HDB - Sell or rent?

[highsulphur]

https://www.google.com/search?q=are...id-samsung-ss&sourceid=chrome-mobile&ie=UTF-8

Confirmed cannot.
Unless get permission

Yes need permission to rent out but it's almost always given once you hit mop

 

[reddevil0728]

https://www.google.com/search?q=are...id-samsung-ss&sourceid=chrome-mobile&ie=UTF-8

Confirmed cannot.
Unless get permission

You go click in? to look at the *?

All owners and occupiers listed in the flat may only invest in private residential property only after the minimum occupation period. However, you have to continue living in the flat after the purchase of the private residential property unless you have obtained HDB’s prior approval to rent* it out. * There are eligibility conditions that you and your tenants have to meet.

Yes unless obtained prior approval to rent out. which is a process. need to file an application n pay a fee. that's all

only cannot rent out if PLH

 

[ahnyaahnya]

Yes need permission to rent out but it's almost always given once you hit mop

They specifically mention that that particular group cannot unless ask for permission.
So sounds like it's harder to get permission in these cases?

Anyway, not my problem. No money to buy private

 

[reddevil0728]

They specifically mention that that particular group cannot unless ask for permission.
So sounds like it's harder to get permission in these cases?

https://www.hdb.gov.sg/residential/renting-out-a-flat-bedroom/renting-out-your-flat/application

 

[yoongf]

Can rent out HDB and stay in own condo?

Last time cannot, now no restriction.

I was also caught off guard, cant find when this rule was quietly changed.

 

[SBC]

Hi Investment gurus,
Need some advise if GPT below is giving me right advise.

Scenario:
45 year old considering whether to sell HDB or rent it out (currently staying in a condo with mortgage). Value of HDB in current $ about 300K and remaining lease is about 50years. I am aware of the lease decay and possibilities of steep price drop in future and ...In future may be a) future populist govt bailing out via SERS/VERS b) no such luck and I need to let go after of 99-yr lease. Assuming the worst that I let the lease decay, the following is what GPT suggests. Is this sound?

To decide whether to sell the flat for $300,000 or keep it and rent it out, we need to compare the present value of the two options over the 50-year period. Here’s how we can approach the analysis:

Option 1: Sell the Flat and Invest​

• Initial Investment: $300,000
• Annual Return on Investment: 4%
• Future Value after 50 years: This is the value of the initial investment after 50 years at a 4% annual return.

Option 2: Rent the Flat​

• Initial Monthly Rent: $2,500
• Annual Rent Increase: 2%
• Reinvestment Return Rate: 4%
• Future Value of Rent Payments: This is the value of the reinvested rent payments over 50 years.

Calculation​

Option 1: Future Value of Selling and Investing​

The future value FVFV of an investment can be calculated using the formula:
FV=PV×(1+r)nFV=PV×(1+r)n
Where:

• PVPV = Present Value (initial investment)
• rr = Annual interest rate
• nn = Number of years

FVsell=300,000×(1+0.04)50FVsell=300,000×(1+0.04)50

Option 2: Future Value of Renting​

The future value of rent payments, taking into account reinvestment and rent increase, requires a bit more calculation since the rent increases annually and each payment is reinvested at a 4% return. The formula for the future value of a growing annuity (rent payments growing at 2%) is:
FVrent=P×(1+i)n−(1+g)ni−gFVrent=P×i−g(1+i)n−(1+g)n
Where:

• PP = Initial monthly payment (annualized)
• ii = Reinvestment interest rate (4%)
• gg = Growth rate of payments (2%)
• nn = Number of years

Given the monthly rent, we first annualize it:
P=2,500×12=30,000P=2,500×12=30,000
Now let's calculate these values using Python:

Comparison of Options​

1. Future Value of Selling and Investing: Approximately $2,132,005
2. Future Value of Renting and Reinvesting: Approximately $6,622,643

Conclusion​

Based on these calculations, the future value of renting the flat and reinvesting the rent payments significantly outweighs the future value of selling the flat and investing the $300,000. Therefore, it makes more financial sense to rent the flat under the given assumptions of rental increase and reinvestment returns.

Can you afford to hold both pty?
If yes, should continue to hold.
I have been renting the HDB out for the past 9 years. Yield is v good, at 10% now.

 

[wira]

Can you afford to hold both pty?
If yes, should continue to hold.
I have been renting the HDB out for the past 9 years. Yield is v good, at 10% now.

wouldnt there be danger of lease decay esp for older HDB properties ?

 

[chong18]

Can you afford to hold both pty?
If yes, should continue to hold.
I have been renting the HDB out for the past 9 years. Yield is v good, at 10% now.

Plan to rent out my flat soon too, if based on purchase price, the nett yield will be about 12% after deducting taxes, town council and vacancy of one month every year. Very attractive compared to private properties.

 

[SBC]

wouldnt there be danger of lease decay esp for older HDB properties ?

Flat is about 40 years old. Another 60 years of rental collection.
Rented at 3.5k now. Using 2.5k for long term, will be getting 1.8mil over the next 60 years.

 

[BBCWatcher]

you haven't factored in repair costs, income tax, property tax and other cost
but i suspect the 2nd option will still yield higher

Yes, and insurance, S&CCs, periods of vacancy between tenants and during rehabs, agent fees (or equivalent) to find tenants, net losses due to nonpayment of rent, net damages (repair costs), and the value of your time to handle all this stuff (or the value of less time but a cost for a managing agent). As others have pointed out there's also the important question of whether HDB even allows you to rent out the flat.

