Portfolio Restructuring

for HDB owners

Strategic Asset Management

(SAM)

If I am 30 years old, have a savings of $30k cash and $300k CPF,

- what is the difference if I fully pay a $300k HDB flat vs taking a 80% bank loan

- What if I were to sell after 10 years

at the same price?

Fully Paid using CPF

• Sell at same price of $300k

= Negative Sale

- $84,000

• Must sell at $384k to Breakeven

$ 300,000

Year 1 $ 307,500

Year 2 $ 315,188

Year 3 $ 323,067

Year 4 $ 331,144

Year 5 $ 339,422

Year 6 $ 347,908

Year 7 $ 356,606

Year 8 $ 365,521

Year 9 $ 374,659

Year 10 $ 384,025

Bank Loan

80% Bank Loan $ 240,000 15% CPF used $ 45,000 Year 1 $ 46,125 Year 2 $ 47,278 Year 3 $ 48,460 Year 4 $ 49,672 Year 5 $ 50,913 Year 6 $ 52,186 Year 7 $ 53,491 Year 8 $ 54,828 Year 9 $ 56,199 Year 10 $ 57,604

• Sell @ $300k

Less $57,604 cpf + accrued

Less $60,000 10yr

Less $175,000 o/s

= $7,396 (positive sales)

+$240k in your CPF earning interest. Government gives you $67,220

$240k in your CPF

$ 240,000

Year 1 $ 246,000

Year 2 $ 252,150

Year 3 $ 258,454

Year 4 $ 264,915

Year 5 $ 271,538

Year 6 $ 278,326

Year 7 $ 285,285

Year 8 $ 292,417

Year 9 $ 299,727

Year 10 $ 307,220

$240k in CPF earning interest

$307,220

Less $240,000

Government give you $67,220

(FREE money)

Comparison$300k Fully paid using CPF

$ 300,000

Year 1 $ 307,500

Year 2 $ 315,188

Year 3 $ 323,067

Year 4 $ 331,144

Year 5 $ 339,422

Year 6 $ 347,908

Year 7 $ 356,606

Year 8 $ 365,521

Year 9 $ 374,659

Year 10 $ 384,025

80% bank loan ($240k)

15% CPF used $ 45,000

Year 1 $ 46,125

Year 2 $ 47,278

Year 3 $ 48,460

Year 4 $ 49,672

Year 5 $ 50,913

Year 6 $ 52,186

Year 7 $ 53,491

Year 8 $ 54,828

Year 9 $ 56,199

Year 10 $ 57,604

What about opportunity cost of investment using the untouched $240,000 in your CPF?

If you can buy a private residential at $800k and sell it in 5 years time at same price, do you make money?

Your Tenant Gives you 100% ROE

Purchase Price $800k

$160k down payment

Rental $3500/month

Sell $800k after 5 years, you get 100% ROE , Total : $163,380

$3500 rental

Interest Principal Passive

$ 777

$ 1,540

$ 1,183

x 60 months

x 60 months

$ 92,400

$ 70,980

Singapore Property Price Index

Singapore Property Price Index and Housing Ratio

Potential of SG property with the influx of population to reach 6.9m?

What will you do if you have $200,000 savings?

- Holiday with family 2 times a year on long haul trips

- Buy luxury items; Car for husband, jewels for ladies

- Save in FD

- Invest in Stocks and Shares

- Buy Unit Trusts

- Buy Forex

- Buy Properties

Savings of $200,000 with a BankAssume 1% per annum

Annual Interest earned if

Every $200,000 gives you interest at $2,000 yearly, 1% p.a.

$2,000 yearly = $166.60per month ($2000/12months)

Only EARN $8,000 ( $2,000 x 4years)

if you were to “park” a SOLID $200,000

savings in the bank

Is this what you want from a Bank or do you think there is a systematic way to grow your wealth?

Down Payment $200k for PropertyAssume $1m property purchase

Assume Rental of $4,000 per month (based on $4.46psf, 2br rental 700sf

Rental : $4,000 x 4 years = $$192,000

Interest : $1,000 x 4 years = $48,000

Principal : $2,000 x 4 years = $96,000

Passive : $1,000 x 4 years = $48,000

Property Investment is the BEST

instrument to HEDGE against Inflation! Earn Passive Income!

$200,000 Bank Savings Vs D/P $1m property

Fixed Deposit for $200,000 (based on 1% p.a.)

1 year = $2,000

4 year = $8,000

4 years savings plan by tenant (base on $4k monthly)

Total Principal + Total Passive

= $96,000 + $48,000

= $$144,000

Property Investment is the BEST

instrument to HEDGE against Inflation! Earn Passive Income!

$8,000 versus $144,000

8 Growth Technique

• Restructuring / refinance of loan

• Guarantor Technique in commercial loan

• Gearing / Term Loan

• E-OPM

• Stretching of loan tenure

• Mortgage Choice

• Pledge / Unpledge

• Decoupling

• HDB Essential Occupier (not valid since 1/4/16)

Why Restructuring

Benefits & Advantages of Restructuring:

- Do not need to fork out huge D/P

- OPM, passive income

- 80% LTV for 2nd property purchase

- Save on min $70,000 ABSD

- Double Property Capital Gain instead of 1 Appreciation

( ie: $200,000 x 2 = $400,000 versus $200,000 x 1 )

Sellers 5 room HDB in Tampines Blk 51x #1x

- HDB Transacted Price: $550,000 ~ $715,000(April 2014 ~ April 2015)

- Outstanding Loan : $200,000- Husband CPF + Accrued : $160,000- Husband OA : $ -- Wife CPF + Accrued : $110,000- Wife OA : $ 10,000

- Breakeven: $470,000 ??

