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Hi Stacked Homes, I am a fan of Stacked homes and really love your analysis in helping the readers decide on their futures homes. I hope you can help me and my husband too on our next phase of life. Current Situation: Options I’m Considering: Considerations: Request: Thank you so much in advance for your advice.  Regards, Hi there, We’re glad you enjoy our content and thank you for writing in. Considering that you’re planning to retire soon, we assume this next property will be your permanent residence. There are different perspectives on this, depending on whether you have children and are thinking about legacy planning. Between an HDB flat and a private property, inheriting the latter is generally easier. If legacy planning is a priority, you might also want to consider the age of the property to ensure it retains its value over time. However, if legacy planning is not a concern, the decision becomes simpler. In this case, choose a property that you prefer and that allows you to enjoy your retirement comfortably. After all, you’ve worked hard for it! Since we don’t have your income details, we’ll assume that the options you’ve chosen can be paid for based on the proceeds of your flat and that both of you have met your Full Retirement Sum (FRS) in your CPF. Now before we run through each option, we want to highlight that you could, at some point, engage in the . This scheme is eligible if you are aged 65 and older, and it applies to all flat types. Undergoing this scheme means that you must sell at least 20 years of the lease back to HDB to raise. However, take note of the eligibility conditions such as meeting the age requirements and also the Minimum Occupancy Period. It cannot be done right away, but once your MOP is up, you would be eligible for this scheme that will allow you to raise more cash for your retirement. We suppose this is a huge benefit of purchasing an HDB, as you have the flexibility to monetise your flat. You can read more on our thoughts of the . We will now run through the numbers for the six options you are considering and address your considerations for each of them. Here are the median 3-room HDB resale prices for Q1 2024.  Since you did not mention any preferred HDB town, let’s be conservative and assume the highest cost option – which is to stay in the Central Area. This way, your costs should only go lower. For calculation purposes, we will use a 10-year holding period.  Here are the potential costs incurred.  While you have mentioned wanting to rent out the property if there is a possibility of having separate living areas for you and the tenants, this would not be achievable with a 3-room HDB flat. Therefore, we assume that in this scenario, you will not be renting out the extra bedroom. Considerations that you have: These are the prices for the last BTO launch in February this year: The prices will differ depending on which location and the unit size that you intend to purchase.  There are a few factors to consider with this option.  However, if you’re considering a 2-room Flexi unit and have married children, you can apply under the Senior Priority Scheme (SPS) which will give you greater priority if the flat you’re applying for is within 4 km of your current flat or if it’s within 4 km of your married child’s property.  At least 40% of 2-room Flexi flats are set aside for seniors and half of these are for eligible seniors under the SPS. Do note that if you’re buying a unit near your children, they will have to continue staying in their property for the duration of your flat’s Minimum Occupation Period (MOP). Anyway, we would also avoid looking at 2-room flexi flats which are more suited to 1 occupant staying. It’s small and provides little privacy for both of you. Some cons of this approach are: For calculation purposes, let’s assume that you purchase a 3-room flat for $250,000 and that the waiting time is 4 years. During this period, you will continue to reside in your current property. The considerations for this option are the same as buying a resale 3-room HDB as mentioned above. However, the difference is in the financial implications and feasibility. In the BTO case, you’ll be stuck with your current residence while you wait for the BTO to be ready. This means you cannot unlock your current flat’s value until then. This can be seen as less efficient since your cash is tied up in the property rather than being invested elsewhere. And if you truly do not value the extra space of your 5-room flat now, waiting further means losing out on returns elsewhere. At the moment, there are three new launch Executive Condominiums (ECs) available: North Gaia in Yishun, , and in Bukit Batok. Among these, North Gaia offers the most affordable units, starting at nearly $1.2M for a 969 sq ft 3-bedroom unit. We don’t know what your finances look like, but the median resale flat price of a 5-room flat in Ang Mo Kio is $905,000. If your flat is fully paid up and you sell it, you’ll still have to top up $295,000 (we’ve assumed you’re not taking a loan since the limit is at 65 and you’re only a couple of years short on this). Since we have not factored in any additional CPF or cash savings you may have, we will assume for this calculation that you have sufficient funds for the purchase. As you are a second-timer, the resale levy will also be payable in this scenario. Regarding payment, purchasing an EC differs slightly from buying a BTO flat. For a BTO, you need to pay an option fee, a 20-25% deposit depending on whether you are taking an HDB or bank loan, and the Buyer’s Stamp Duty (BSD). The remaining payments or loan disbursements occur upon key collection. For a new EC, similar to a BTO, you must pay the 25% deposit and the BSD. However, the remaining payments are made progressively as the project is constructed. If you require the funds from selling your existing property, you may need to rent while waiting for the project to be completed. This could be extremely inconvenient as it means having to move twice. Once to your rental unit, and once again when you move in. Alternatively, you could opt for a Deferred Payment Scheme (DPS), where the remaining payment is made upon the project’s Temporary Occupation Permit (TOP). Note that not all developers offer