How do you make $500k or more investing in resale condo?

Introduction

Significant coverage has been given to new launch investing. We are guilty as well, with a significant portion of our research resource focused on new launch research. But the fact is that a new launch project is not always better and not always suitable for everyone’s individual circumstances.

Most investment minded property owners begin their journey with a hybrid mandate – providing a shelter for their family and generating that significant profit to make life better. Only with that in place can we be in the right position to play the dual property game, which we specialise in. This is a guide that documents our experience, aggregating all the strategic pathways that resale property owners have used to generate above average returns.

Resale condo investing strategies

The strategic pathways we have studied and helped our clients implement can be broadly segmented into the following 5 strategies:

1. TOP condo flipping
2. Resale EC MOP price exploit
3. Affordable quantum positioning
4. New launch price catalyst play
5. RCR unit hoarding play

We are Decoupling Expertise

We are a real estate investment consultancy that specialises in helping investors procure 2nd investment property.

Our expertise is grounded on 2 fronts:

1. Tax Optimisation – Finding the most tax optimised strategy for investment minded property owners to procure a second property by using strategies like decoupling property.
2. Research – Analyst by trait, Operator of our own dual property portfolio by experience. We pride ourselves for conducting profit focused, practical research to help our clients and readers shortlist investment property and validate purchase decisions.

You are now reading a sample of our research work. Feel free to drop us a text if you would like to seek a 2nd opinion on your investment decision.

Strategy 1 – TOP Condo Flipping

How this strategy makes money

The TOP condo flipping strategy involves selecting a new launch condo that has just TOP’d and purchasing it early as a second buyer from the direct buyer that purchased directly from the developer. This may sound counterintuitive because you could be serving as exit liquidity, allowing the first owner to make their first $400k to $500k profit. But buying into a TOP property gives you several advantages.

If you are able to select the right development with strong fundamentals and supply-side asymmetry – whereby there is limited or no competing supply coming up in the area – you could be buying into an asset that can hold its value and continue to grow exponentially after the TOP phase. While many buyers are hesitant to commit to a TOP property, we have seen many buyers bite the bullet, buy into a TOP property, live in it and hold it for a six to seven-year duration, and make a handsome profit from there.

Advantage to you as a buyer

A TOP property solves a problem that a new launch property cannot solve. For a resale buyer, you will likely need an immediate place of dwelling, and a TOP property provides exactly that.

• You do not need to incur a high renovation cost. The savings of $100,000 to $200,000 in renovation costs can add up meaningfully to the net profit you derive from the property.
• A TOP property’s lease life is as new as it can get, aside from buying a new launch property. With that young lease life, you can hold the property for a long time for family homestay without any concern over lease decay, while still providing ample runway for your future resale buyer.
• A TOP property mitigates a lot of the unit selection risk that comes with a new launch. When buying a new launch, you are essentially buying from a floor plan. With a TOP property you can see the physical product, evaluate aesthetics, facilities and unit facing.
• There is also a buyer’s advantage at the TOP phase because there will be a hoard of sellers looking to offload their units. You have an ample number of units to choose from and can use that as a bargaining chip to negotiate towards the best entry price.

For a deeper read on whether buying TOP or sub sale condo is worth it, refer to our dedicated research article.

Why would future buyers pay a premium for your unit?

The use case for your future resale buyer is similar to yours. They are looking to buy into a property they can live in immediately, so new launches are out for them. If there are no newer condos in that specific area, they will look at your development as the top priority. It allows them to rationalise their purchase – aside from buying a nice home to live in, they can also rationalise the investment upside.

If you plan your renovation smartly – using furniture as the main form of dressing up the unit rather than permanent fixtures – you can still sell the property as a blank slate to the next resale buyer, providing the proposition that no further renovation is needed for them to create their dream home.

Who is this strategy suitable for?

This strategy is suitable for investment-minded property owners that need an immediate place to live in but yet want to tap into significant investment upside. It also makes a lot of sense for property owners looking to buy into RCR areas or established mature residential estates where new launch condos or private condos are scarce in nature – buying into a TOP property in these areas allows you to position yourself strategically.

