View Full Version : 3-3-5 rule now endorsed by the CPF Board
https://www.propertysoul.com/2017/10/05/3-3-5-rule-endorsed-by-cpf/?utm_source=condosingapore&utm_medium=wlink&utm_term=0&utm_content=0&utm_campaign=std
3-3-5 rule now endorsed by the CPF Board
October 5, 2017
It is official. CPF Board just endorsed Property Soul’s 3-3-5 rule.
The statutory board recently published an article “How to use the 3-3-5 rule to consider if you can afford your new home” in its “Are You Ready? (https://www.areyouready.sg/YourInfoHub/Pages/News-How-to-use-the-3-3-5-rule-to-consider-if-you-can-afford-your-new-home.aspx)” portal.
“Are You Ready?” is an initiative by the CPF Board to educate Singaporeans on how to plan for major financial decisions at different stages of their life cycle – from starting work, getting married, buying a house to planning for retirement.
The article also comes with an infographic using guidelines from the 3-3-5 affordability test for home buyers to calculate housing affordability.
https://i0.wp.com/www.propertysoul.com/wp-content/uploads/2017/10/CPF-3-3-5-rule.png?ssl=1
3-3-5 rule is not conservative. It is realistic.
The 3-3-5 rule has three simple thresholds to determine whether you can really afford the home that you intend to buy.
Rule #1: 30% of property price
Guideline: Your initial capital should be at least 30 percent of the property’s asking price.
Implication: If you don’t have 30 percent cash for the property you want to buy, admit the fact that you don’t have adequate savings to buy your dream home.
Rationale: Besides paying 20 percent for the down payment, you have to set aside at least 10 percent in cash for the transaction costs such as stamp duties and legal fee.
Note that this doesn’t include the budget for renovation, furnishing and house moving after the property is handed over to you.
Forget about applying for personal line of credit or a renovation loan. Are you sure that you want to pay interest to the bank for another loan when you are already tied up with the monthly mortgage for your housing loan?
Rule #2: 1/3 of monthly salary
Guideline: Your monthly mortgage payment should not exceed one-third of your monthly salary.
Implication: If you are using more than one-third of your income to pay for your monthly mortgage, you don’t have enough buffer against potential loss of employment or future hike in interest rate.
Rationale: Installment plans and buy-now-pay-later schemes are designed for the poor. The more the poor man buys, the poorer he becomes.
Similarly, the lower the buyer’s capital, the more he needs to borrow. The higher the leverage, the riskier the purchase, and the higher the chance to default.
To lower your mortgage payment, you can either apply for a smaller housing loan, or buy a more affordable home.
Rule #3: 5 times of annual income
Guideline: The purchase price of the property should not exceed five times of your annual income.
Implication: If you are paying more than 5 times of your annual income for your home, you can’t really afford it. You need to look for a higher-pay job or settle with a more affordable home.
Rationale: Prices of private residential properties have climbed 60 percent for a consecutive 17 quarters, but only retrieved 12 percent over the last 15 quarters.
The ‘boiling frog’ effect means buyers are made comfortable paying high prices for overvalued properties because they think this is normal. The fundamentals to buy a value-for-money home or to invest based on the ROI of a property are thrown out of the window.
Stop complaining that you can’t find any property that can meet the stringent 3-3-5 rule. Take a hard look at yourself and dive deeper to research the property market and you will understand what “affordability” really means.
You may like to revisit my previous post “Why housing affordability is more than your salary (https://www.propertysoul.com/2017/07/26/housing-affordability-is-more-than-salary/)” to know where you are in the four categories of affordability, namely “very affordable”, “highly probable”, “merely stretchable” and “barely reachable”.
If you are still in doubt or not yet convinced by my 3-3-5 rule, please email the CPF Board directly at
[email protected].
Super easy to meet with all the enbloc proceeds.
One family split to buy 4 units can easily meet 3-3-5 ratio, full cash also no problem!
tonymontana
06-10-17, 08:39
This vip sure likes to pat herself on the back, doesn't she?
I've been using the 3-3-5 rule long before I heard about it on forums / talks, since I'm naturally prudent & conservative.
You know what? Back in 2003, I wish I hadn't. I'd have been wealthier today.
Btw, didn't VIP collect a few properties between 2003-2005? How many was it? 3? 4?
So she kept dilligently to her 3-3-5 rule throughout this period while buying these investment properties?
