Owning a house is one of the major milestones in life, and even more so when one becomes a young adult. When considering homeownership, some options that come to mind are executive condos. However, owning a freehold condo provides several financial benefits. This blog post looks at the financial benefits of owning a freehold condo, especially for the novice who is just beginning to consider property investment.
1. Long-term Investment Value
The major financial benefits of freehold condo ownership pertain to long-term investment.
- Appreciation over Time: Because ownership is not limited in time, freehold properties appreciate more steadily with time when compared to leasehold or executive condos. This makes it a good long-term investment, especially in areas where property demand is high.
- Better Resale Value: Freehold condos can also command a higher resale value because future buyers are willing to pay more for the security of indefinite ownership. Even though executive condos may be sold after a certain period, freehold condos usually hold an edge in the market due to their permanence.
- Generational Wealth: Thinking ahead, a freehold condo can be passed on to your children or members of your family, securing long-term wealth for generations to come. Without the time-constrained ownership of executive condos, one might have options regarding tenure for freehold condos, perhaps even retaining the property indefinitely.
2. More Flexibility with Renovations and Customization
Ownership in a freehold condo usually means more flexibility when it comes to making renovations and customising space.
- Renovation Freedom: In an executive condo, renovation work may be restricted by HDB rules and regulations. Freehold condos, on the other hand, generally give you a wide range of freedom to express yourself. Through your addition of new rooms, laying out new electrical points, changing layout features, etc. This will add considerable value to your property in times to come.
- Customization for Resale: Consider customizations to enhance your property’s appeal to potential buyers if you plan to sell in the future. Upgrading kitchens, bathrooms, or flooring is a common renovation that provides an increased resale value for a freehold condo.
- Maximising Rental Income: Renovations increase rental income by adding value for resale and making the property more appealing to renters. By customising the space to accommodate the needs of tenants, you are able to command better rental prices. This makes owning a freehold condo a great source of passive income in the long run.
3. Freedom to Rent or Lease Without Restrictions
Freehold condos offer the financial benefit of freely renting your unit without strict restrictions. You are not allowed to rent out your executive condo unit without first waiting for a specified period of time. This restriction may last anywhere from five to ten years.
- No Waiting Period: In the case of freehold condos, there is no such waiting period. Consider renting out your property for passive income if you’re not yet ready to live there.
- Higher Returns on Rentals: Condos that are freehold are normally located in prime areas, and as such, they usually attract higher rental rates. This makes it easier for you to service your mortgage or save towards future investments. Not only are you building equity, but you are also generating ongoing income.
- No Government Restrictions: Unlike an executive condo that can have certain government regulations or quotas for foreign tenants. With a freehold condo, you have the freedom to choose tenants for your unit as you please.
4. Better Loan and Financing Opportunities
When financing a freehold condo, could also provide advantages over buying an executive condo or a leasehold property.
- Larger Loan-to-Value Ratio: Due to their better value retention, freehold condos often qualify for a higher LTV ratio from banks. It often allows for a smaller down payment, making it easier to own a house at a younger age.
- Lower Interest Rates: Because of the long-term value and stability, freehold condos may access lower interest rates for loans compared to executive condominiums. The savings for every per cent drop in interest rate can save you thousands of dollars over time on the overall cost of the property.
- Refinancing Flexibility: Freehold condos also enjoy flexibility in refinancing loans. In the case of falling interest rates or improvement in one’s financial situation, one may refinance at a lower rate. Hence further raising the financial benefits accruable from owning a freehold condo.
5. High Demand for Prime Locations
Finally, freehold condos are usually found in the prime location, which is a major financial advantage.
- Accessibility: Freehold condos usually come in highly desirable locations with easier access to transportation, amenities, and city centres. They tend to appreciate faster than other properties built at less accessible sites.
- Attractiveness to high-income tenants: Freehold condos are usually located at the heart of prime locations, which automatically places them at an advantage. Of course, you’d expect high-income tenants who would still be willing to pay premium rental rates. This provides the chance for higher returns on investment, especially if you are considering renting out your unit.
- Greater Market Stability: Properties in good locations are more stable compared to those in fluctuating markets. This means at times of economic crisis, freehold condos may hold a little better against the values of other properties.
Conclusion
Freehold condo ownership offers superior financial benefits, such as passive income, higher appreciation rates, and fewer restrictions. A freehold condo presents the case for a smart, long-term investment. As young adults try to get an early start on accumulating wealth, choosing to go with a freehold condo might make all the difference. As a key financial move that pays dividends for years to come.
