I have finalised the plans and quotes for the renovation of the new property purchase . I had to restrain my overly enthusiastic contractor/designer who had had urges for a much more ambitious project than I did. This is a rental project, not own use, and there is no point in spending money that is not going to be recovered through enhanced rental income.
When I signed the agreement, I negotiated multiple pre-completion visits. This will enable the building contractors to do all the measurements and start work immediately after completion (instead of taking 1-2 weeks to do the measurements etc.
I have also signed the formal sale and purchase agreement and had the lawyer check the title and the body corporate rules.
I have submitted a mortgage application to DBS for a loan equal to 60% of the purchase price. This level of gearing was selected because it will give me a small positive cash flow on a 20 year P+I mortgage with headroom for interest rates to rise to 3% and assuming that the property is rented at the mid-point of the agent's indicative rent. Of course, if interest rates remain where they are, I will have a positive cash flow even at the lowest rental level.
I also have to sell some of my equity investments to fund the rest of the purchase price, pay the stamp duty and other closing costs and fund the renovation - I do not have enough cash on hand. I'll make a decision over the weekend but am leaning towards selling all of the actively managed funds. With the increase in the number of relatively low cost ETFs, the justification for paying the higher MERs of actively managed funds is becoming very marginal.
Completion is due on 8 October.