Or is she only mentioning her 3-3-5 rule ad nauseam these days because she is hoping for less liquidity in the market, seeing as how she may have missed her chance to reinvest?
Amber Woods
06-10-17, 09:53
This vip sure likes to pat herself on the back, doesn't she?
I've been using the 3-3-5 rule long before I heard about it on forums / talks, since I'm naturally prudent & conservative.
You know what? Back in 2003, I wish I hadn't. I'd have been wealthier today.
Btw, didn't VIP collect a few properties between 2003-2005? How many was it? 3? 4?
So she kept dilligently to her 3-3-5 rule throughout this period while buying these investment properties?
Or is she only mentioning her 3-3-5 rule ad nauseam these days because she is hoping for less liquidity in the market, seeing as how she may have missed her chance to reinvest?
Let's put the 3-3-5 rule in perspective. It is meant as a guide for the masses who are not financially savvy. Savvy investors know better how and when to take risk and how and when to cut losses.
DayDreamer
06-10-17, 10:07
If we follow the 3-3-5 rule, a lot of people will not even consider/eligible to buy their first property.
Not a sexy formula.
3 X 3 = 9
3 + 3 = 6
How to justify must be 3 and must be 5?
Why not 5-5-10 principle?
Or 3-6-9?
Amber Woods
06-10-17, 10:14
If we follow the 3-3-5 rule, a lot of people will not even consider/eligible to buy their first property.
You are right. That is why 80% of the population should buy only public housing. For the more savvy within this 80%, they are more willing to take risk. They either get rewarded or burnt depending on their level of risk they take.
https://www.propertysoul.com/2017/10/05/3-3-5-rule-endorsed-by-cpf/?utm_source=condosingapore&utm_medium=wlink&utm_term=0&utm_content=0&utm_campaign=std
3-3-5 rule now endorsed by the CPF Board
October 5, 2017
It is official. CPF Board just endorsed Property Soul’s 3-3-5 rule.
The statutory board recently published an article “How to use the 3-3-5 rule to consider if you can afford your new home” in its “Are You Ready? (https://www.areyouready.sg/YourInfoHub/Pages/News-How-to-use-the-3-3-5-rule-to-consider-if-you-can-afford-your-new-home.aspx)” portal.
“Are You Ready?” is an initiative by the CPF Board to educate Singaporeans on how to plan for major financial decisions at different stages of their life cycle – from starting work, getting married, buying a house to planning for retirement.
The article also comes with an infographic using guidelines from the 3-3-5 affordability test for home buyers to calculate housing affordability.
https://i0.wp.com/www.propertysoul.com/wp-content/uploads/2017/10/CPF-3-3-5-rule.png?ssl=1
3-3-5 rule is not conservative. It is realistic.
The 3-3-5 rule has three simple thresholds to determine whether you can really afford the home that you intend to buy.
Rule #1: 30% of property price
Guideline: Your initial capital should be at least 30 percent of the property’s asking price.
Implication: If you don’t have 30 percent cash for the property you want to buy, admit the fact that you don’t have adequate savings to buy your dream home.
Rationale: Besides paying 20 percent for the down payment, you have to set aside at least 10 percent in cash for the transaction costs such as stamp duties and legal fee.
Note that this doesn’t include the budget for renovation, furnishing and house moving after the property is handed over to you.
Forget about applying for personal line of credit or a renovation loan. Are you sure that you want to pay interest to the bank for another loan when you are already tied up with the monthly mortgage for your housing loan?
Rule #2: 1/3 of monthly salary
Guideline: Your monthly mortgage payment should not exceed one-third of your monthly salary.
Implication: If you are using more than one-third of your income to pay for your monthly mortgage, you don’t have enough buffer against potential loss of employment or future hike in interest rate.
Rationale: Installment plans and buy-now-pay-later schemes are designed for the poor. The more the poor man buys, the poorer he becomes.
Similarly, the lower the buyer’s capital, the more he needs to borrow. The higher the leverage, the riskier the purchase, and the higher the chance to default.
To lower your mortgage payment, you can either apply for a smaller housing loan, or buy a more affordable home.
Rule #3: 5 times of annual income
Guideline: The purchase price of the property should not exceed five times of your annual income.
Implication: If you are paying more than 5 times of your annual income for your home, you can’t really afford it. You need to look for a higher-pay job or settle with a more affordable home.
