Calculations on a HDB purchase versus rental (for singles)

After reading Uncle8888's post, I thought I would just do a quick post on how one would fare buying a HDB 4-room resale flat that costs $360,000 as a single (assuming single at 35yo and flat is with 70 years lease left i.e TOP 1991).

The table below is a super simple illustration of the rental yield plus saving cumulative over a period of 70 years, assuming the rental of a room is $600 per month.
Disclaimer: I did not factor in inflation of rental over the years nor utilities / income tax or possibility of years when there's no tenant renting.

Year Renting cost Collection of rental (2 rm rented out) Rental yield + saving
1 7200 14400 21600
2 14400 28800 43200
3 21600 43200 64800
4 28800 57600 86400
5 36000 72000 108000
6 43200 86400 129600
7 50400 100800 151200
8 57600 115200 172800
9 64800 129600 194400
10 72000 144000 216000
11 79200 158400 237600
12 86400 172800 259200
13 93600 187200 280800
14 100800 201600 302400
15 108000 216000 324000
16 115200 230400 345600
17 122400 244800 367200
18 129600 259200 388800
19 136800 273600 410400
20 144000 288000 432000
21 151200 302400 453600
22 158400 316800 475200
23 165600 331200 496800
24 172800 345600 518400
25 180000 360000 540000
26 187200 374400 561600
27 194400 388800 583200
28 201600 403200 604800
29 208800 417600 626400
30 216000 432000 648000
31 223200 446400 669600
32 230400 460800 691200
33 237600 475200 712800
34 244800 489600 734400
35 252000 504000 756000
36 259200 518400 777600
37 266400 532800 799200
38 273600 547200 820800
39 280800 561600 842400
40 288000 576000 864000
41 295200 590400 885600
42 302400 604800 907200
43 309600 619200 928800
44 316800 633600 950400
45 324000 648000 972000
46 331200 662400 993600
47 338400 676800 1015200
48 345600 691200 1036800
49 352800 705600 1058400
50 360000 720000 1080000
51 367200 734400 1101600
52 374400 748800 1123200
53 381600 763200 1144800
54 388800 777600 1166400
55 396000 792000 1188000
56 403200 806400 1209600
57 410400 820800 1231200
58 417600 835200 1252800
59 424800 849600 1274400
60 432000 864000 1296000
61 439200 878400 1317600
62 446400 892800 1339200
63 453600 907200 1360800
64 460800 921600 1382400
65 468000 936000 1404000
66 475200 950400 1425600
67 482400 964800 1447200
68 489600 979200 1468800
69 496800 993600 1490400
70 504000 1008000 1512000

The rental yield is approximately 4% if both spare rooms can be rented out and the owner stays in. 

Assuming that one takes the maximum loan tenure from HDB at 2.6% PA, how much accrued interest would one have to pay for the flat hypothetically?

Looking at the table above, it would be approximately $130,000. 

The actual cost of the 4-room flat would be 360,000 + 130,000 = $490,000. This is without taking into consideration any accrued interest from the use of CPF.

As such, the break-even point would be in year 23. Although one would have reached age 55 in year 20.

If one decided to sell the flat anytime before reaching 55 years old, the accrued interest from CPF usage would need to be refunded back to the CPF account together with any grant (also with accrued interest) and the flat resale amount to make up the minimum retirement sum. Balance from the sales proceed would be the pocketed earning.

I won't go into details of how to calculate the accrued interest for CPF savings used (aka I don't like chomping too much numbers). You can find the details here and here.

Basically, it's the sum used-to-date plus 2.5% PA (we have to do the calculation for yearly and add them up). If one decided to stay in the purchased flat till one kicks the bucket, then there's no need for accrued interest repayment.

Assuming that the rental income plus saving can yield a 4% cashflow per annum, say from investing, it can be compounded to approximately $844,184 after 23 years. [correction] Or $669,573 if compounded at 2% PA. 

In a nutshell, one would probably not earn much upfront cash from flipping an old flat (technically speaking flat purchase is "house leasing" from gov). If we stay in it or bunk in at parents' after the purchase then collecting rentals can help to enhance our cashflow as illustrated above.

However, if one has spare cash that are rotting in the bank, it might be a better choice to pay off as much of the loan as possible so that there would be less snowballing of interests. As such, the breakeven years can be shortened.

For more information on flat purchase, you can check out my Budgeting Tools.

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Disclaimer: Contents of this blog are personal opinions and NOT financial advice to buy or sell any mentioned securities, commodities or assets.


  1. Excellent! You can count. LoL!

    1. Hi Uncle8888,

      Haha, it's just a simple "enter figure and drag down the column" Excel calculation.

