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Condo landlords - How has your investment/rental experience been so far?

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Old 21-02-2019, 02:27 PM   #31
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I bought one there, but still long till TOP...

Not expecting the yield to be as good as those resale ones though...
the price increase in the nearby resale condos is due to the recent "new" launches (including the one that you bought).... mostly adjusted as your PSF is pretty much higher....

Honestly, a bit tough for your side to have much of capital appreciation.... and due to the higher quantum, yield is very much reduced too....
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Old 21-02-2019, 02:46 PM   #32
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I use my original purchase price. If based on SRX valuation, my rental yield is 3.5%.

My rent is higher than SRX value hence the rental yield also higher lo.

4.5% gross yield is certainly a good investment.

What's the denominator used to arrive at 4.5%? To make comparison of yield, one need to use gross rent divided by current market value. Other than that, the yield is subjective.

If value of property appreciates, yield goes down if rental no change.
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Old 21-02-2019, 03:00 PM   #33
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the price increase in the nearby resale condos is due to the recent "new" launches (including the one that you bought).... mostly adjusted as your PSF is pretty much higher....

Honestly, a bit tough for your side to have much of capital appreciation.... and due to the higher quantum, yield is very much reduced too....
Definitely agree.

Oh well, I am just looking at rental income and holding a bit of hope for capital appreciation, rather than investing in shares which usually ended up with huge losses.
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Old 21-02-2019, 07:16 PM   #34
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I don't think many people still think that property is a path to riches. But the fact is that if you buy a property in the right location (keyword), you can enjoy very healthy gains. It's just like stocks - if you can find the diamond in the rough, you can still earn great profits, while the general market is either stagnating or going down.
What makes property different (or better, depending on who you are) is that not everyone can afford it, so finding diamonds in the rough (that you can buy before others grab it) is arguably easier than stocks, where the barrier to entry is very low. You can have a property in a great location that's clearly a great buy, but no one takes it - just because those who saw it can't afford it, while those who can afford it just didn't chance upon it. That, in my opinion, is what still makes property attractive - putting the general market trend or sentiment aside.

I dont rent house. But property tax fory house and houses around my area keep going down these few years. This is a good indication of rental is not doing well.

Never use number from estate agent/company. Get the country official number for better understanding. Population is not growthing, even schools is reducing. Why people still think houses will keep increasing at a large number?

Last edited by minamikaze; 21-02-2019 at 07:18 PM..
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Old 21-02-2019, 08:17 PM   #35
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you are talking about gross rental yield...
if you are not cash rich and have to borrow max loan from bank, the principal interest itself will kill you.
1M condo
750k loan
mortgage interest close to 1.4k-1.5k (Assuming mortgage interest 2.4%, did not add principal amount into calculation)
so monthly 1.4k + maintenance 250 + tax 250 = 1.9k already
assuming you rent out 2.2k, take into consideration other costs (i divide by 12 for monthly calculation)
- agent fee : 0.5 * 2200 / 12 = 92
- 1-3 months not being able to rent out : 2200 / 12 = 183 (assuming one month)
- repair/request from tenant = 500 / 12 = 42

1900 + 42 + 92 + 183 = 2217, thats how much money you are paying out to everybody every month, dont think there's even any actual yield, in fact you are making a loss (i did some aga-ration and rounded down some figures).
running the numbers in excel using XIRR shows that it's not a sure win these days
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Old 22-02-2019, 06:50 AM   #36
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you are talking about gross rental yield...
if you are not cash rich and have to borrow max loan from bank, the principal interest itself will kill you.
1M condo
750k loan
mortgage interest close to 1.4k-1.5k (Assuming mortgage interest 2.4%, did not add principal amount into calculation)
so monthly 1.4k + maintenance 250 + tax 250 = 1.9k already
assuming you rent out 2.2k, take into consideration other costs (i divide by 12 for monthly calculation)
- agent fee : 0.5 * 2200 / 12 = 92
- 1-3 months not being able to rent out : 2200 / 12 = 183 (assuming one month)
- repair/request from tenant = 500 / 12 = 42

1900 + 42 + 92 + 183 = 2217, thats how much money you are paying out to everybody every month, dont think there's even any actual yield, in fact you are making a loss (i did some aga-ration and rounded down some figures).
Expense divided by 12 is fair. But doesn't make sense to count interest incurred as it is as it becomes subjective. Some loan 20%, some 30% and some none. May be fairer to impute the interest cost based on what is forgone had you invested the value of the property.

Also for short term, some would calculate the net yield by taking the denominator as amount paid plus interest cost. Amount paid comprises the initial payments plus the installments paid to date plus accumulated interest.
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Old 22-02-2019, 09:26 AM   #37
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Actually, how should yield be calculated?

I choose to differ from the usual method.

For eg. A condo bought at $1m. I definitely did not cough out $1m cash to buy. Take it as 35% at most, which is $350k perhaps.

So, should the yield be calculated based on $1m, or $350k which increases over time with the repayment?
On the 350k. Even (some) stock investors borrow money to invest cause the yield on their investment will be higher when leveraged.
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Old 22-02-2019, 10:18 AM   #38
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Expense divided by 12 is fair. But doesn't make sense to count interest incurred as it is as it becomes subjective. Some loan 20%, some 30% and some none. May be fairer to impute the interest cost based on what is forgone had you invested the value of the property.

Also for short term, some would calculate the net yield by taking the denominator as amount paid plus interest cost. Amount paid comprises the initial payments plus the installments paid to date plus accumulated interest.
i'm just pointing out that taking max loan to generate passive income is wrong at this time - for people who have more cash, it might be viable to invest in a property for capital gains and generate passive rental yield at the same time (some will argue if you have that much cash might as well invest somewhere else or let CPF grow it).

afterall yield is income / expenses * 100%.
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Old 22-02-2019, 10:34 AM   #39
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On the 350k. Even (some) stock investors borrow money to invest cause the yield on their investment will be higher when leveraged.
Yup. Know of someone like that doing so on the long term, but probably burnt his hands after some time when he started borrowing money from me.
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