Rationale: Prices of private residential properties have climbed 60 percent for a consecutive 17 quarters, but only retrieved 12 percent over the last 15 quarters.
The ‘boiling frog’ effect means buyers are made comfortable paying high prices for overvalued properties because they think this is normal. The fundamentals to buy a value-for-money home or to invest based on the ROI of a property are thrown out of the window.
Stop complaining that you can’t find any property that can meet the stringent 3-3-5 rule. Take a hard look at yourself and dive deeper to research the property market and you will understand what “affordability” really means.
You may like to revisit my previous post “Why housing affordability is more than your salary (https://www.propertysoul.com/2017/07/26/housing-affordability-is-more-than-salary/)” to know where you are in the four categories of affordability, namely “very affordable”, “highly probable”, “merely stretchable” and “barely reachable”.
If you are still in doubt or not yet convinced by my 3-3-5 rule, please email the CPF Board directly at
[email protected].
My son tell me he going to save enough to buy HDB.
I tell my son that is for good boys and girls, but for him I am going to help him get his private property.
yes stick to 335 rule so that you stay put and lay low .. work work work
The Government should introduce ABSD and TDSR etc for REITs and private companies paying above 3-3-5 for commercial properties since their prices are bidded and transacted to sky high levels and these people are transferring their costs to obscene sky high rental rates for retail businesses and then the sky high costs transferred to consumers! :smiley_simmons:
https://www.propertysoul.com/2017/10/05/3-3-5-rule-endorsed-by-cpf/?utm_source=condosingapore&utm_medium=wlink&utm_term=0&utm_content=0&utm_campaign=std
3-3-5 rule now endorsed by the CPF Board
October 5, 2017
It is official. CPF Board just endorsed Property Soul’s 3-3-5 rule.
The statutory board recently published an article “How to use the 3-3-5 rule to consider if you can afford your new home” in its “Are You Ready? (https://www.areyouready.sg/YourInfoHub/Pages/News-How-to-use-the-3-3-5-rule-to-consider-if-you-can-afford-your-new-home.aspx)” portal.
“Are You Ready?” is an initiative by the CPF Board to educate Singaporeans on how to plan for major financial decisions at different stages of their life cycle – from starting work, getting married, buying a house to planning for retirement.
The article also comes with an infographic using guidelines from the 3-3-5 affordability test for home buyers to calculate housing affordability.
https://i0.wp.com/www.propertysoul.com/wp-content/uploads/2017/10/CPF-3-3-5-rule.png?ssl=1
3-3-5 rule is not conservative. It is realistic.
The 3-3-5 rule has three simple thresholds to determine whether you can really afford the home that you intend to buy.
Rule #1: 30% of property price
Guideline: Your initial capital should be at least 30 percent of the property’s asking price.
Implication: If you don’t have 30 percent cash for the property you want to buy, admit the fact that you don’t have adequate savings to buy your dream home.
Rationale: Besides paying 20 percent for the down payment, you have to set aside at least 10 percent in cash for the transaction costs such as stamp duties and legal fee.
Note that this doesn’t include the budget for renovation, furnishing and house moving after the property is handed over to you.
Forget about applying for personal line of credit or a renovation loan. Are you sure that you want to pay interest to the bank for another loan when you are already tied up with the monthly mortgage for your housing loan?
Rule #2: 1/3 of monthly salary
Guideline: Your monthly mortgage payment should not exceed one-third of your monthly salary.
Implication: If you are using more than one-third of your income to pay for your monthly mortgage, you don’t have enough buffer against potential loss of employment or future hike in interest rate.
Rationale: Installment plans and buy-now-pay-later schemes are designed for the poor. The more the poor man buys, the poorer he becomes.
Similarly, the lower the buyer’s capital, the more he needs to borrow. The higher the leverage, the riskier the purchase, and the higher the chance to default.
To lower your mortgage payment, you can either apply for a smaller housing loan, or buy a more affordable home.
Rule #3: 5 times of annual income
Guideline: The purchase price of the property should not exceed five times of your annual income.
Implication: If you are paying more than 5 times of your annual income for your home, you can’t really afford it. You need to look for a higher-pay job or settle with a more affordable home.
Rationale: Prices of private residential properties have climbed 60 percent for a consecutive 17 quarters, but only retrieved 12 percent over the last 15 quarters.
