Someday, I’m gonna sit my 4-year old son on my lap and tell him, “Son, there comes a time in every boy’s life when he becomes a man. For me, that was in October 2015 when I bought my first house.”
My son will look at me with pleading eyes and go, “No dad, not that story again! I wanna go watch X-Men.” But I’ll simply ignore him and launch into a long monologue about my life, How I Met Your Mother-stye.
Sooooo I just got the keys to my resale flat last week. It’s a crazy significant milestone, so I wanted to share this special life chapter with you.
You might be curious: Why did I choose a resale flat over a BTO?
Does it mean that resale flats are “better” than BTOs? ‘Course not! Everyone has different needs and expectations. But if you’re in the midst of making that Big Housing Decision, it’s good to have as many perspectives as possible.
So here’s why my fiancee and I chose a resale flat over a BTO:
1. We Had A Budget
Before we started our house hunt, I had very a specific criteria in mind: Everything (taxes, renovation, furniture, etc) had to fit within a $500K budget. This isn’t some magic number; it was just something I could comfortably afford. It might be too low or too high for you.
But why such a conservative budget? Isn’t your first house an “investment”? No, it’s not:
- If you sell your house, you’ll need to buy another one to live in (it’s amazing how virtually nobodythinks about this)
- It’s really difficult to “trade down”, so you’ll likely use the money to buy an even more expensive house
Aren’t resale flats more expensive than BTOs? Well, yes, and no.
Yes, because BTOs are subsidised by the government. No, because as first-time buyers living near our parents, we qualified for the CPF Family Housing Grant and the Proximity Housing Grant. (The former doesn’t apply to BTOs because they’re already subsidised).
With the grants in place, we were able to significantly reduce the cost of our home. In fact, we got it at a price that was waaaaaayyyy lower than several BTO projects we were considering.
2. We Wanted To Live Near An MRT Station
My fiancee hates waiting for buses. Whenever she comes over to my place (which isn’t near an MRT station), she looks like she just walked through the Three Kingdoms.
So she really, really, really wanted to live near an MRT station. Her criteria? “No longer than 7 mins or 500m, whichever is closer”. I know.
In Marriage Preparation Course, I learnt that it’s critical to listen to my future spouse. Better to give her what she wants now than to suffer 40 years of whacking because she’s frustrated from taking the bus.
In all seriousness, living near an MRT station rocks. It means easy access to supermarkets, the library, coffee shops, and the occasional pasar-malam. Ramly Burger ftw! My fiancee’s dad joked that we don’t need a storeroom because our “storeroom” is the 24-hour NTUC which is 5 mins walk away.
It’s also good for the kids so that he/she doesn’t have to take 16 hours to come back from school.
And that’s the great thing about a resale flat: You get to choose your location. You get to decide where you wanna be on the convenience/price trade-off.
3. We Wanted To Live There For The Long-Term
The whole housing process is a pain in the butt. The whole thing – from the house-hunting, to the negotiations, to the renovations, etc – is needlessly annoying and frustrating. Not to mention… expensive!
Which is why we decided that we’re not moving anytime soon. It means that this needs to be a place we could live in for the next 20, 30, 40 years.
That also means making enough room for kids, in case they happen.
BTO flats are small. I’m don’t say it in a condescending way – they’re objectively smaller than the older resale flats. A 4-room BTO flat usually has 3 bedrooms, but many couples choose to knock down one wall because they feel the Master bedroom is too claustrophobic. That leaves just one bedroom for kids, which isn’t enough if you have a boy and a girl who want their own rooms.
Buying an older resale flat means that we comfortably have 3 bedrooms, enough for one kid’s bedroom and one study, or two kids. But if we end up having quintuplets or something, that’s another story…
4. We Had A Time Frame
We all know the joke about how Singaporeans propose by asking, “Wanna apply for a HDB flat?”.
I didn’t want our marriage decision to be influenced by an impending house, so I deferred the house-hunting to after the proposal. You know, like how the rest of the world does it.
The downside of that is that we had wait 3 years-ish for BTOs to be completed. Which meant that we either had to live with our future in-laws or rent. We didn’t wanna trouble our parents, and renting is expensive, so we decided to go with a resale flat. That also gave us enough time to complete the renovation before the wedding and move in.
More importantly, this gives me 6 months to learn how to iron my shirts more efficiently and cook a decent meal. I know, I know, I’m completely useless around the house. Not proud of it.
