sell it later. For calculation purposes, let’s assume you purchase a 3-bedroom unit at Bedok Residences and rent it out for 5 years before buying a 4-room HDB in Bedok Central for your own stay. Note that this will require a 15-month wait-out period as you’re not yet 55 years old (though this rule may not apply to you by then). We will also assume you can continue staying at your friend’s place during this time, and that you’ll sell Bedok Residences at the same price you bought it for. Bedok Residences purchase Costs involved  Linear Green 4-room flat purchase Costs involved Total gains if you were to take this pathway: $177,358 – $25,727 = $151,631 The table indicates that the final option, which involves initially purchasing an investment property to rent out before selling it to acquire an HDB in your desired location, has the potential for the highest gains and leaves you with the most cash on hand, which can be allocated to other investments. In the first option, although there may be potential for appreciation with the condo, this can only be realised upon selling the property. Therefore, if the condo is intended to be your forever home, you will be sitting on these potential profits and have a lower amount of cash at your disposal. This plan makes sense if you’re looking to cash out and downgrade to a smaller home later on, otherwise, its full potential will not be realised. In the second option, the cost is lower, but you cannot maximise your rental income in the first 5 years, as only the additional bedrooms can be rented out until the property reaches its MOP. Regardless, you do have a sizeable amount of cash that can be invested for the long haul. The final option offers the best of both worlds, especially since alternative accommodation is available and the 15-month wait-out period may not be a significant concern. With this option, you can benefit from the rental yield of your investment property, cash out from it, and purchase a more affordable property in your preferred location. In our calculations, we assumed the purchase of an HDB at $800K. If you were to buy one of the older HDBs, the remaining cash on hand would be even higher. This option would be most favourable if your intention is to make the HDB your permanent residence without selling it. Ultimately, when it comes to making money here, there’s no right or wrong. There’s safety in all three options. The rest boils down to: Since you’re not taking a loan, you’ll not be taking on any leverage with property which is the huge benefit of buying property, especially in a low interest rate environment. As such, it’s a question of how you want to allocate your cash – do you think it can grow more with alternative investments? If you could achieve a year-on-year growth of 7%-10% over the long term, that would likely outperform your condo. You wouldn’t have to go through the hassle of selling your property to unlock its growth in the future too. If you’d like to get in touch for a more in-depth consultation, you can do so .