The ‘boiling frog’ effect means buyers are made comfortable paying high prices for overvalued properties because they think this is normal. The fundamentals to buy a value-for-money home or to invest based on the ROI of a property are thrown out of the window.
Stop complaining that you can’t find any property that can meet the stringent 3-3-5 rule. Take a hard look at yourself and dive deeper to research the property market and you will understand what “affordability” really means.
You may like to revisit my previous post “Why housing affordability is more than your salary (https://www.propertysoul.com/2017/07/26/housing-affordability-is-more-than-salary/)” to know where you are in the four categories of affordability, namely “very affordable”, “highly probable”, “merely stretchable” and “barely reachable”.
If you are still in doubt or not yet convinced by my 3-3-5 rule, please email the CPF Board directly at
[email protected].
omg, I cannot even buy a single property under all these rulings
Actually hor, to tell the truth, anybody who follow 3-3-5 will likely remain poor forever (unless you earn $Millions salary)!
Rich people become rich by not following 3-3-5.......
Rich people know very well to use money (even if borrowed - that is why always loan to the MAXIMUM) to make money (don't be so stupid to use hardwork to make money - how much time and effort you alone have to make money for you?) :hopelessness:
You are right. That is why 80% of the population should buy only public housing. For the more savvy within this 80%, they are more willing to take risk. They either get rewarded or burnt depending on their level of risk they take.
That's why some of these self proclaimed gurus cause greater harm than benefit.
By insisting that people lower their risks way below the threshold that people actually can comfortably afford, the people who need to take some (minimal) risks end up taking zero risk.
Taking zero risk is extremely risky, sure lose. Remember, high risks, high gains.
So you mean CPF Board is doing that too?
That's why some of these self proclaimed gurus cause greater harm than benefit.
By insisting that people lower their risks way below the threshold that people actually can comfortably afford, the people who need to take some (minimal) risks end up taking zero risk.
Taking zero risk is extremely risky, sure lose. Remember, high risks, high gains.
So you mean CPF Board is doing that too?
The same method, the risk level differs for everyone.
Vina and CPF advice may work well for those starting on first property especially HDB.
Investment property has to use a different set of principles.
Not only CPF Board, even the MAS with their TDSR, MSR, ABSD to deter people from buying properties etc
cause greater harm than benefit.
By insisting that people lower their risks way below the threshold that people actually can comfortably afford, the people who need to take some (minimal) risks end up taking zero risk.
By insisting that these people take little risk, they can only invest in lemons (like shoebox units, or 99-years leasehold properties in "bird-no-lay-egg" places), which obviously won't help to increase their wealth (if at all), and may even be detrimental to their wealth!
The same method, the risk level differs for everyone.
Vina and CPF advice may work well for those starting on first property especially HDB.
Investment property has to use a different set of principles.
That's why some of these self proclaimed gurus cause greater harm than benefit.
By insisting that people lower their risks way below the threshold that people actually can comfortably afford, the people who need to take some (minimal) risks end up taking zero risk.
Taking zero risk is extremely risky, sure lose. Remember, high risks, high gains.
Not true, every decent location OCR project I have been involved, the one-bedder yields are always the most fantastic. Mostly in matured estates.
Definitely not lemons; many of us have been collecting for years.
No lay egg places I did not really try so can't say much for that.
Not only CPF Board, even the MAS with their TDSR, MSR, ABSD to deter people from buying properties etc
cause greater harm than benefit.
By insisting that people lower their risks way below the threshold that people actually can comfortably afford, the people who need to take some (minimal) risks end up taking zero risk.
By insisting that these people take little risk, they can only invest in lemons (like shoebox units, or 99-years leasehold properties in "bird-no-lay-egg" places), which obviously won't help to increase their wealth (if at all), and may even be detrimental to their wealth!
manunited86
09-10-17, 21:36
If any of you try to make any argument that derail her perspectives on her main blog, she will ban you from posting. What is the point of having a "comment box" session when you simply want "high-fives" from only those who buy into your advice? If you can't face the heat or handle a debate, then forget about being a so called property guru.
You can continue to hide with your moderation, but you can't fool savvy investors.
PropVestor
13-10-17, 11:06
Friday Joke:
My 3-3-5 rule
Buy first private property in your 30s, no more than 3 bedder and 50% loan if you can.
You will be pretty safe?
tonymontana
14-10-17, 16:02
Friday Joke:
My 3-3-5 rule
Buy first private property in your 30s, no more than 3 bedder and 50% loan if you can.
