Sunday 25 November 2018

HDB loophole or sugar from big daddy?

If you look around your colleagues in their 40s to 50s, you may find some of them have rented out their HDB flats while they are staying in private condos themselves.

This is a variation of the 2 bites of the cherry and upgrade to private property sugar from big daddy. 

Today, if you owned a condominum or private landed properties, you must sell your condo when you downgrade to a HDB flat.

But if you owned a HDB flat, you can "invest" in a private condominium. Now that's cool for those of us who started with small means. And no interest in investing in equities or other forms of financial "paper" assets...

To you, an asset is something you can feel, touch, and hold kind. Wink.

Of course not everyone and anyone can do it. 

But its a great later years option for those who started out "average". The slow starters. The mediocre fresh graduates. Those with no papers. And those who have no clue what they wanted to do in life! You know, no dreams, no goals, no plans whatsoever... 

Strange things do happen. 

Who knows?

Maybe 10-20 years later your career or own business took off!?

Now you can afford to upgrade to a private property. Why not rent out your HDB for "passive" income? (OK, no such thing as "passive" as you may still need to handle tenants from hell!)

And you know what? You can do this without knowing how to read financial statements, know nuts about what's happening globally in the financial markets, or anything to do with FIRE or financial freedom!

Its just based on simple Earn More, Save More. And some luck in life!

Let's be honest. Which is easier?

Renting out a flat/condominium?

Or investing in paper assets like bonds or equities for the yield?

I mean its inside our DNA from 5,000 years of Chinese history.

Landowner anyone?



  1. Like my neighbour, can rent out whole HDB unit and move to stay as caretaker of her aging mother. Lucky generation

    1. CW,

      Its always good to have options ;)

      Especially when the rent can help make up for the loss in income or medical expenses.

      Many thing we don't "plan" for them to happen...

      I also don't like to live with strangers as in tenants... But its good that in a "no choice" situation, I can always rent out my 2 bedrooms and sleep in the living room.

      I stumbled onto this option when I stayed in a "hostel" in Rome for the first time.

      Its the equivalent of our 5 rm HDB flat. The Mainland Chinese ex-engineer converted his 3 bedrooms into bunkbeds for 4 to 6 persons; while he sleeps in a double-decker bed in the living room!

      I suspect the "hostel" is illegal ;)


      Got imagination won't starve one ;)

  2. According to HDB rules,

    U can buy private but u must stay HDB. If u stay private and rent HDB, Jusy hope no one whistle blow.

    1. Stay private and rent hdb. Offend yr neighbour then you tua jee

    2. Sillyinvestor,

      You are the example why the Efficient Market Hypothesis is debunked ;)

      Stay in condo rent out HDB flat

    3. CW,

      Big tree attract wind.

      The elephant keeps walking ;)

      Would you prefer your neighbour to be jealous of you or you to be jealous of your neighbour?

      How other people behave we can't control; we focus on our own cultivation ;)

  3. HDB rules changed sometime in the 2000s. Can stay in condo & rent out HDB.

    As long as you have held onto the HDB for 5 yrs .... which should be the case anyway, as by right you can't buy a condo until the 5-yr MOP is up. Hence by the time you buy condo, it also means you can rent out your HDB :)

    This applies where at least 1 of the HDB "owners" is citizen.

    For pure PR HDB "owners", they cannot own both private property & HDB, even if they bought the HDB first. If they buy a condo, they will have to sell off their HDB within 6 mths.

    Also, pure PR HDB "owners" cannot rent out their entire HDB flat, even after completing the 5-yr MOP.

    The above 2 rules enacted after a PR (who was also a PA/RC grassroots member) boasted online about staying in condo & renting out his HDB ... which caused a big hoo-ha.

    I'm sure the new rulings prompted quite a number of PRs to try & get converted to citizenship LOL!!

    1. Spur,

      HDB rules and regulations not that complicated.

      Sheep just make empty talk like we don't "own" our HDB flat...

      It will go to zero and what not...

      Shepherds and landowner wannebes study the HDB rules and regulations to find how we can "milk" the sugar from big daddy.

      Most people will go for the 2 bites of the cherry and upgrade to private. Need the profits from HDB sale to pay for the condo.

      To be able to keep our HDB and upgrade to private, our careers or business must be doing very well indeed!!!

      You can't argue with meritocracy or luck!

      OK, some imagination needed; its definitely not passive ;)

    2. "Sheep just make empty talk like we don't "own" our HDB flat..."

      "Shepherds and landowner wannabes study the HDB rules and regulations to find how we can "milk" the sugar from big daddy."

      .. I suppose that's why we should always think outside the box? Never say can, doesn't mean cannot. Never say cannot, does it mean can?!

    3. Kevin,

      I remember an old Dale Carnegie story about 2 convicts looking out of their tiny cell windows.

      One sees stars; the other sees mud.


  4. For average person who don't have the monies or salary to get the HDB + condo sugar, can still turn HDB into an income producing asset:

    Get your parents / in-laws to stay with you & rent out their flat.

