Sell or Keep Inherited House. Advice Needed...

Hi, I'm new to the forum and would like to seek 3rd party objective views on the following issue :

1. I inherited a freehold terrace house from my grandparents and have been living in same house all my life.

2. I have also raised my 3 kids in this house since they were born (still schooling) and we are all very happy living here. I have no other property and have no other major debts.

3. My grandparents have since passed on and my head was turned when I found out my neighbor is selling his place for $2.5M.

4. As I've never thought of selling, I've not been keeping in touch with property prices.

5. Assuming if I can get $2.5M for my place, I may consider selling as I was thinking of cashing in and downgrade to a condo or private apartment and perhaps pick up a second property when prices come down in next downturn.

6. I'm currently working but feeling very burnt out so having a simpler job and passive income is very attractive.

Pros of Selling

1. Exchanging one for 2 properties and hopefully get some passive income and retiring earlier. I'm 50 this year

Cons of Selling

1. Sentimental about selling what was given to me

2. House is in a nice neighborhood and with the general crowding in Singapore, this may be a big miss unless I find another nice neighborhood

Appreciate all 3rd party views as I'm now undecided about next steps. Thanks in advance !

(02-01-2013, 05:25 PM)Cloudman Wrote: Hi, I'm new to the forum and would like to seek 3rd party objective views on the following issue :

1. I inherited a freehold terrace house from my grandparents and have been living in same house all my life.

2. I have also raised my 3 kids in this house since they were born (still schooling) and we are all very happy living here. I have no other property and have no other major debts.

3. My grandparents have since passed on and my head was turned when I found out my neighbor is selling his place for $2.5M.

4. As I've never thought of selling, I've not been keeping in touch with property prices.

5. Assuming if I can get $2.5M for my place, I may consider selling as I was thinking of cashing in and downgrade to a condo or private apartment and perhaps pick up a second property when prices come down in next downturn.

6. I'm currently working but feeling very burnt out so having a simpler job and passive income is very attractive.

Pros of Selling

1. Exchanging one for 2 properties and hopefully get some passive income and retiring earlier. I'm 50 this year

Cons of Selling

1. Sentimental about selling what was given to me

2. House is in a nice neighborhood and with the general crowding in Singapore, this may be a big miss unless I find another nice neighborhood

Appreciate all 3rd party views as I'm now undecided about next steps. Thanks in advance !

A FREEHOLD TERRACE HOUSE will appreciate relentlessly because Singapore is land scarce...

I am not a property expert but I would suggest that instead of selling, you should try to rent it out for passive income...

Selling it now will net you lotsa money but you will be buying property at a high as well...

Who knows what will happen in the future and most property on sale is 99 yrs lease...

(02-01-2013, 07:08 PM)Zelphon Wrote: A FREEHOLD TERRACE HOUSE will appreciate relentlessly because Singapore is land scarce...

I am not a property expert but I would suggest that instead of selling, you should try to rent it out for passive income...

Selling it now will net you lotsa money but you will be buying property at a high as well...

Who knows what will happen in the future and most property on sale is 99 yrs lease...

Thanks for your view. Renting out is not an option as I only have one property and will need to rent another to stay so its a not feasible.

(02-01-2013, 07:14 PM)Cloudman Wrote: Renting out is not an option as I only have one property and will need to rent another to stay so its a not feasible.

You can wait for the crash, then borrow against your house to fund the second property. This way you can make use of most of the value of the house without having to sell it. The disadvantage is that the rental from the second property will mostly go towards paying the mortgage. But on the flip side, you don't have to move, so there is no disruption to your family.

Didn't think of that. Thanks.

I'm quite risk adverse so lots of thinking needed as I'm risking my 1st property to buy the 2nd and could lose both as I'm already 50 years old this year and have limited chance to recover if something goes wrong. But nonetheless, an interesting suggestion to consider. Thank you.

Like all investments including stocks, there are 3 reasons(some may argue there are 4) as to why you want to sell.

1. you make a mistake. don't think this is the case here
2. the price has shot up a lot and is way over value. well it is difficult to time the mkt. many property bears were proven wrong till now. will it collapse or still shoot up???
3. you have a better use of the excess cash out property after down grading. this is more pertinent to you. if you don't have then the freehold property is a relatively safe investment long term.

my 2cents worth

At your age, it would be better to be prudent, esp considering there are schooling children.
Not to concentrate all the eggs into one basket, ie. Property in this case.

Perhaps some financial advisers may suggest diversification. It's not a bad idea in my humble opinion. Just be careful of the risks involved as well.

Cheers.

it seems the main crux is that u are getting burnt out from ur job.

it also seems that u are happy with ur current house, both in terms of environment and sentimental reasons.

so are u going to be happier

a) selling ur house, getting 2 condos (one to stay, one to rent out), keeping ur current job, and getting one more rental income

b) selling ur house, getting 2 condos (one to stay, one to rent out), quitting ur current job/getting a new job, and getting one more rental income

c) keeping ur current house, changing a job which u are happy with

**************

it seems that a) will still be unhappy
c) seems happiest but not sure if possible to find happy job
b) might be happier depending on whether the new job makes u happier than the loss of happiness currently.

so seems to me it boils down to whether u can find an alternative job which makes u happy.

I am not qualified to give advice, so the following is not advice.

How about bequest the freehold terrace house to your kids, just like what your grandparents had done.
As the saying goes, they are not making anymore freehold land.

(02-01-2013, 07:14 PM)Cloudman Wrote: Thanks for your view. Renting out is not an option as I only have one property and will need to rent another to stay so its a not feasible.

You can rent out your terrace house (example $7k/mth), then rent a place for your own residence (example $4k/mth). This results in a net $3k income. Of course there's property tax and other expenses, but basically you don't have to completely write off the renting out option. This option however, involves a downgrade in lifestyle and living conditions.

Just to offer two "out of the box" options:
1) if you have spare rooms you can even rent out a room (of course screen the tenants carefully) for passive income.
2) Borrow a loan against the terrace house (at 1% interest now), buy into dividend counters (offering 5-6%). The difference is your passive income, tax free! Of course risks are there - in case interest rates rise and the dividend drops you may lose that passive income and even have negative cashflow. When you try to sell off the dividend stocks, they may be below the value you paid. So beware, and I disclaim liability for any losses

In the end you know yourself best so we can only offer points to consider, you have to make the decision.

If it were me, I would hold on. I always felt that the home is not an investment, it is a place where I need to meet my family needs. So unless my needs change (children grow up and move out, or change workplace and need to move closer to office), I will stay put. Some things money cannot buy. By the way, I am doing a variation of option 2 (took a term loan on my house value, for investment purposes).

Wish you wisdom to decide on your next move!

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Actually I totally agree with AlphaQuant. Many of us dream of such "windfall" so we can quit our job or take a less stressful job. The issue may not be about the house or the money. The issue is about what we want to do with our lives.

I think I also should not offer advice, but I share what I might do:
At 50, if I feel burnt out at my job, I may want to consider slowing down the pace and spending time with children. This is regardless of whether i have money or inheritance or property. We are only given a few decades here on earth, they fly by quickly. I will however, want to find something to keep me engaged and push me so I am still stretched mentally. I do not want to deterioriate with inactivity. If I have not enough money, I will scale down my lifestyle and spend frugally. I always remember my days of hardship and tell myself I must not be spoilt even when I can afford luxuries.

That's just me.