Which type of small condo is the best for rental yield?

spiritGate

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Now one bedroom around 500k ++ onwards Liao unless you looking for leasehold less than 50years.
 

OngHuatHuat

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Yeah last time so many analysts said this kind of small condo lack of demand, really a hard slap on their face. :(

Now one bedroom around 500k ++ onwards Liao unless you looking for leasehold less than 50years.
 

cheongking888

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where to look for fire sales?

Actually Fire sales lobangs are around.

Like need to sell due to divorce, distribution of inheritance, debts settlement etc etc.

The problems are most fire sales are swept away by "insiders" before they hit the market.
 

Mr.Canberra

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Now one bedroom around 500k ++ onwards Liao unless you looking for leasehold less than 50 years.

Actually if the property is used as purely investment and not own stay I find those with shorter lifespan lease will have good yields. Sellers are willing to let go at a cheaper price as afraid of getting zero when lease runs out.

As my capital oulay is much lower I can undercut the competition and rent it below market rate. No matter how bad the market is I have still have net income.

From an investor point of view we are just like leasing a piece of land or factory to do business for a long time frame. Just take it the chance of lease renewal is only 1%. And if luckily tio en bloc you will strike windfall.

If I have extra funds I will make such a play. Best is lease balance 20 years and at desirable locations.

This is the same strategy some ride sharing drivers are using. Buy those cars with COE balance 1-2 years. Low capital injection.

Actually Fire sales lobangs are around.

Like need to sell due to divorce, distribution of inheritance, debts settlement etc etc.

The problems are most fire sales are swept away by "insiders" before they hit the market.

As these are distressed properties they will want to do a quick sale. You must be cash ready for such bargain bin deals. Wait for loan approval maybe some other folks snatch liao. :s13:
 
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cheongking888

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Even if you bought a fire sale property (say 10% below valuation), you better pay Iras BSD based at valuation price otherwise Iras will come after you even few years later.

I have a friend he bought a property at Novena area at about 20% below valuation. Happily paid BSD at sale price. 9 months later kenna called up by Iras and he has to pay penalty plus the balance BSD.

Now he is trying to blame his lawyer.
 
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Mr.Canberra

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Even if you bought a fire sale property (say 10% below valuation), you better pay Iras BSD based at valuation price otherwise Iras will come after you even few years later.

I have a friend he bought a property at Novena area at about 20% below valuation. Happily paid BSD at sale price. 9 months later kenna called up by Iras and he has to pay penalty plus the balance BSD.

Now he is trying to blame his lawyer.

So in the eyes of the law the BSD is based on property valuation price. Not the OTP price between buyer/seller?

If so this is a good detail to take note. Anything that has black and white sure cannot run away in Singapore. Better to do it right one time and save the agony and extra losses.

Cheers. :D
 
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gerdhold

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Yields are not particularly high at the moment. After costs and taxes you would be lucky to get 2.5-3%. With leverage you can perhaps get higher, but still nowhere near the yields you can get in the past. Interest costs are also projected to rise so the only way is capital appreciation.
 

BBCWatcher

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Yields are not particularly high at the moment. After costs and taxes you would be lucky to get 2.5-3%.
Yes, agreed, you would be lucky to get that.

As a fascinating point of comparison, the 30 year government bond (NA16100H), with about 28 years to maturity, is coming up for auction again next month (February, 2018). It should yield high 2.X%. That’s a AAA rated government bond, the absolute lowest risk Singapore dollar denominated investment. Amazing.

At the very least it’s fair to say that it’s not rational to invest the majority of your wealth in real estate. The real estate market in Singapore is simply not compensating you enough for the risk at this point in time.

Interest costs are also projected to rise so the only way is capital appreciation.
And capital appreciation hasn’t been happening since 2012 (depreciation has), unless you want to crack open the champagne to celebrate the past two quarters of tiny plus signs. I wouldn’t celebrate just yet.

Don’t overweight real estate is my advice. If you’re past 20% of your portfolio in real estate (and counting your owner-occupied home in that), that’s plenty.
 

RM2SSG

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I can share actual numbers.

D20, freehold, next to MRT, 1-bedroom.

TOP in 2012, bought at $1,052 psf. URA (Oct 2017) listed similar unit sold at $1,450 psf.

Rental in the past 5 years yield around 2.5% based on amount of cash I have invested.

What to note is this:

1. Rental went from $3,300 to current $2,200
2. Maintenance went from $750/qtr to $825/qtr
3. Sinking fund remained unchanged
4. Property tax has gone down
 

OngHuatHuat

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I can share actual numbers.

D20, freehold, next to MRT, 1-bedroom.

TOP in 2012, bought at $1,052 psf. URA (Oct 2017) listed similar unit sold at $1,450 psf.

Rental in the past 5 years yield around 2.5% based on amount of cash I have invested.

What to note is this:

1. Rental went from $3,300 to current $2,200
2. Maintenance went from $750/qtr to $825/qtr
3. Sinking fund remained unchanged
4. Property tax has gone down

Thanks for sharing.
I plan to go for higher yield condo.
 

Perisher

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What is a realistic average yield? Based on that, just aim a little higher?
 

BBCWatcher

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TOP in 2012, bought at $1,052 psf. URA (Oct 2017) listed similar unit sold at $1,450 psf.
If you can get that same deal (an unusual one), maybe it makes sense to realize ~35% capital appreciation now.

Rental went from $3,300 to current $2,200
That's not surprising/is typical, but...ouch. :(
 

OngHuatHuat

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What is a realistic average yield? Based on that, just aim a little higher?

This kind of small condo price keep going higher and higher, especially those freehold condos. Rental keep going down but price keep going up. :s22::s22::s22:

They used to cost around 400 plus K only.
 

OngHuatHuat

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If you can get that same deal (an unusual one), maybe it makes sense to realize ~35% capital appreciation now.


That's not surprising/is typical, but...ouch. :(

The asking price and transacted price all went up already. :(:(:(:(:(
 

Perisher

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This kind of small condo price keep going higher and higher, especially those freehold condos. Rental keep going down but price keep going up. :s22::s22::s22:

They used to cost around 400 plus K only.

Use to be able to afford... :(
Now really is barely can afford. And agree on the yield and capital gain part.
Like got disconnect... Too many people prefer buying than renting.
 

RM2SSG

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If you can get that same deal (an unusual one), maybe it makes sense to realize ~35% capital appreciation now

I've been tracking the transacted prices very closely. It has been moving up steadily.

I'm also inclined to cash out but have not straighten out my thoughts on what to do with the cash. It's another discussion altogether. I shall not go off topic.
 
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