    Or stay with parents / in-laws & rent out your flat if after 5-yr MOP.

    I have a neighbour & ex-colleagues who do this.

    1. Spur,

      That's why I quite puzzled when people "complain" about HDB flats!?

      I mean if life treats us well, our HDB flat is a "gift" that keeps on giving:

      Can sell x 2 and upgrade to private.

      Can stay in HDB and rent out private property.

      Can stay in private property and rent out HDB.

      Talk about options!

      And if life treats us not so well, we can:

      Rent out rooms like in the old days in Chinatown when police wear shorts...

      Downgrade to smaller HDB flat to monetise the value of our flat.

      Sell the remaining lease back to HDB.

      Still can qualify for grants somemore! 3rd bite of the subsidy cherry?

      And of course plus the examples you and CW mentioned.

      People are creative. There will always be ways to profit from big daddy regulations - that's what "investors" do ;)


    2. That's why I am sooooo 'looking forward to 35'. Higher success rate of securing old-age income than finding 'Mr Right' right?

    3. Rainbow girl,

      I'm not jealous of those who are better off financially than me.

      But I do get envious when I see couples in their 80s still holding hands and loving each other's company.

      On that count, I can't argue with you.

      It is much harder to find "Mr Right" or the "Right Woman"!!!

      Now tell me do you see the sillyness when someone tells you they set goals and do planning to get "Mr Right"?


  5. temperament,

    Physical assets and paper assets are same same but different.

    Its like making a bet with illegal bookie and won! But the bookie lost too much and ran away; what can you do?

    That in a nutshell is counterparty risk ;)

  6. temperament,

    Yup, that's the general experience of those with no papers; we are like the leaf in the wind ;)

    The educated types may find it hard to appreciate what we have gone through...

    Can't blame them.

    Not when their lives are a series of goals and milesstones as in kindergarten, primary, secondary, junior college, then university, and so forth.

    Have you read those blogs where they even have goals when to get married, when to have children?

    So its not suprising we have "precision" as in when to be financially free, when to be manager, when to be grandparents (this is a poke), etc.

    I love this Christian joke that I've shared in the past:

    How to make God laugh?

    Tell him your plans.

    Very revealing to the believers on how deep their faiths are, isn't it?


  7. "Have you read those blogs where they even have goals when to get married, when to have children?"

    Hahahaha the reason I come back all the time is because the entertaining and juicy bits are always in the comments section! The blog post itself is usually the thought-provoking one ;)

    1. Kevin,

      That's because I'm the irreverent clown in the community mah!

      Sex, religion, politics - all can poke!

      This is all thanks to the diversity of views that make it interesting ;)

      Sometimes its polite agreee to disagree; sometime its taking out our bayonets and start plunging and twisting!


  8. Now condo psf so exp, buy already how to rent??
    Nowadays AngMo expatriate also renting HDB liao hor!
    Actually I don’t understand why people choose to downsize and stay in smaller condo.
    Funny thing is they don’t use the facilities much.

    1. WolfT,

      Some prefer rice, some prefer noodles, some prefer bread ;)

      Some prefer 3-in-1 coffee, some prefer kopitiam kopi, some prefer attas coffee.

      Some prefer men, some prefer ladies, some both also can!

      You can't argue with preferences ;)

      P.S. I don't think when people switched from a bigger HDB flat to a smaller condo unit its called "downsizing" ;)

      Its a bit like being last in place in an attas school still commands more academic respect than being first in a unknown neighbourhood school...

      That's the truth about being anyone and everyone - 80% of the population.

      I don't mind.

      I don't mind when others mind and can't wait to escape from the HDB heartlands :)

  9. temperament,

    This Zen buddhist "trust but verify" dialogue sums it well:

    Q. Is Buddha bound by the Laws of Cause and Effect?

    A. Buddha is not blind to the Laws of Cause and Effect.

    Prejudices and biases don't "magically" disappear just because we say so.

    When I visit Orchard Road or any more attas establisments, I tend to "dress up" a bit more than walking around in my HDB neighbourhood. Defintely no slippers!

    We don't mind does not mean we can disrespect or forget courtesy to others ;)

  10. Depending on what are you doing at Orchard Road. Shopping or dining? Walking up and down Orchard rd and eating at food court then t shirts,short and slippers okay. Shopping with slippers. Sales people may see you no up.

  11. CW,

    That's why I said "I".

    You want to wear what up to you!

    You are aware of the "consequences" as there are social mores whether we like it or not ;)

    I remember in the 70s, people wear pyjamas to the HDB coffee and neighbourhood shops at night.

    Now only seniors in their 80s or some Maniland Chinese do that ;)

  12. I go orchard, i also wear my makeup de.. my rolex and Ferragamo shoe. You get better service everywhere, even if u don’t buy! LOL

  13. WolfT,

    Hang on a minute.

    You're a chio bu or meng nan?

    I don't care if you fly the rainbow flag or like all things pink.

    Just want to get the context and perspective right ;)

    Somehow, I've always assumed you're a he.

    Now I not so sure...

  14. 100% straight Male! 39 but look like 29!


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