You will be pretty safe?
methinks, no LESS than 3 bedder!
give yourself room to downsize when kids etc grow up and/or you get fedup of cleaning such a big space. C'mon lets not kid ourselves, these days, it's the guys doing the heavy cleaning in the house.
Yes, pretty damn safe. But you may regret tying up all that capital on one property. I know I did when I was younger!
Cheers!
How's DUO? Did you get it tenanted out already?
PropVestor
16-10-17, 09:33
Its getting harder to buy an investment property or upgrade for those in their 20s or early 30s. I know what you meant about tying capital on one property. Invested DUO at 33 while there was that feeling of uncertainty back in 2013. Still looking for tenants but offers are coming in. Thanks for asking!
Really? Wow! Still, agents are telling me that OCR units are finding difficulty in renting out, with 3BR units now mostly going for $2400 pm or less. How much the OCR one-bedder commands?
Not true, every decent location OCR project I have been involved, the one-bedder yields are always the most fantastic. Mostly in matured estates.
Definitely not lemons; many of us have been collecting for years.
No lay egg places I did not really try so can't say much for that.
Really? Wow! Still, agents are telling me that OCR units are finding difficulty in renting out, with 3BR units now mostly going for $2400 pm or less. How much the OCR one-bedder commands?
My 3 bedder OCR just rented out for over 3k a few days ago leh.
Look at a different sector, Teddy. Don't stare at the shrubs.
3 Bedder OCR? 99-years LH, about 1300 sqft, current market price $1400 psf? You need to provide specific furniture and appliances too?
My 3 bedder OCR just rented out for over 3k a few days ago leh.
Look at a different sector, Teddy. Don't stare at the shrubs.
tonymontana
16-10-17, 15:51
3 Bedder OCR? 99-years LH, about 1300 sqft, current market price $1400 psf? You need to provide specific furniture and appliances too?
some bought during recession years , psf very low, so good yields.
3 Bedder OCR? 99-years LH, about 1300 sqft, current market price $1400 psf? You need to provide specific furniture and appliances too?
Comes as a package as white goods from developer. Only partially furnished and add in lights and curtains - zero cent on furnishing or appliances.
Quite a bit smaller than 1300 sqft. Current market price is about 1400 PSF but bought under 1200 PSF.
Already quite poor yielding in the area actually - many caveats in this area are higher.
OCR are not all the same. Even in the same development, the fate of each unit may differ.
$3k pm / 1300 sqft *12 mths / $1200 psf = 2.307% gross yield.
So net yield only about 1% p.a.? So low? And 99 years leasehold means collect for 99 years and property value = $0?! :scared-3:
Comes as a package as white goods from developer. Only partially furnished and add in lights and curtains - zero cent on furnishing or appliances.
Quite a bit smaller than 1300 sqft. Current market price is about 1400 PSF but bought under 1200 PSF.
Already quite poor yielding in the area actually - many caveats in this area are higher.
OCR are not all the same. Even in the same development, the fate of each unit may differ.
Which part about the "quite a bit smaller than 1300 sqft" did you not get?
Anyway like I mentioned, mine is lower than those surrounding already. The bigger ones less than 1300 sqft in size are closer to 4K actually.
Why don't you share with us the yield for your century old mansion?
$3k pm / 1300 sqft *12 mths / $1200 psf = 2.307% gross yield.
So net yield only about 1% p.a.? So low? And 99 years leasehold means collect for 99 years and property value = $0?! :scared-3:
Mine?
Just quote you 1 of my properties for comparison:
1300 sqft, $6000 pm rental, Bought at $1000 psf, Freehold condo unit with full facilities.
So Gross yield p.a. = $6000 / 1300 *12 / $1000 = 5.54% p.a.
Oh, by the way, my $6000 pm rental is already at the low end of the range!
Which part about the "quite a bit smaller than 1300 sqft" did you not get?
Anyway like I mentioned, mine is lower than those surrounding already. The bigger ones less than 1300 sqft in size are closer to 4K actually.
Why don't you share with us the yield for your century old mansion?
$3k pm / 1300 sqft *12 mths / $1200 psf = 2.307% gross yield.
So net yield only about 1% p.a.? So low? And 99 years leasehold means collect for 99 years and property value = $0?! :scared-3:
Quote current value better since it's a century mansion.
