SINGAPORE: Is it worth it to buy an old condo? A man in his 30s had the same dilemma; he said: “Found a beautiful apartment in Central area going for 1.2mil but it only has 55 years left on the lease. We are both in our 30s, have a combined income of about 12k per month, and live quite simply. No major/urgent plans to have kids, and we can see ourselves staying in it for a significant period. We’ve considered migrating before and will rent out if we do.”
Redditor red_flock gave some reminders about old condos, saying, “As the property ages, the maintenance costs become more and more spectacular, and depending on the MCST, it may be sneaky one time levies that you cannot predict. If this is a small development controlled by a few owners, then you dont even have a say.”
The Redditor who posted answered: “It’s a fairly big developer – mixed development too. For now, maintenance costs are quite low but agree that can’t predict what it would be over time.”
red_flock further advised, saying, “The developer worked on the project 40 years ago and couldnt care less now. The developer may still be managing the retail portion…. I cannot advise you since I dont know mixed developments, just walk in with your eyes open. If the MCST is controlled by a group of owners, you have no choice if they were to levy, say, 100k on all units to fix something you dont use.”
Another user kikababoo shared his opinion: “Not worthwhile imo. Low rental yield (especially net after expenses), ur rental income will be subject to income tax, the hassle of managing tenants. These r downsides I can think of. Unless u have a strong view over capital appreciation of that particular ppty, or u rly like that unit for ur own stay, I wouldn’t recommend doing so.”
So, is it worth it to buy an old condo? According to Ryan Ong from 99.co, there are five things you should consider when it comes to buying old condos.
5 Tips for Purchasing an Older Condo
1. Think if it’s an En-Bloc
- Check if the building can be sold.
- Watch out for taxes if it’s sold soon after you buy.
- Be careful with big renovations in case you lose money.
As Ryan Ong said: “So if you buy that old condo for, say, $700,000, and spend $60,000 renovating it, an en-bloc on the first year could cost you ($84,000 for the SSD + $60,000 in wasted renovations) = $144,000. Ouch.”
He added: “So while an en-bloc could mean a nice payout if you buy at the right time, it could also burn you if it happens too soon. Get a gauge of how close the owners are to selling, if en-bloc efforts are happening.”
2. Check for Leaks
- Look for leaks in your apartment.
- Make sure it’s not a big problem throughout the building.
3. Rental History Matters
- Find out who lived there before.
- If lots of people still want to live there, it’s a good sign!
4. Know the Rules and Area
- Learn about the building’s height limits and the area around it.
- More shops and businesses nearby can be good.
This simply means a more beneficial long-term.
5. Check your Financing Options
- Ask different banks about loans.
- Some banks might not lend much if the lease is short.
- You can talk to a mortgage broker for help finding a loan.
Purchasing an old condo can be rewarding, but knowing the risks and considerations should first come to mind.