My Investment Unit Has Reached TOP. Should I Cash Out or Rent Out?

In 2023, the number of units expected to hit TOP will be about 15,000 units.

The source?

They are mostly from the enbloc fever of 2018 – where a lot of aging developments were bought over by developers.

The Sunday Times examines 2 reasons that may be the cause of this year's collective sale fever.

Posted by The Straits Times on Saturday, November 11, 2017

Reaching TOP status is a significant milestone as it presents an opportunity to re-assess your investment.

Your have to consider the new monthly mortgage that will kick in.

And in an environment of rising interest rates – it is good to review what are the upcoming expenses that you have to monitor.

Let me share with you what is going to happen next.

From the moment you step into the condo to collect your keys…

You will face a barrage of agents – from those telling you to sell and take profit.

To those focusing on rental who tells you that it is a good time to rent out your unit.

Then, there are the ID vendors will excite you with how beautiful and cozy your new home will be.

They will share pitches on how you can create a space your family will enjoy and how much discount you can get.

Not to mention well-meaning friends and relatives voicing their opinion.

Nothing wrong, they are sharing their thoughts and are happy for you.

They are all correct, all stating facts. But you need to know which facts are most helpful and beneficial for you.

Essentially, when a development reaches TOP status – it is time of great excitement and fun.

But also a time where you might find it challenging to be objective.

Here I am going to present 2 in-depth perspectives from the options open to you.

Perspective A: Sell the newly-TOP unit and cash out. Repeat the process for another property.

A common question I get from my clients is this: Can I cash out and reinvest the profits for another property?

Of course you can.

However, before you make the decision, here are some factors you have to consider.

#1: Your loan amount for your next purchase

A few things have changed since the time you bought this property.

You have grown older. This will affect your TDSR.

The TDSR has been reduced from 60% to 55%.

How will the new property cooling measures affect your ability to take up home loans? We break it down for you.

Posted by CNA on Friday, September 30, 2022

The interest floor rate for the computation has increased to 3.5% by MAS.

Some banks are also using higher rates.

So you might not be able to get as big a loan amount as your previous application.

#2: Are there still potential upside for this property?

For this question, I am not looking in the context for the next 10-20 years.

What am I referring to you is whether are there any upcoming transformation happening within the next few years?

It could be upcoming malls / MRT stations / amenities.

These could be catalysts for an exit strategy in the future.

#3: Upcoming increases in property tax and interest rates

These are increasing expenses that you have to consider.

It makes rental income less attractive.

Taxing the wealthy: Tax hikes for top earners, high-end property and luxury cars in #SGBudget2022, at a glance.

Posted by CNA on Friday, February 18, 2022

#4: What is your own level of risk appetite?

There are some people who are ok with not capturing their gains immediately and prefer passive income.

This is a group who prefer regular dividends.

However, there are also some people who prefer to capture their gains upfront.

Why? Because they prefer not to let their gains be eaten or lost due to changing market environments.

This really is a personal preference and depends on what type of investor you are.

Perspective B: Become a landlord and collect rental income.

I can imagine the excitement of owning an investment property and being able to call yourself a landlord.

It is something we wish to experience especially in retirement – to be able to collect rental monies as a form of passive income.

When the development hits TOP,  we would have already completed all the downpayment.

What’s left is only the monthly installment.

So our belief is that if we can:

  • rent out the unit to suitable tenant
  • the monthly rental paid should be able to cover the mortgage

The property becomes self-financing.

Essentially, the tenant is depositing money which goes to your savings account.

However, I like to highlight certain considerations you must take note.

When you make your monthly payments towards your mortgage, it is goes into 2 different containers:

  • part of it goes to your principal
  • another part of it goes to your interest

The bank needs to make money as well.

Imagine if you bought a property at $1.5M.

You took a loan of $1.125M at an interest rate of 3.9%.

Even though you are using the rental income to service the loan – take note for the first few years, the interest will be very high.

More of your payment goes to the interest, and less to the principal.

Being A Landlord Is Equivalent to Running A Business With A P&L Statement

If you run a business, you would be very familiar with the term of P&L (profits & loss) financial statement.

As the investment unit is under your name, it means you are essentially responsible for the P&L statement.

Unlike dividends which you can collect passively, there is an active element involved in managing a rental property.

The active element in this case?

You are responsible for the outgoing expenses and incoming rental revenue.

Let’s explore an example of a P&L statement for a rental property.

Parc Esta has recently hit TOP status back in Dec 2022.

The above table has been sorted by size.

We will take the typical 3-bedder unit which is about 904sqft as an example.

The rental rate varies – with the highest at $6.6K per month.

For this example, I am going to assume a $6000 per month rental rate.

Purchase Price: $1,393,000 (I use the unit at Level 5 as an example)

Assuming 75% loan, this means the loan amount: $1,044,750.
Interest Rate: 3.9%, 30 years tenure.

This is what we will have using a loan calculator.

Purchase Price (We use the level 5 one as example): $1,393,000 (estimated)

The property tax will be based on an Annual Value of $43,800.

For the payable tax rates, you can refer to IRAS website here:

Estimated P&L Financial Statement for Rental of a 3-bedder unit at Parc Esta

Below is the estimated incoming revenue and outgoing expenses for a 3-bedder unit that is rented out at $6K per month for the next 3 years.

For Parc Esta, I understand that the maintenance fees is currently at $190 per month for a 3-bedder unit. This is actually quite low.

So to be conservative, I am assuming it is $300 per month – which is actually more typical for similar-sized developments.

After 3 years, we can see that the estimated nett rental profits is about $68K.

Rental Profits vs Capital Gains

For the particular level 5 unit at Parc Esta, the first owner made an estimated profit of about $327K when they sold it off – just before the TOP date.

If we were to account for the various fees – stamp duty, legal fees, and agent commission – the estimated capital gains will be about $300K.

Compare the $300K gains that is achieved upfront vs $68K gains after 3 years.

Which would be more preferable to you?


If you are a property investor, I think it is fair to treat your investment unit as a financial statement which you can manage.

There are costs involved which might be missed out on first glance.

With rising interest rates and property taxes, we cannot be very sure on whether are we still profitable after 2-3 years.

Experts told TODAY that the rate of increase of rental prices should ease this year as more supply of private homes comes on the market but rents may still jump by another 13 to 16 per cent.

Posted by TODAY on Friday, January 27, 2023

At the same time, if you do decide to sell after renting out for 3 years?

Remember that past capital gain performance does not mean future performance.

I cannot deny that demand from tenants for a rental unit is very high especially now in 2023.

My goal is the P&L statement I provided here is able to provide useful insights on what an investor can do with a newly-TOP unit.

By the way, not all new launches will make money upon TOP.

There are risks and factors to take note of – like the size of the unit and location of the property.

Still unsure on what you can do about your property?

Let me know. Drop me a whatsapp message at

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Darius Ng
Darius Ng

Darius Ng is a District Director and consistent top producer in PropNex since 2011.

Over the years, he has built up a strong track record of successful restructuring / upgrading case studies. This depth of experience has allowed him to share many critical learning points that are beneficial to his clients.

In addition to serving clients, he also has mentored many of his associates in Darius Ng Division towards becoming top 100 producers as well.

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