DPS, and purchasing under DPS usually involves a slightly higher purchase price compared to the Progressive Payment Scheme (PPS). However, DPS can save you the hassle of moving twice and incurring additional rental expenses. Assuming you purchase a unit under the DPS at a 4% premium, a $1.2M unit would cost $1.248M. We will also assume a waiting period of four years for the EC, during which you will continue to reside in your HDB flat. Considerations that you have: You specifically mentioned Hougang Avenue 1, so here are some of the recent transactions along this stretch: The prices of these Maisonettes are quite similar to 5-room flat prices in Ang Mo Kio This is a typical 5-room maisonette floor plan. On the upper level, there are usually 2 common bedrooms and a master bedroom. Let’s say you were to rent the common rooms at $800 each and the master at $1,200. As before, we will presume a 10-year holding period. Considerations that you have: Unfortunately, there’s no official classification for “Jumbo”, but the closest you can find is “Adjoined Flats” in HDB’s transaction database, so here are some of these recent transactions to give you an idea of their prices: Looking at the average price of adjoined flats over the last 6 months, the average price comes up to around $926,650. We will assume this to be the purchase price.  This is a typical floor plan for a jumbo unit made up of two adjoining 3-room flats.  Based on the Q1 2024 HDB rental statistics, the average rent for a 3-room flat is at $3,064. We will assume this to be the rental for one side of the property.  Considerations that you have: As mentioned earlier, it seems you only prefer renting out the space if there is some kind of separation between you and the tenants. Therefore, we presume renting out the extra bedrooms in your current flat is not an option you are considering. In this case, it makes more sense to cash out of the property rather than sitting on the funds and holding on to a flat that is too large for you to maintain. As mentioned, this is less efficient especially if you do not appreciate the larger space. Let’s do a quick summary of the 5 options you’re considering. In this summary, we’ll also assume your 5-room flat is fully paid and is one of the older blocks which comes to around $750,000 in Ang Mo Kio. This allows us to see the hypothetical cash you have left which you can invest, or the difference you need to top-up: First off, we don’t think buying a new EC is feasible here. You mentioned “financial implications” as one factor, so we assume that the cost is important. Judging from your current residence, a large top-up would be required over your selling price (and this assumes the property is paid off too). You’ll also be faced with a monthly maintenance fee of over $300 (estimated) which is quite the opposite of passive income during retirement. Even if we consider legacy planning in mind, the financial implications outweigh the benefit of passing down a private property to your children (if any). Therefore, this would be our last pick among the five options. The only reason this would be a good option is if you intend to sell right after MOP, allowing you to unlock capital gains. However, you’ll be approaching your 70s during this time and we assume moving homes at that age is the last thing on your mind. Let’s now talk about the Maisonette/Jumbo options. Purchasing a 5-room maisonette or jumbo unit would provide a stream of passive income, but these properties are more expensive and could incur substantial renovation costs if major works are needed. A higher property price also attracts larger taxes, both property tax and stamp duties. Additionally, managing tenants can be a hassle. In your older age, you might not want to deal with the renovations and maintenance.  Lastly, the remaining funds (including rental income) are not higher than the first two options of rightsizing. The benefit of investing in property in Singapore is the price stability and the ability to take a loan. Since you won’t be taking a loan, we don’t think it makes sense to allocate your resources to earning a return on rental given the increased cost of ownership over investing the spare cash elsewhere. This leaves us with the first two options. Of the rightsizing options, applying for a BTO would make sense as it would leave you with a considerable amount of funds for your retirement. The main issue here is that you’d be sitting on your existing flat for another 4-5 years. This is a considerable amount of time to not unlock your flat’s value. Applying for a BTO could also be challenging due to the time it takes to get one, resulting in more time wasted locked up in your 5-room flat. You might be wondering – wouldn’t the BTO allow you to earn the most later on? This is true, however, we’re inclined to think that this is going to be your last property move as mentioned. After all, having to move when you’re 70 can be stressful. You can’t take a home equity loan out of an HDB too, so there’s no way to unlock the growth unless you sell the flat which is not something you intend to do. Thus, this isn’t a consideration in our opinion. This finally leaves us with the first option of rightsizing to a 3-room flat which we think is the best choice out of the five. Although this option does not provide rental income, it does free up capital from your existing 5-room flat so that you can invest this elsewhere for passive income. You can also leave it in your CPF Retirement Account (RA), earning an interest of 4% annually. This can support your retirement and eliminates the need to manage tenants. Additionally, a smaller space will be easier to maintain, and as mentioned, unless you need the extra space in the living and the extra bedroom, there isn’t that much more difference in the quality of life. This is very subjective though, and something only you can decide. If this is a concern, you could consider a resale 4-room flat in a non-mature estate. You can still unlock a tidy sum from your existing 5-room flat in Ang Mo Kio and decide to either knock the walls of one bedroom down to create a larger living area or have that extra bedroom. We hope that our analysis will help you in your decision-making. If you’d like to get in touch for a more in-depth consultation, you can do so .