The Biggest Financial Decision Of Your Life
So there you have it, the 4 reasons why we eventually chose a resale flat over a BTO flat. Again, resale flats aren’t necessarily “better” than a BTOs – it all depends on your needs.
Maybe this is me justifying why I spent a whole chunk of my life savings. I don’t know. It’s hard to step outside of your own biases. But we’re happy with our purchase from all angles, and it’s hard to argue with that.
So if you’re in the midst of making probably the biggest financial decision of your life, it’s good to consider all options and not blindly apply for BTOs just because all your friends are doing it.
That way, in 10 years’ time, you’ll get to sit your kids on your lap and bore them a story of how you made a great housing decision too.
P.S: Which do you prefer: Resale or BTO? If you already own a house, I’m curious about what drove your decision. Let me know in the comments below – I read every one.
Image credits: kirksiang, bradipo, gunman47, pedrosimoes7, udithawix,
Good read. Am contemplating resale as well. But resale in my ideal location aka my estate costs around 600k-800k. probably have to relook at other areas.
Keep looking! You never know where the market might go in the next few years 🙂
Lionel I think you are taking a lot of risk putting out age old spousal rule of thumb for discussion. The 24 hour NTUC IS A BIG PLUS. i think at the end of the day if you are going to live there for long, and you know what you want, thought through a few scenarios, it is good. The subsidies would be what will go into your renovations. Hopefully the flat is not too run down.
Hahaha I made sure to check with my fiancee before I published that post 😀
Yeah bro, we also just our keys in late Oct, a resale flat (30 yrs old) in Bedok area. Reno cost is a lil higher compared to bto, but we really like the convenience of mature estate and serene surrounding!
Nice! 🙂
My fiancé and I are on the way to owning a resale flat. The biggest reason was that we didn’t want to wait a few years to get a BTO. We felt that it’s easier starting fresh after our wedding.
Congrats on getting your keys by the way! 🙂 did you manage to get an ID to renovate your new place?
Congrats on getting your resale flat as well! I’m in the midst of finalising an ID to work with (finally!!!)
Hey cool read and i’m sure its an exciting chapter for you.
I agree with many of the points you made and i am looking for a resale as well, but only because I’m single and 35 and think thats the most financially sensible option to take, especially as a single buyer. I have however been swayed between resale HDB and resale private
Few thoughts that came to my mind, which i (still) don’t have the answer to:
HDB Resale:
Pros: Many of the points you made above
Cons: Really depending on the number of years left. Because buying a resale HDB in a good location means whatever money that you are plonking down will depreciate over the years. I see it as term insurance. Paying and not getting any money back. Yes, people might have made money from HDB but it’s really those who bought BTO, given the subsidies
Private Resale:
Pros: There might be potential upside if and only if, the timing is right. I guess the million dollar question is when.
Cons: Higher financial risk (especially as a single buyer) given the trend of companies retrenching ever so often. I have been in my company for 5 years, and gone through 5 retrenchment. Yes i survived all of them.. but one day.. just one day..
Additionally, I really don’t like the thought of paying maintenance every month for a private apt.
Good point on the possibility of a depreciating value of a flat with fewer years left on the lease. However it’s also contingent on the housing market as well as how long you plan to live in it. If you’re not planning to move or monetise it (as in my case), then I suppose the point is moot 🙂
Hey Lionel, Congrats on your new home and marriage! 😀
Like you say, i had to listen to my wife … And she wanted a bigger toilet so can have wet and dry area … The older gen flats have smaller toilets generally, so we went for BTO … And also we got a good queue number (< 100) on our first try, so it's woohoo.
Nice. Always good to listen to the wifey haha
For us It was important to stay near (actually, just above) the mrt, and near to my mum at the same time.
Our story was about how we settled for the first flat we saw. I had planned for it as an exposure because my wife had never been to a resale unit viewing.
The whole time I was keeping that poker face not wanting to give away my interest. Inside my head I was thinking “the feeling is right, but shouldn’t we look around for other options first?”
My mum and wife were clearly also blown away by the location and thought I was going to pass this one up (must have been an awesome poker face on my part)
Thus we signed the option to purchase within hours.
Location being Toa Payoh, about 30 years old, we bought it just before the housing market began to cool off, we paid a little more than we had to. Two years down, looking back, best decision made ever.
Best part was that both sides saved thousands because we didn’t engage agents!
