Note: LEASE is in caps... cos... LEASE is LEASE. You don't own it. Tell yourself whatever you want.
Anyway, I've accepted that I don't own my HDB.
And I'm ok with that.
For the past 2.5 years when I've been out of the country, I've been renting.
I don't know how much the rental was in Paris, cos the company handled it.
But in US, the apartment cost me US$1,830 every month.
I signed a 99 year lease contract with HDB to rent this place at Dawson for S$45x,000. I forgot the exact price I had to pay for the BTO.
This works out to be around S$400 per month using straight line depreciation.
(Not counting bank loan and interest.)
Current price for a similar unit in the block I stay is around S$820,000.
So even if I take over someone's remaining 93 year lease from within the same block, it works out to be under S$750 per month.
*Notice how I phrased it ;)
For a first world country, we are paying some really cheap rentals.
Sure, it's not a condo, but it's not shabby either. Most of us have a park/playground near where we stay, we have coffeeshops nearby, easy access to food and amenities.
This low rent is of course only available cos we're paying bulk prices for a long term contract.
Current market rent for an HDB is maybe S$1,500 per month. Which is starting to be pretty expensive.
The thing is, we/I always have a choice.
I can move to a freehold property, and yet I choose not to.
There are some cheaper freehold properties in some ulu places. Not great location but it's still freehold.
I like the idea of "fully paying" my rent for the rest of my life. So that I don't have to worry about having a roof over my head.
Yes, from an investing point of view, it's not the brightest idea.
But from a stress and mental point of view, I feel it's the direction for us.
My wife can leave her job anytime she wants cos there's no loan.
I don't want to have a situation where we're sitting on a loan and my wife isn't free to move as and when she wishes, and if markets turn bad, I end up with a situation where I have a loan and my investments aren't doing well enough to easily pay off the loan.
Wrote about this here.
The thing is... well... I've come to be more ok with not owning my HDB and that it's just a long term lease. Rental at S$500 per month, or S$700 per month. That's already a steal.
Furthermore, I could easily transfer the remaining lease of my current place to someone else and take over the lease of a place on the east side and nearer to our parents and we would likely get a bigger HDB and even get some money back.
Bulk purchase of long term rent really isn't that bad if you think about it from an expense point of view.
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