Case study – Parc Esta

Parc Esta is one good case study to reference for this strategy. TOP property buyers made at least $600k to $712k for a two-bedroom unit with a six-year holding period. Three-bedroom TOP property owners made profits ranging from $845k to $900k over a six-year holding period.

A significant driver of this success is attributed to its strategic location in Eunos. Firstly, it is the only mega development located near Eunos MRT. The other competing developments in the area are either small ageing boutique condos or ageing mid-sized developments. In terms of facade and facilities, no development in the area is on par with Parc Esta. Even today, if a resale buyer – a third owner – were to purchase from you, they would still be enjoying the strong fundamentals of the development. From a supply perspective, there are no new developments to be launched in that area that can compete against Parc Esta.

Parc Esta 2-Bedders – Earning $600K-$712K Gross Profit Over a 6-Year Hold

Parc Esta 3-Bedders – Earning $845K-$903K Gross Profit Over a 6-Year Hold

Attributes that define a good development for TOP condo flipping

Some of the key attributes to look out for in a TOP condo flipping strategy are as follows. First, within the 1km radius of a highly sought-after school – this provides a strong draw for buyers motivated by the mandatory requirement of enrolling their child in that school. Second, a development with superior competitive advantage both now and in the future. You need to consider whether the development is superior from a resale buyer’s perspective compared to current resale options, and also forecast future GLS land supply to ensure no significant new competitor emerges in the mid-term.

Aside from these two key factors, there are many other micro-attributes we consider when identifying an optimal TOP condo. We have also identified many other resale developments suitable for a TOP condo flipping strategy. Drop us a WhatsApp note for us to share that insight with you if this strategy is relevant to you.

Strategy 2 – Resale EC MOP Price Exploit

How this strategy makes money

Most would think that a new EC is the mode of investment that will make the most money, but many overlook the potential of using resale EC to generate high profits. This strategy works by exploiting resale EC at its MOP stage, capitalising on the price discovery phase whereby sellers are not yet aware of the benchmark price to set for their EC. Some sellers are looking to rush out to liquidate their EC and realise returns early.

As a buyer, the goal is to enter early at the MOP stage, find a unit selling at an advantageous entry price, secure it and hold it for the next five to six years. From our experience, we have seen a countless number of resale EC buyers generating over $500k in profits simply by buying into an EC early in its initial MOP phase. It is often under-reported because filtering resale EC transactions from data requires significant work compared to reporting profits from new launch or new EC sellers.

Advantage to you as a buyer

1. You enjoy significant profits from the EC without having to fulfil the five-year MOP phase required when purchasing a brand new EC.
2. You already have a property to move into immediately, without worrying about renting in the interim.
3. It provides a more affordable entry especially for investors that are lower on capital, as ECs are generally of lower quantum. This strategy allows you to invest with lower capital outlay and potentially generate profits equivalent to private properties or new launches, boosting the ROE metric.

Why would future buyers pay a premium for your unit?

A lot of these EC buyers – whether the second, third or fourth buyer – are always buying for practical reasons. A significant proportion are upgrading from a BTO or HDB nearby. Their goal is to purchase a unit with a similar or larger floor area and an equally or more efficient layout. They are often working within a set budget, and a resale EC located further from the MRT with a more affordable quantum than a private condo would be palatable for their current financial circumstances.

Who is this strategy suitable for?

This strategy is most suited for investors working within a set budget who are also willing to live in a less centralised area where resale ECs are typically located. It could also be a very good fit for HDB upgraders looking to secure the next launch pad property that can generate another $500k profit, using it as a cycle two flip before moving on to procure two private properties or making a single larger quantum investment entry. Refer to our dedicated article on resale EC investing for a deeper dive into this strategy.

Resale EC Flipping – Strategic Framework

Case study – Tampines Trilliant

Tampines Trilliant, located in Tampines, provides an interesting setup for an MOP EC flipping strategy. What is interesting about Tampines is that it is a neighbourhood with a significant number of private condos, new launches and ECs. Unlike areas like Punggol and Sengkang, which are mainly dominated by ECs, Tampines has many private condo new launches serving as price catalysts that set new benchmark prices and push up both new EC and resale EC prices. Most of the supernormal profit transactions tracked below are by buyers who made their entry early, immediately after the EC MOP.

