If you own an HDB or BTO (build to order) flat, you are probably aware of the fact that you can’t sell the property until it reaches MOP (minimum occupancy period).
This is why one of the questions we receive most often from our readers has to do with what happens after MOP.
Should you keep living in your HDB, or sell it and upgrade to private properties?
Those following us for a while already know we are always encouraging people to do the following:
There is no one-size-fits-all solution when it comes to what to do after your HDB reaches MOP, but here's a no-brainer.
To make the best decision, you need to stay informed.
There are many traps HDB homeowners can potentially fall into. This is why we put together this list of five things you need to keep in mind after MOP passes.
1. Change is natural and moving out is not that difficult
Many homeowners choose not to move out of their HDB flat even if the MOP is over, as they believe moving out is too time-consuming and challenging.
And while no one says moving houses is a piece of cake, it is also not as hard as our minds sometimes play it out to be.
The human mind is averse to change and by nature, procrastination is our default mode so be mindful and not let this aversion take control of your wallet and your opportunities.
Because if you wait too long, you may not be able to sell your flat at a reasonable price, and you will realize that you cannot buy back that lost time.
It’s what we call… pick your fruits before they spoil.
2. Finding the right properties requires effort
It is time-consuming and stressful too at times BUT (with caps), the results will pay off and it will be worth it.
It is known in the circle that those staying in their HDB 10 or 15 years after the MOP passed have a much difficult time finding the right property to move in.
Your 40s are the years you need to start consolidating your wealth, and owning an HDB may not be the best way to do so.
Take the time to look for a suitable property. Talk to experts, do your homework. You will find something that will suit your every need.
3. A large HDB or a smaller private property
Some people don’t want to consider an HDB upgrading because it would mean moving to a much smaller private property.
And while yes, owning a large house may come with a bunch of advantages, it comes with its own disadvantages as well.
A large HDB flat may be spacious and charming to live in, but the value of the property appreciates much slower.
Buying a private property, on the other hand, may mean you need to dig deeper into your pockets, and its land size may be smaller, but it's leveraged nature makes for more potential gains.
You can easily expect 6-figure gains from a private property, while I can’t say the same for HDBs.
Is the compromise you are willing to make worth a 6-figure sum? Give serious thoughts to this.
4. Understand how Buyer’s think
Most of the time, buyers want new properties. For resale flats, this means they will be looking for a property that is no older than 5 years, which is the usual MOP for HDB flats.
This is why, if you want to sell your HDB, it’s better to do so immediately after the MOP has passed.
When buyers visit new properties, their mind will instantly gravitate towards the nice parts of the apartment, rather than the things that need a bit of fixing.
It’s just how the human brain works; we tend to see less flaws when a product seems newer, and are willing to pay more for them.
Unfortunately, this happens the other way around as well. People think that an older property needs more work to remodel, meaning they will try to obtain a lower price.
5. Stop obsessing and start acting
While you do need to take the time and plan your actions, sometimes obsessing too much over a particular decision will prevent you from acting at the right time.
All you need to do is research the market, and if you don’t know where to start, try this:
- Check the market for properties similar to yours and observe how their price changed over the past 5 years.
- Discuss with a real estate expert that knows the market.
- Talk to friends and family that have been through a similar situation.
Ultimately, what you do after the MOP passes is up to you and you alone, but ensure that before you make any decision, you have weighed your options and chosen the one that brings you one step closer to achieving your financial goals.
If you want to speak to someone with in-depth and up to date knowledge about the Property Market, or if you need a second opinion on a coming Property Investment, you can ask me directly here.