And this isn't the only available scenario. What if you were to sell your private condo, invest the net proceeds (in the 4%/year portfolio posited, or X%/year if you want to run other forecasts), and live in your HDB flat? That's another financial scenario for comparison.

 

[DevilPlate]

HDB website for one!

Rental not sale

 

[NeneNene]

Thanks all for the advise. Indeed the repair, maintenance, tenant replacement etc. is a hassle. Manageable so far. So for now I will keep it the rental way. Do not have appetite for another fresh mortgage so may be post-retirement move back into HDB to free some cash from condo.

For those wondering if renting is possible, it's possible for those HDB that have completed MOP before the new rules kicked in. I had moved into condo by paying ABSD (first wave of ABSD) but before private ownership/cooling rules kicked in. I need to annually take HDB approval which so far is not an issue. There was no application of rules retrospectively !!

 

[qhong61]

Plan to rent out my flat soon too, if based on purchase price, the nett yield will be about 12% after deducting taxes, town council and vacancy of one month every year. Very attractive compared to private properties.

Then stay where

 

[pantss]

Can you afford to hold both pty?
If yes, should continue to hold.
I have been renting the HDB out for the past 9 years. Yield is v good, at 10% now.

Base on purchase price or market value?

 

[SBC]

Base on purchase price or market value?

Purchase price

 

[junlove]

you are assuming that your rental will keep increasing as the flat ages, i suggest go for worse case scenario that it'll go down towards the end, with the value of the leasehold.


That said, rental out is likely still higher

 

[andyhtc]

Hi Investment gurus,
Need some advise if GPT below is giving me right advise.

Scenario:
45 year old considering whether to sell HDB or rent it out (currently staying in a condo with mortgage). Value of HDB in current $ about 300K and remaining lease is about 50years. I am aware of the lease decay and possibilities of steep price drop in future and ...In future may be a) future populist govt bailing out via SERS/VERS b) no such luck and I need to let go after of 99-yr lease. Assuming the worst that I let the lease decay, the following is what GPT suggests. Is this sound?

To decide whether to sell the flat for $300,000 or keep it and rent it out, we need to compare the present value of the two options over the 50-year period. Here’s how we can approach the analysis:

Option 1: Sell the Flat and Invest​

• Initial Investment: $300,000
• Annual Return on Investment: 4%
• Future Value after 50 years: This is the value of the initial investment after 50 years at a 4% annual return.

Option 2: Rent the Flat​

• Initial Monthly Rent: $2,500
• Annual Rent Increase: 2%
• Reinvestment Return Rate: 4%
• Future Value of Rent Payments: This is the value of the reinvested rent payments over 50 years.

Calculation​

Option 1: Future Value of Selling and Investing​

The future value FVFV of an investment can be calculated using the formula:
FV=PV×(1+r)nFV=PV×(1+r)n
Where:

• PVPV = Present Value (initial investment)
• rr = Annual interest rate
• nn = Number of years

FVsell=300,000×(1+0.04)50FVsell=300,000×(1+0.04)50

Option 2: Future Value of Renting​

The future value of rent payments, taking into account reinvestment and rent increase, requires a bit more calculation since the rent increases annually and each payment is reinvested at a 4% return. The formula for the future value of a growing annuity (rent payments growing at 2%) is:
FVrent=P×(1+i)n−(1+g)ni−gFVrent=P×i−g(1+i)n−(1+g)n
Where:

• PP = Initial monthly payment (annualized)
• ii = Reinvestment interest rate (4%)
• gg = Growth rate of payments (2%)
• nn = Number of years

Given the monthly rent, we first annualize it:
P=2,500×12=30,000P=2,500×12=30,000
Now let's calculate these values using Python:

Comparison of Options​

1. Future Value of Selling and Investing: Approximately $2,132,005
2. Future Value of Renting and Reinvesting: Approximately $6,622,643

Conclusion​

Based on these calculations, the future value of renting the flat and reinvesting the rent payments significantly outweighs the future value of selling the flat and investing the $300,000. Therefore, it makes more financial sense to rent the flat under the given assumptions of rental increase and reinvestment returns.

AI is correct based on your assumptions.

The underlying basis is you can continue to find richer tenants.

If the government of the day decides to restrict or reduce immigration due to poor election results, your assumptions will be thrown off.

 

[SBC]

Purchase price

After renting close to 10 years, total rental income is matching my purchase price of the HDB.
CAGR 7%, simple application of Rule 72.

 

[starlight318]

After renting close to 10 years, total rental income is matching my purchase price of the HDB.
CAGR 7%, simple application of Rule 72.

Same here, rental collected almost 80% of purchase price. Good money.

 

[DevilPlate]

Where got calculate yield based on purchase price haha

Then my condo gross yield 7%+ based on purchased price but in fact nett nett yield based on current market price only 2%

If yr flat still relatively young <20yo still can continue to milk it till condition cui then decide to reno or sell. At the same time price still can potentially appreciate 1-3% annually.

If left less than bal 60year lease, i would sell liao since hdb market still so hot now…..Once resale market soften, old flats vy hard to get rid

Also your age? Let say u are 50yo now and yr flat left 50yr bal lease…..so what…..do u still want to handle rental when u are 70yo? By that time flat bal lease 30years near impossible to sell….Also yr kids most likely cannot inherit yr flat as well……and they goto dump/sell it….

Whereas if u hold a young 99LH condo or FH condo, yr kids can inherit them without absd.