With whatever cash and CPF OA balance I had, I bought a $560k one bedroom apartment in Nov 2013. It is a freehold apartment that is about 6 minutes' walk from Potong Pasir MRT station. While the apartment is small, it has everything that I would need for my simple daily living. I also like it that it's a corner unit and no renovation is needed; I just need to buy a bed, table, sofa and TV set to move in.
After I signed the agreements etc, I told my friends about my purchase and my plan to live in my own apartment. The feedback I got was largely negative -- it's so expensive for such a small space, it's wrong timing to buy now when the property market is red hot, prices are sure going to drop this year or next, why you don't want to continue living with your parents? For awhile I doubted that I made a correct decision about my purchase.
I collected the apartment's keys from the law firm on a Tuesday after all the paperwork has finalised. I met my property agent on that week's Thursday to look at my apartment and see if it can be rented out. I figured that this apartment can generate passive income for me. The property agent brought the first potential tenant to look at the place on Sunday afternoon, a rental rate was agreed on, and the tenancy agreement was signed on Sunday evening. The tenant moved into the apartment on Wednesday. I was pleasantly surprised that all these happened in one week's time.
The monthly rental is just sufficient to cover my monthly mortgage, mortgage insurance, fire insurance, maintenance fees and property tax. It would have been even better if there is some leftover from the monthly rental for me to spend on things I like, but I'm glad with how things have progressed. The tenant is helping me pay off the loan on my apartment, and I am not paying out any more money aside from my initial 20% downpayment. Over time, I can also re-finance the mortgage and pay down the loan, and rental can be raised in the future too (I hope). Then, I will get to enjoy extra cashflow from the apartment.
My apartment is in a sense "self-sustaining" with rental income covering the associated expenses every month. In the meantime, I shall continue to save from my monthly salary to realise my next plan.
Shall talk more about this "next plan" in my next post.