Tampines Trilliant 4-Bedders – Resale Buyers Entering Post-MOP, $770K-$1.16M Profit Over ~5 Years

Tampines Trilliant 3-Bedders – Resale Buyers Entering Post-MOP, $480K-$830K Profit Over ~5 Years

Attributes that define a good development for Resale EC MOP Price Exploit

The first attribute to look at is layout and usable space. As established, a lot of resale EC buyers are buying for practical homestay reasons. Your goal is to model the layout of a typical BTO flat and attempt to outdo it with your resale EC. The second attribute is the development’s standing in comparison to competing resale ECs in the area – in terms of layout, general facade and facilities. There are also many micro-attributes to consider, such as proximity to local highly sought-after neighbourhood schools, micro layout nuances like having a regular-shaped usable balcony over two small balconies, having a storeroom that can double up as a helper room, and lease life considerations.

For a complete view of the attributes to look out for in resale EC investing, drop us a text and we will conduct a preliminary research based on your specific search criteria.

Strategy 3 – Affordable Quantum Positioning

How this strategy makes money

Ever tried buying a property in a highly sought-after area like Woodleigh, Bartley, Bishan or Clementi? You will realise that most of the sought-after developments are often priced at a premium and could be out of budget for many buyers. The crux of this strategy lies in finding a balance between affordable quantum and desirable location.

Within every highly sought-after district, there is always a tier-one development – priced at a premium and most sought-after – and a tier-two development, an older resale option that is less well-known but priced lower. Your goal is to find a sizeable unit with a good livable layout within the most affordable quantum, and position it for sale to a future resale buyer working within a budget constraint. Examples of this in practice include The Scala in Lorong Chuan, Bartley Residences in Bartley, 8@Woodleigh in Woodleigh, and SkyVue in Bishan.

Advantage to you as a buyer

1. From an ROE perspective, these resale condos are often priced at an affordable quantum, requiring less capital outlay to enter. They also often provide a sizeable and livable environment for your family.
2. There is an added advantage for a dual property portfolio owner who has just decoupled their property. This affordable resale property can be positioned as your homestay property while you focus most of your capital and leverage on the high-growth investment property.

Why would future buyers pay a premium for your unit?

Buyers would pay a premium for a resale property like this out of necessity – their desire to buy into a sought-after area is strong and driven by mandatory reasons like a child’s school, or relocating to a more central location nearer to parents or parents-in-law. They will be willing to pay a premium for your older resale unit as long as it still sits within their affordable quantum.

Who is this strategy suitable for?

The irony is that this strategy is suitable for buyers in a similar situation to the future resale buyer. You may be working within a budget constraint because this is your second property, you have less capital to start with, or you are deploying capital into other investments. A second reason is a locational constraint – if you have to get your child into a certain primary school within a location, the resale EC flipping option may not be available to you, making this strategy a natural fit.

Case study – Bartley Residences

Bartley Residences serves as a good example. At the time of writing, this development is coming to 10 years old, having TOP’d in 2015. Yet buyers that purchased six years ago easily made profits ranging from $500k to $700k for three-bedders, and from $900k to $915k for four-bedders. This is only possible because the setup is right – Bartley as a location enjoys significant spillover demand from the highly sought-after Woodleigh. The cluster of private condos in the Bartley area sits right within walking distance of the highly sought-after Maris Stella Primary School. The Botanique at Bartley sets the benchmark price for the area as the newest and most aesthetically pleasing development, while Bartley Residences, being the oldest, positions itself as the most affordable option.

Bartley Residences 4-Bedders – $900K-$915K Gross Profit with a 6-year holding duration

Bartley Residences 3-Bedders – $545K-$740K Gross Profit with a 4 to 5-year holding duration

Bartley Residences 2-Bedders – $395K-$577K Gross Profit with a 6-year holding duration

Attributes that define a good development for Affordable Quantum Positioning

To identify a good development for the affordable quantum play, macro analysis of the neighbourhood is extremely important. The first step is to ascertain that the neighbourhood has high resale buyer demand, which we do by aggregating all resale developments in the area and looking at average growth rates. If there is a proven high average growth rate, that area is worth looking into.