I could go on about how I was disgusted at the balloting number for the Toa Payoh BTO prior to that, but that’s another story…
Love your posts and experiences Lionel, keep it coming in!
Hey Roy, I know how you feel. We eventually settled on one of the first few flats we saw too – almost the same experience as you although we left it hanging for a couple of weeks. Toa Payoh is an awesome location – was considering a place there too but it was out of our budget.
Just curious, which MRT is your new flat near?
Secret 🙂
May I know why you made the below comment?”It’s really difficult to “trade down”, so you’ll likely use the money to buy an even more expensive house”
I meant that people buy houses thinking that it’s for an “investment” – but it’s really not because if you sell your house, you’ll likely use the proceeds to buy a more expensive house, since most people will upgrade instead of downgrade.
Thanks for sharing Lionel! Love your stories and i do agree with your points…most of the time. (Like 90% haha)
I too got a resale flat (3Rm) in 2008. But we didnt have time to consider that many options and because my wife and i were staying in a rented apartment. The annual rise of the rental fees made us consider getting our own flat.
“Why pay for instalment for other people when we can pay for our own?”
But we were still quite young then so a 3rm is our best option. It was during the times when HDB flat prices were high but starting to drop. No regrets at all looking back. We got a top floor 3A unit within 10mins walk from mrt and got NTUC + Sheng Siong nearby. With the new “Yishun City” on the way it will just be better for us. Before we got rid of the home phone line, it was mostly agents cold-calling to ask if we are selling!
I also agree with you that this place might be a long term flat for us since getting a new 4Rm is so much harder not just because of the price, but the shitty locations new BTOs are being built. One would have to endure for like 5yrs before it becomes mature enough to be comfortable.
Look at Seng Kang and Punggol. Used to live there when “even the birds do not lay eggs there”. 10yrs down the road it finally looks like a great place to live in. But its too congested.
Sounds like a great location 🙂 I wanted to do a study on whether it was more worth it to rent + invest the savings rather than buy, but looks like you already worked out the sums.
its a shame we dont have laws that states there can only be a certain % in rental rise which san franscico has. if you take a mortgage and don’t pay it off, buying a HDB flat is essentially renting from the bank
Hi Lionel,
Congratulations!!! Welcome to being in debt!
Anyway, I, too, bought a resale HDB flat with my wife. But that was 3 years ago when the prices were still going up! The main reason that we did not want to wait for a BTO.
However, we spent a tidy sum on the Cash-Over-Valuation (COV) and renovation. The renovation was because it was a 22/23-year-old flat when we bought it and it was from the first owner. So, we practically ‘hacked’ the whole place down and ripped out all the electrical wires!
Three plus years on, the transactions for similar flats nearby had increased but still below the total sum of the flat, COV, renovation and furnishings we’ve paid. Nevertheless, there are plus side. There will be an upcoming MRT station within walking distance and my alma mater is just nearby. So, my wife and I should not need to worry about transport for primary school when the time comesl!
Regardless, a flat/house is just a physical asset. Just focus on making your house a home with many wonderful memories!
Enjoy!!
Cheers,
Naro
Sounds like a great decision, especially on the location! And love the perspective that it’s the memories you make in that home that count 🙂
hi Lionel, thanks for sharing your perspective. I find myself in a bit of a quandary – I prefer living in mature estates and prices for new 4 or 5 room BTOs are already at the half a million mark, which then makes resale units seem more favourable given the lowered prices and the fact that I will not have to wait 3 years for it. These two factors combined, make it seem like the extra that I will have to pay seems worthwhile as I am paying for the ability to choose my ideal flat and enjoy the flat immediately. However, there is still the old adage that BTOs are a good bet and a more prudent way to start, given the lower costs if I were to compare it directly to a resale in the same matured estate. Thoughts?
I guess the question you’ll have to ask yourself (and research more on) is: WHY is there an adage that BTOs are a good bet? Are there comparable resale flats in the same estate at a reasonable price? (esp given the location, ability to choose your flat, larger space, etc) Also, don’t forget that you may qualify for a CPF grant which would lower that price even further. Given all these factors and the perspective that your first flat is an expense, not an investment, would you still choose a BTO over a resale?
Hey Lionel, that aside, where do you go for the marriage prep course?
I attended the official Catholic one: http://www.catholicsg.info/mpc/welcome/
I’m also considering to get a resale flat because the wait for a BTO flat is ridiculous. how did you arrive to your budget of 500k? care to share?