Case Study
Early Equity Recycling for Asset Growth
Introduction:
Adrian (34) and Melissa (32) had entered the private property market early in their careers, purchasing a compact 2-bedroom OCR condo 7 years ago shortly after their marriage. With strong career progression and the arrival of their first child, they now needed more space. At the same time, they wanted to optimise their property portfolio for long-term growth.​
Situation Overview:
Combined monthly income: $24,000 (Adrian: $14,000, Melissa: $10,000)
Current Private Property:
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Purchase price 7 years ago: $950,000
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Outstanding loan balance: $480,000
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Estimated current market value: $1,400,000
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Estimated selling costs (agent, legal, fees): ~$35,000
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Net sales proceeds: ~$885,000 (after loan redemption and sales costs)
CPF OA Balances:
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CPF OA used for initial purchase: ~$200,000 (including accrued interest)
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Refund to CPF upon sale: ~$200,000
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Cash proceeds after CPF refund: ~$685,000
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Cash savings: $200,000
Dave's Approach:
We assessed their true upgrading capacity by fully accounting for CPF refunds, net cash proceeds, and their ongoing income capacity. Rather than purchasing a resale unit immediately, Adrian and Melissa opted to buy a new launch 3-bedroom premium unit under construction at $2,600,000. This gave them sufficient space for family growth, with the intention to hire a helper once their child starts formal schooling.
To maintain continuity for their young child and avoid living with parents, they chose to rent a nearby 3-bedroom unit during the interim period.
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New Launch Purchase Breakdown:
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Purchase Price: $2,600,000
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Buyer Stamp Duty: $102,600
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Legal & Misc: $5,000
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Total Cost: $2,707,600
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Loan (75% LTV): $1,950,000
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Cash + CPF Required (initial 25%): $650,000
Funding Allocation:
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CPF OA refund used: $200,000
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Cash proceeds from sale: $685,000
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Total funds available: $885,000
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Remaining buffer after initial payments: $885,000 - $650,000 = $235,000
Rental Plan:
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Interim rental for 2.5 years while new launch is under construction
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Estimated monthly rent for 3-bedroom unit: $4,800/month
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Total rental cost over 30 months: ~$144,000
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Deducted from remaining buffer: $235,000 - $144,000 = $91,000
Holding Power Assessment:
With a remaining buffer of ~$91,000 after interim rental and initial downpayment, and a combined income of $24,000/month, they retain holding power. Upon TOP, monthly instalments at 3% interest over 25 years will be approximately $9,280, serviceable within their dual-income capacity. Stress-tested single-income scenarios remain within safe buffers.
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Final Plan & Outcome:
Adrian and Melissa sold their existing condo and committed to a new launch 3-bedroom premium unit, funded through a combination of CPF refunds and net sale proceeds. Renting during the construction phase allowed them to maintain lifestyle continuity while securing their long-term upgrade plan. Their disciplined equity recycling approach kept them within safe buffers, balancing both family needs and financial growth.
Client Profile:
Age / Life Stage: Early-mid 30s, Married with 1 young child
Family Situation: Dual-income professionals with growing family needs
Property Type / Ownership: Own a 2-bedroom private condo (OCR), purchased at age 27
Main Concerns: Upgrading space for family, recycling equity efficiently, maintaining financial stability
Key Takeaways:
Early private property purchases often serve as a stepping stone, not a final home
New launches offer access to higher quality future-ready homes, but require interim rental planning
CPF refunds are an important part of total available capital during asset transitions
Holding power and liquidity buffers remain essential even for high-income households
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