Sellers Plan: Upgrade to Condo, Joint Purchase

After Sales of HDB @ $708,000

- CPF Total Returns : $270,000

- Total Cash Proceeds : $238,000

Available Funds for $1.2m Purchase

- CPF Available : $280,000

- Cash Proceeds : $238,000

- H Monthly OA contribution : $1,050

- W Monthly OA contribution : $1,050

Financial Calculation for $1.2m Condo

Available Funds after $1.2m Purchase- CPF Available : $280,000 - $240,000

- $ 30,600 = $ 9,400- Cash Proceeds : $238,000 - $60,000 = $178,000

- Cash Top Up : $3,599 - $2,100 = $1,499

Why Restructuring

Benefits & Advantages of Restructuring:

- Do not need to fork out huge D/P

- OPM, passive income

- 80% LTV for 2nd property purchase

- Save on min $70,000 ABSD

- Double Property Capital Gain instead of 1 Appreciation

( ie: $200,000 x 2 = $400,000 versus $200,000 x 1 )

Portfolio Restructuring

Husband own 1st property Own StayWife own 2nd property for investment (rental)

Husband Profile:- 37 year old- Monthly income: $8,000- CPF Available: $160,000- Monthly Contribution: $1,050

Wife Profile:- 36 year old- Monthly income: $5,000- CPF Available: $120,000- Monthly Contribution: $1,050

Portfolio Restructuring - Husband

Available Funds after $1.2m 3br Own Stay Purchase- Total CPF Available : $280,000 - $160,000 = $120,000- Cash Proceeds : $238,000 - $60,000

- $20,000 - $30,600= $127,400

- Cash Top Up : $3,839 - $1,050 = $2,789

Portfolio Restructuring

Husband own 1st property Own StayWife own 2nd property for investment (rental)

Husband Profile:- 34 year old- Monthly income: $8,000- CPF Available: $160,000- Monthly Contribution: $1,050

Wife Profile:- 32 year old- Monthly income: $5,000- CPF Available: $120,000- Monthly Contribution: $1,050

Portfolio Restructuring - Wife

Available Funds after $700k Investment 1br Purchase- Total CPF Available : $120,000 - $105,000 = $ 15,000- Cash Proceeds : $127,400 - $35,000 - $600

= $ 91,800- Cash Top Up : $2,240 - $1,050 = $1,190

$2,500 - $1,190 = $1,310 (monthly passive)

ComparisonAfter Sales of HDB Own 1 x $1.2m (Joint Purchase) Husband 1st Purchase $1.2m Wife 2nd Purchase $700k

Husband OA $ - $ - $ - NA

Husband CPF + accrued $ 160,000 $ - $ - NA

Monthly OA contribution $ 1,050 $ 1,050 $ 1,050 NA

Wife OA $ 10,000 $ 9,400 NA $ -

Wife CPF + accrued $ 110,000 $ - NA $ -

Monthly OA contribution $ 1,050 $ 1,050 NA $ 1,050

Stamp Duty NA $ 30,600 $ 30,600 $ 15,600

Oustanding loan $ 200,000 $ 900,000 $ 960,000 $ 560,000

Cash on Hand $ 200,000 $ 190,000 $ 127,400 $ 91,800

Cash Profits $ 238,000 NA

Loan Tenure 7 years 25 years 25 years 25 years

Monthly Instalment $ 2,606 $ 3,599 $ 3,839 $ 2,239

Cash TOP UP $ 506 $ 1,499 $ 2,789 $ 1,189

Rental Income NA No Chance NA $ 2,500

Passive Income NA No Chance NA $ 1,311

TOP Up per month Difference $ 1,499 $ 1,478

( $2789 - $1311 )

Summary

After having own 2 property

- Spare cash: $91,800

- Has 2 property that has capital appreciation in 5

years time

( $200,000 x 2 = $400,000 versus $200,000 x 1 )

- Able to stretch tenure again *

- Able to bring down mortgage *

What If …..

1) Interest Rates Goes Up

2) 5 year later sell at today price

3) Husband / Wife is Jobless

What If …..

1) Interest Rates Goes Up

Base on $960,000 loan, 25 years tenure

- 1.5% : $3,839- 3.5% : $4,805

Difference of $1,000 if 2% interest climb

Solutions:- Stretch Tenure- Bring Down Mortgage ( 2 years )

What If …..2) 5 year later sell at today price

Based on $700k 2nd condo purchase

D/P : $140,000Rental : $2,500Interest : $ 700Principal : $1,539Passive : $ 261

Assume 5 years laterTotal Principal = ( $1,539 x 12 x 5 ) = $92,340Total Passive = ( $261 x 12 x 5 ) = $15,660Total Savings = $108,000

FD for $140,000 ( based on 1% Per annum ) = $1,4005 years FD = $7,000

Vs

5 years Saving by Tenant = $108,000

What If …..

3) Husband / Wife is Jobless

Reserve Fund of $91,800 ( spare cash from sales proceeds)

Monthly Mortgage of $1.2m: $3,839

Monthly Mortgage of $700k: $2,239

Total Monthly Mortgage : $6,078

Can tied up to 1 year jobless period

CPF contribution

Thank You for Your time to view this report, do contact me if

you like to find out how you too can benefit from this

purchase

Millionaires become Millionaires not by

saving pennies, BUT by INVESTING in

REAL ESTATE