My Property Hunting Journey

When it comes to financial matters, property ranks as a close second to trading amongst my interests. While I do not profess to be some kind of property guru (all I have bought so far is a matrimonial home), I have done quite a lot of research, viewed quite a number of units, and follow the market keenly as I am looking to buy another property for investment purposes. In the spirit of "sharing is caring", I am setting out the experiences of Mrs RetailTrader and myself in looking for our matrimonial property. 

Note: My account covers the purchase of a private non-landed residential property.

Phase 1 - Ascertaining the Baselines

When we decided we wanted to start looking for our matrimonial home, Mrs RetailTrader and I had to see where we both stood on the basics. It is critical to think through the basics, regardless of whether you are buying a place as a couple, with investment partners or by yourself.

The very first decision we had to come to was to decide the type of property we were going to buy. This intrinsically ties in with how much we were willing to spend on the home - our budget.

I subscribed to the thinking that a house was a consumption good and the more expensive the home we stay in, the higher the opportunity cost. The very rational personal finance school of thinking. And money saved from housing can be used for trading! But I had to admit the idea of staying in a condo also called out to me. After all, I had grew up staying in a HDB estate that was sandwiched between two condominiums that looked pretty sweet to me, so I always wondered what it would be like to stay in one like them.

Mrs RetailTrader also grew up in the HDB heartlands, but her family had since moved to landed which they have been staying for the past ten years or so. Since I was also a bit gian, we decided a condo would be an appropriate middle ground for the both of us. But as a nod to my financially prudent tendencies we agreed that budget-wise we were going to be relatively conservative. Phew first big decision out of the way huh!

We then had a long running debate about freehold vs leasehold. I was largely indifferent towards the two. I mean, all things being equal I would always take freehold, but the freehold status commands a price premium and to me whether that price premium is worth it is debatable. Mrs RetailTrader on the other hand was brought up on the "always buy freehold" mantra, to the extent this represented almost an absolute truism for her. Our decision on this point was that we would first try to source for freehold units only in our search, and see what comes up.

Next was location, location and location. 

Mrs RetailTrader and I did not live near each other. We are both family folks and envisage returning to visit our parents quite a bit, so we decided that a good starting point would be to stay somewhere in between our parents. She stays in the north and me in the east, so a compromise region would be somewhere between Novena, Bishan-Toa Payoh and Serangoon/Lorong Chuan. So we decided to focus on those areas for our initial search. 

Somehow despite our plans to stay near our parents, the idea of staying near to the CBD, where both our offices are, was also something that excited the both of us. Hence, as a wildcard option, we also decided to look for units in the Dhoby Ghaut/Harbourfront area to see if there was anything that fit our budget. 

The next biggie was buying used versus new. There was a divergence in our views for this one. Mrs RetailTrader likes fresh new things. "You never know what may have gone on in used units", she would say. Me, on the other hand, I like "what you see is what you get". You can study a plan of a development on paper for all you like, but it can never ever beat being able to step into the actual unit to see it, breathe it, smell it. I always think that when buying a unit off the plan, there will always be some factor which you will overlook (and regret). You could say it was a fear that was brought about by my consciousness of my lack of experience in property acquisition - but that was how it was then for me. So anyway yes, my preference was to buy resale and we were keen to get a unit that had already TOP-ed anyway so we didn't have to wait for our home to be ready. So our position became to look for TOP developments, but preferably not too old (not beyond ten years). 

Next was size. This one was easy. Mrs RetailTrader would have liked something with three full bedrooms if possible. I was more keen to keep the size smaller to keep the costs lower. We agreed to KIV this - if the psf (price per square foot) of a development was lower, we could afford to get a bigger unit, but if it was higher we would probably have to go smaller. But as a rule of thumb we agreed something like 1000 square feet would be a good starting point.

Then comes the matter of amenities. We both agreed that we would like to stay near a mall because of the convenience. And that there was a difference between staying near a small neighbourhood mall and a large regional one. We were not planning to cook so it would be nice if we had a variety of food options within walking distance to our future home. And I'm a huge sucker for having MRT near the home. And that's where my "buy the jewel of the estate theory" comes into play. 

The theory is that if you buy into a development that is near an MRT (I will discuss what "near" means subsequently - this is very relative!), near a decent-sized shopping mall with all the typical amenities and is the most desirable in the area, you cannot go too wrong with your purchase. 

Why is this the case?

My belief is that for most estates (except for those that are extremely out of the way, e.g. north of Ang Mo Kio, east of Marine Parade and west of Clementi), there will always be a pool of people who want to buy property in specific estates for their own personal reasons (e.g. the estate is near their family or near their workplace). So, as long as you buy a unit in a good stack in the most desirable development in any such estate, the "jewel of the estate", you will always have a ready pool of potential tenants and buyers waiting to buy/rent from you. In other words, everyone who wants to get a unit in XXX estate will always look to the jewel in the first instance. And desirability of the unit means less downward pressure when the market turns bad on you, compared to other developments in the same estate. 

The corollary to the theory is that, rather than buying one of the laggards in a "star" district, focus on buying the jewel of an estate which you can afford.

Ok brilliant, you say, but this then begs the question - how do you decide how a development is the most desirable in an area?

First, location takes the cake. All things being equal, the nearer a development is to a mall and MRT, the more desirable it is.

Second, the liveability of the development. Is there noise? Is the MRT line elevated or underground? Are there roads nearby? Schools, places of worship? Petrol station? Feng shui is too important to ignore - Is it sited on lower ground? Is the development at a T-junction?

Third, the appearance and condition of the development. This depends largely on the age of the development although the management of some developments can really screw up on the maintenance of the development. I have this test I call the "BBQ pit test" - take a look at the condition of the BBQ pit of any development you are viewing. Would you dare to use the BBQ pit there? There's also the "children's playground" test. Management councils that ignore these facilities are likely to be shabby in other aspects of the maintenance as well.

A simpler way to find the jewel of an estate is to look for estates with less developments. Less developments mean less competition for buyers and tenants. Some estates are very densely packed with condos, some less. For example, imagine an estate that only has one development that is within 2 minutes' walk to the MRT/mall, and the next development requires a 5 minute walk and is less liveable. You have found the jewel of the estate already!  

In the end we decided that our home should be no more than 500 metres away from the MRT and mall. 

Finally, I have this thing about the size of the development (i.e. the number of units in a development). I like developments to be large so there is more 人气 around. I find that developments with only one block tend to have puny swimming pools and the grounds are relatively poorly maintained. It's also depressing to me when I see the grounds of the development are always empty. Is it just me?

So we have pretty much covered all of the search factors you can input in Propertyguru. To sum up, we are going for:

• condo
• relatively conservative budget
• freehold preferred
• Dhoby Ghaut, Novena, Bishan-Toa Payoh and Serangoon/Lorong Chuan
• not older than ten years
• around 1000 square feet
• good-sized mall and MRT within 500 metres
• no small developments

So on one beautiful day when the sun was shining, and the birds were singing, I input our criteria onto the search bar on Propertyguru and waited for the search results to emerge...