From there, we cluster developments into different tiers – tier-one being the premium most sought-after developments – and then identify the tier-two and tier-three options that are priced most affordably yet still possess acceptable attributes for a homestay buyer. The key point to note is that you are really hunting to sell to non-economic buyers – future resale buyers purchasing predominantly for homestay reasons, willing to pay a premium for your older resale unit as long as it sits within their affordable quantum. Refer to the research on Pinery Residences for a flavour of what makes a district one with high growth potential. If this is a strategy you are interested in, drop us a note and we can ascertain whether the location you are looking at is suitable.

Strategy 4 – New Launch Price Catalyst Play

How this strategy makes money

This resale condo investing strategy relies on a piggybacking approach. The crux of the strategy looks into areas where there is a potential highly desirable new launch to be launched, and then you go about buying the neighbouring resale development that will enjoy a price hike due to spillover demand or a new benchmark price set by the new launch. Historically, we have seen this play out for Clavon during the Elta launch, for The Scala during the Chuan Park launch, and for Gem Residences during The Orie launch.

Advantage to you as a buyer

The key advantage is avoiding the pricing risk of buying into a new launch and shouldering the burden of testing the resalability threshold of a new benchmark price. Instead you purchase a property you can readily move into or rent out for rental income, and piggyback off the growth of the benchmark price set by the new launch.

Why would future buyers pay a premium for your unit?

To understand the mindset of a resale buyer under such a setup, you need to appreciate that from a resale buyer’s perspective, when viewing resale developments, they do not distinguish between the latest new launch and a neighbouring older launch. What matters most is price point, layout and the aesthetic facade of the development. Using a Queenstown area example, Penrith may be the latest new launch in the area, but because of Stirling Residences’ scale as a mega development, it remains one of the most desirable developments in the area and rides on the new benchmark price set by Penrith.

Who is this strategy suitable for?

The investor profile for this is very similar to the TOP condo flip strategy. It is suitable for someone with a decent-sized budget looking for an asset with a fresh lease that can have a long runway, but who does not want to invest in a new launch because the price gap between the new launch and the resale property feels too wide. They may also need a place to rent out immediately upon purchase, or prefer a property they can live in right away.

Case study – Clavon

Clavon stands out as a good example because beyond its 3-bedroom units being very profitable, its 2-bedroom resale buyers also made significant profits ranging from $362k to $402k. Even more notably, Clavon is not located near an MRT or within 1km of a reputable school. Its growth is mainly driven by its affordability and the numerous new launches in the Clementi area serving as price catalysts.

Clavon 2-Bedders – $362K-$402K Gross Profit in ~4.5-5 Years

Clavon 3-Bedders – $582K-$744K Gross Profit in ~3.5-4.5 Years

Clavon 4-Bedders – $906K-$985K Gross Profit in ~3-5 Years

Attributes that define a good development for the New Launch Catalyst Play

The crux of identifying a development suitable for this strategy lies in understanding the future GLS land sale pipeline. We review the URA Master Plan for significant plots of land in the area that have the potential to be developed into sizable and desirable new launches, then identify the neighbouring resale development and buy a desirable unit within it.

An important point to note is the land sale bid price of the incoming new launch. You want to ensure that it was secured at a significantly higher price than the land cost of the resale development you are buying into – this ensures the new launch will be priced significantly higher than your resale condo. The challenge emerges in areas like Media Circle, where newer land bid prices could potentially be lower than the older plot, which would undermine this dynamic.

Gain Clarity – Side by Side Project Comparison

There are two projects that caught your attention launching in sequence and you are unsure which to commit to. This is where objective fact-based evaluation of both projects brings clarity to your decision-making process.

