The second house we purchased in 2012 was the 8th and final property we bought in the span of 10 years. The house was bought off-plan from a real estate group which, at that time, ran one of the most successful real estate agencies in Singapore. The group was founded by a brilliant man who started his career as an air steward, progressed to a star real estate agent, and later made his empire a household name by providing real estate agency services and developing properties.
We were impressed by the artist impressions and floor plans for the brand new house in PropertyGuru, and made our way to Marina Bay Sands Convention Centre where the real estate group was holding an exhibition. The founder of the group was giving a motivational speech at the exhibition and the hall was packed with people lapping up his pearls of wisdom. Every now and then, a real estate agent would yell "Sold!" emphatically, and his colleagues would applaud and cheer in support.
We purchased the brand new 3.5-storey freehold intermediate terrace house in District 15 for S$2,750,000.00. The built-up space was over 4,200 sq ft. At the point of purchase, construction on the house was already afoot. We would drive by occasionally to check on the status of the construction, and were pleased to see it progressing along very quickly.
The keys to the new house were handed to us in mid November 2012. We walked through the house with the developer's representative, making notes of defects along the way. The developer's representative promised that the defects would all be taken care of as soon as possible. Our agent had already found us tenants who were due to shift in in December 2012 with rental yield of 3.5%.
Within a week of our tenants shifting in, problems started to surface. Over time, the string of defects became endless. There were leaks due to rain, water running out of electrical sockets when one was showering, frequent power outages, main water pipe bursting, water heater constantly tripping, massive cracks, tempered glass roof shattering, false ceiling collapsing, mould, etc. It was every house owner's veritable nightmare!
Our tenants were extremely patient, reporting each incident to us and taking it in their stride. One of them even continued to sleep in a mouldy room with a collapsed false ceiling for some time. This developer's workmanship was unbelievably horrible. They tried to rectify the defects, but it was obvious that they couldn't do a proper job without re-doing the piling for the house, as the house was sinking and tilting at the same time. Eventually, we had to terminate the lease with about 6 months remaining, move everyone out, so the developer could re-work the foundation of the house and rectify all other defects once and for all.
We met with the developer's representatives and the founder himself on numerous occasions. It was a stressful period for all of us, and some of the meetings were tense with raised voices. Hubby wanted to engage lawyers to commence legal proceedings against the developer, but I was not in favour of that. I was well aware of how lawyers charged for their services and was of the opinion that, even if we had a good case, the winner at the end of the day would be the lawyers and not us.
I preferred a softer approach to work out an amicable solution with the developer. In the end, the developer paid us rent for 6 months to compensate for the early termination of our lease with the tenants, covered our mortgage payments for the remainder of the 2+ years when the house was being rebuilt, and rectified the problems.
In September 2016, a house reinstated to brand new condition was handed to us. We parted ways with the developer's founder with a signed settlement agreement and a friendly handshake. It was weight off everyone's shoulders. Our capable agent quickly found us a new tenant, paying us rent at 2.8% yield. The rental market had weakened from 2014. We noticed the shrinking demand for rental property and the consequent fall in rental from our other properties too.
A slew of property cooling measures were introduced after our purchases in 2012, softening the property sales market considerably. To avoid paying Seller's Stamp Duty ("SSD"), we continued to hang onto the house, collecting ever reducing rent, and hoping that defects would not show up.
Unfortunately, even after the rebuilt, the house continued to be plagued by leaks and cracks, albeit not as seriously as before. With the defects warranty period over, the developer no longer entertained our calls.
In 2018, when our holding period to avoid paying SSD was already over, we decided to sell the house. Our overall observation of the market was not a positive one. Year 2017 to early 2018 saw a surge in the number of en-bloc sales, and we felt our best bet was to capitalise on the flock of en-bloc sellers looking to upgrade to a landed property. Our agent put our property on the market, and reported on the lukewarm response. We persevered, quietly collecting rent and taking care of repairs.
It took a while before we successfully offloaded the property at the end of 2019 for S$3,500,000.00. A meagre 27% profit after 7 long years of stress and worry.
Even though our combined profit from selling the last 2 houses exceeded a respectable S$1 million, Hubby and I were disappointed with ourselves. After tasting the sweet nectar of success with our initial picks, we had not applied logic and common sense in our last 2 purchases. We had made impulsive buys without proper due diligence. We had failed to survey the neighbourhood in detail, like how we walked the streets in Little India. We had not studied the track record of the developer carefully. Our last 2 purchases probably taught us the most valuable lessons of all in our investment journey; lessons which will be indelible this lifetime.