      I did likewise for calculating life insurance - premiums and its surrender values. :P

      We can tweek the figures and play around to see how much is considered affordable.

  2. Hello Rainbow girl,

    Eh... How do I put it across to you without hurting your feelings?

    By treating you as an adult and not patronising you just because you're a girl ;)

    (I'm that guy that you can trust to tell you when you have vegetable stuck in your teeth, or your blouse button has come undone)

    1. How does your calculations help you to decide whether its a buy for your 4 room resale flat at $360K???

    At $360K, will it be a buy or rent for you? You did not say.

    Spur had offered the "scholarly" formula for determining whether is better to buy or rent - its textbook formula found in Investopedia, just to let you know.

    Mine is a much simpler rule of thumb used by experienced property buyers to get a quick assessment ;)

    You can count and calculate, but I'm afraid you're going off tangent...

    2. I was wondering why you have this unhealthy "obsession" with CPF accrued interest payback thingy?

    Now that you have indicated that source and link, ah! No wonder!

    Just pause and think for a moment why veterans like CW and Spur say it does not matter.

    And that goes for the MAJORITY of Singaporeans who bought their flats using CPF.

    If its a BIG issue, wouldn't you hear more about it? From real people, real stories? Not just hypothetical examples? Wink.

    Why do the MAJORITY of HDB buyers - both BTO and resale - still use CPF instead of cash to service their housing loans?

    Can't they count? Or maybe they don't know about this CPF accrued interest thing?

    Trust but Verify for yourself.

    Don't believe or let what I say affect you. But apply the same to whatever you read in the internet.

    This CPF accrued interest bogeyman is often used by property snake oils to steer HDB bei kambings to their schemes...

    And sometimes by youths who monkey hear, monkey write in THEORY, not from their actual experiences ;)

    1. Hi SMOL,

      Why do I wrote this post? Of course to get some serious poking from veterans! Those who have "been there, done that", like what you said not just hear-say from theory.
      Don't worry, I don't have glass heart. :)

      1. I saw Spur's comments and you must be talking about this

      Actually I have calculated and found that... it's sama sama. Assuming suburb rental of whole flat unit (purchase wise seems like only suburb 4 rm can be found at 360k) at $2000/mth. $24000 x 15 = $360,000
      (Magic figure or what? Lol)

      So to buy or to rent in this case will depend on other personal factors.

      2. I figured that if a Singaporean is to buy the flat as home to stay, then the CPF accrued interest does not really matter. No flipping property. Did I get your point right?

      As for property snake oils, I would be interested to hear about their schemes. Care to share?

    2. Oh, that screenshot table up there it's the accrued LOAN interest (2.6%) from HDB that I am talking about.
      (In case you thought that's part of my obsession about the CPF 2.5% accrued interest to pay back on flat sale.)

    3. Rainbow girl,

      1. No. Its not your tables. I was thinking when we are making a BUY or RENT decision, what has CPF accrued interest got to do with anything?

      This CPF accrued interest thing is more about HOW we are going to finance our housing loam - in cash or CPF?

      And that only applies AFTER you have made a BUY decision ;)

      That's what I meant you going off tangent...

      2. Try goggle CPF Accrued Interest. See the number of posts by "vested interests" and by young writers writing for a living and not necessarily sharing about something they know first hand ;)

      Then read this:

      CPF Accrued Interest - Will It Really Come Back To Haunt Me If I Used It To Finance My Property?

      Refreshing coming from "vested interest"... But then again, as a snake oil myself, I can see why he is doing so.

      But what he says has more "truths" than your home-made source ;)

      Her hypothetical example of someone selling their HDB after 30 years for $800K but still has to refund CPF for $900K, that's a good example of datamining statistics to fit our preconceived conclusion...

      Ask yourself, if after 30 years your HDB's appreciation is BELOW the annual CPF 2.5% interest, will you still make a BUY decision today?

      Can it happen?

      Of course!

      Like in HK now where people are looking to emigrate out.

      Or Singapore has become an economy basket case 30 years from now.

      Yup. BUY or RENT decision is like you've said. Its more than the quantitative numbers. There are also qualitative personal and macro factors to consider.


    4. Hi SMOL,

      Thanks for your sharing.

      To tell the truth, my post is biased towards BUY. After I have concluded that buying and not renting is better for the cashflow. And yes, off-tangent I went.

      Nobody wishes for HDB's appreciation to fall BELOW the annual CPF 2.5% interest. But looking at the bright side, we don't have to refund the shortfall if that's the case


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