My friend lost $48,000 selling HCMC apartment despite 34% price growth

In a dynamic city like HCMC where the demand for housing among young families is always very high, whether to buy or rent an apartment to live in is a common question in many people’s minds.

Recently, my friend sold an apartment in Tan Phu District, which is in the western part of HCMC, five years after purchasing it.

His situation got me thinking, hence I would like to share my thoughts here so young people who are considering buying a house can have a better perspective.

The apartment my friend bought has an area of 65 square meters, consists of two bedrooms and two bathrooms, and is located on a busy street in Tan Phu.

The apartment’s developer is a well-known company that is listed on the HOSE stock exchange.

Construction started in early 2016, and the apartment was handed over at the end of 2018.

This was the company's first project in the city, so the construction was relatively great and on schedule.

The purchase price of the apartment was VND2.05 billion, or VND31 million per square meter.

The initial deposit was VND1 billion while the rest was paid through a bank loan that my friend took out.

After receiving the apartment, he borrowed an additional VND700 million in cash for interior furnishings before moving in.

By the end of 2023, he rented out the apartment for VND12 million a month.

Needing money to buy a larger apartment, my friend sold the apartment for VND2.73 billion, or VND42 million per square meter.

Judging by the selling price, his apartment appreciated by 34% in five years, which is quite good.

Since I have several years of experience investing in real estate, I helped my friend calculate the incurred costs as follows:

Firstly, the interest paid for the VND1.05 billion bank loan, at an 11% interest rate, was VND570 million.

Secondly, the opportunity cost over five years totaled VND510 million.

This is calculated on the total amount of cash he invested, which was VND1.7 billion.

If he had not bought the house and instead deposited it into a savings account for five years at an average interest rate of 6% per year, he would have earned VND510 million.

Thirdly, he had to pay VND50 million in commission to the real estate broker and VND60 million in taxes when he sold the apartment.

Finally, there are numerous other expenses, such as maintenance, service fees, management, and parking fees, that he had to pay during his time living there.

So, while the apartment’s price has increased, in reality, my friend actually lost at least VND1.19 billion when accounting for all the expenses and costs.

Spread over five years, it would cost him VND20 million per month.

This is quite high compared to current apartment rents in Tan Phu, which is around VND12 million a month.

So my friend would have been better off renting an apartment in the first place.

Moreover, with the initial VND1.7 billion in cash, if he had bought a townhouse a bit further away from the city center, the selling price could have increased two or three times during the past five years.

Do you think this analysis is reasonable and that renting an apartment might be better in this case?

Reader Phat Nguyen

*This opinion was translated into English by AI. Readers’ views are personal and do not necessarily match VnExpress’ viewpoints.