• Side-by-side pros and cons analysis of 2-3 projects you’re currently considering
• A second opinion on which project offers the best balance of profit potential and downside protection
• A refined shortlist of projects that best suit your investment objective

Drop us a text for a non obligatory Q&A

Strategy 5 – RCR Unit Hoarding Play

How this strategy makes money

This strategy works for both new launches and resale. The crux lies in identifying mature RCR districts that have a limited supply of private condo, and then purchasing a unit in the area. From our separate research on attributes of high-growth new launch condos, we identify that RCR areas provide the most optimal setup for profitable returns due to a combination of factors.

First, from a competition standpoint, RCR areas tend to be dominated by older resale condos – competition is not as intense as in OCR areas where there is a slew of affordable ECs and new launches competing with your development. Development and unit selection are therefore a lot simpler. Second, the RCR area is often the hotspot for upgrader demand. The usual progression path for an HDB upgrader is to upgrade from a BTO or EC in the OCR area into a more centralised RCR location. This research article on how to identify undervalue property provides a deeper look into how to leverage a new launch as a price catalyst for resale development capital appreciation.

Advantage to you as a buyer

The advantage to you as a buyer is less uncertainty from a competition standpoint. After securing a unit in an RCR location, there is less concern over emerging new launches or new ECs that will be developed right next to you and erode your resale demand. Another often understated factor is the concentration of reputable tertiary institutions and primary schools in RCR areas. Even if your development is not within 1km radius of such schools, you still enjoy spillover demand from buyers whose kids are already enrolled in these schools and who are looking for a property in a location their kids can easily travel to.

Why would future buyers pay a premium for your unit?

Future buyers will often pay a premium for such a unit due to the scarcity of supply in the area. If a future buyer is only willing to locate within a certain city fringe location, there are simply not many comparable units to look at. Interestingly, this is also one of the core drivers behind multiple million-dollar HDB transactions – many of these locations are the same areas most suited for this strategy.

Who is this strategy suitable for?

This strategy is suitable for two types of resale buyer. The first is a pure investor looking to optimise for both capital gain and rental income simultaneously – RCR developments, assuming the right one is selected, often enjoy higher rental yield and stronger rental demand due to their centrality. The second is an investor looking for a homestay location with a preference for RCR locations. This strategy kills two birds with one stone, providing capital gain upside while placing you in a location you are willing to live in.

Case study – Sky Vue

Sky Vue, a development located in the Bishan area, is a perfect example for this strategy. The development TOP’d in 2016, almost 10 years back at the point of writing, yet resale demand remains extremely strong. Buyers that purchased five to six years back – in 2018 to 2019 – made at least $630,000 to even $1 million for three-bedroom units. There is no secret sauce to this. Sky Vue is simply located in a strategically advantageous position.

Firstly, Bishan is an area highly sought-after by many EC and BTO upgraders with substantial capital to deploy after liquidating their prior properties. Secondly, the development is located within proximity of two highly sought-after schools: Catholic High Primary and Kuo Chuan Presbyterian Primary. Lastly, from a competition standpoint, there are simply no new plots of land to be developed for new launches in Bishan. Its closest competition, Jadescape, is located in Marymount and priced at a significant premium over Sky Vue.

Sky Vue 3-Bedders – Making $630K-$1M Gross Profit Over a 3-7 Year Hold

Attributes that define a good development for the RCR Unit Hoarding strategy

The selection criteria for a development that fits this strategy often revolve around a macro analysis – diving deep into the location to confirm it is truly highly desirable and aspirational for upgraders. Only then do you zoom down to identify which specific development to narrow down to for unit procurement. Within the development comparison itself, you will want to evaluate a list of sub-attributes that are ideal and attractive to future buyers. The key requirement is that the development must possess a set of attributes that position it advantageously or differentiate it from comparable resale condos in the area – either positioned as the most affordable option, the closest to the MRT, or within 1km of multiple reputable schools.

Looking to purchase a resale property as a second property?

Check out the following articles for more insights on how to avoid ABSD:

• Decoupling Property Singapore – The Complete Guide
• How to buy a second property in Singapore without ABSD?

More Reads Regarding Resale Condo Investing

• Best Resale Condo Singapore
• Is resale condo worth buying ?
• New Launch vs resale condo – which is better for Investment ?
• How To Identify Projects That Can Make $1 Million Profit Over An 8-Year Holding Duration