Mine?
Just quote you 1 of my properties for comparison:
1300 sqft, $6000 pm rental, Bought at $1000 psf, Freehold condo unit with full facilities.
So Gross yield p.a. = $6000 / 1300 *12 / $1000 = 5.54% p.a.
Oh, by the way, my $6000 pm rental is already at the low end of the range!
Current value is higher than your OCR 99-years leasehold property at $1400 psf (but not by a lot considering it is in CCR and freehold), and rental I can collect till I die, then my children and grandchildren can still continue to collect rental until they die and still can sell for a profit (that increases with inflation), better than 99 years leasehold that has ZERO value at the end of 99 years lease right?
If to quote current value, then your gross rental yield is even more obscenely low!
Your gross rental yield at $1400 psf = $3k pm / 1300 sqft *12 mths / $1400 psf = 1.98% p.a.!
So net rental yield going to be <1% p.a.? Like that put money in fixed deposit also can earn more without the 99-years leasehold OCR risk!
Quote current value better since it's a century mansion.
https://frugalinsingapore.com/real-rental-yields-singapore-zero/
What Should You Do? The example here takes into account a lot of assumptions while also neglecting inflation and the use of CPF as the funding source (as well as the need to replenish your CPF along with the interest portion that would have been earned). We live in unprecedented times and things can change, especially over the course of 25 or 30 years. Here are some thoughts to consider:
With such low net yields on rental income, by investing in a second property, you would be banking almost completely on appreciation in order to make your investment worthwhile.
Property prices have actually come down over the last few quarters. Most people agree that this is primarily due to the cooling measures, since we’re still deep into ZIRP. When ZIRP ends, and interest rates rise, property prices will likely go down even further.
A mortgage uses leverage, which can be really good when it works for you or a complete disaster when conditions are not in your favour.
Investing the money that would have been used as a cash down-payment into another investment (CPF, bond, ETF, etc). could be a much better option, as it might give you the same or even higher returns, in addition to being more flexible and liquid.
Being a landlord is not always a bed of roses. I’m currently filling both roles, and while I enjoy collecting income on my investment properties (which have positive yields, because they were purchased a long time ago at fire sales), I also enjoy being a renter and having the freedom to shift to a new location and change my environment and living conditions every couple years.
If you bought your property a long time ago (when housing was more reasonably priced), then you probably have a positive rental yield on your investment since your total cost of purchasing and your rental expenses are both low. And in this case, much of this post doesn’t apply to you.
tonymontana
17-10-17, 07:39
Mine?
Just quote you 1 of my properties for comparison:
1300 sqft, $6000 pm rental, Bought at $1000 psf, Freehold condo unit with full facilities.
So Gross yield p.a. = $6000 / 1300 *12 / $1000 = 5.54% p.a.
it's normal to have this kind of gross yield (5.5%), even in OCR, if one is considering rental yield for a property bought a decade ago.
HDB rental, also in OCR, is slightly more than 10% for those who bought new a decade ago.
many people have been priced out of CCR property recently. And there are not really that many investment options open to the general populace.
People forget that once upon a time, Bukit Timah was considered OCR and ulu.
Most of these property and finance blog writers, actually they probably don't know what they are talking about or they are ignorant idiots acting and sounding like experts.
I will use the example I given in my previous post as example:
Mine?
Just quote you 1 of my properties for comparison:
1300 sqft, $6000 pm rental, Bought at $1000 psf, Freehold condo unit with full facilities.
So Gross yield p.a. = $6000 / 1300 *12 / $1000 = 5.54% p.a.
Oh, by the way, my $6000 pm rental is already at the low end of the range!
So, what is my real net rental yield?
Say Property price = $1,300,000.
I only pay 20% upfront or investment amount = 0.2*1300000 = $260,000.
My net rental $ after deducting all costs (just give a rough estimated figure) = $4000 pm.
So, real net rental yield p.a. = $4000 / 1300 * 12 / (260,000/1300) = 18.46% p.a. (for investment amount of $260,000)!
But, you have to buy the RIGHT property which gives you good rental (read "CCR" and good location), freehold, and with good attributes (not too many units in the estate (<300) with full facilities)!
If you buy 99-years leasehold OCR properties in estate with >300 units, good luck to you!
https://frugalinsingapore.com/real-rental-yields-singapore-zero/
What Should You Do? The example here takes into account a lot of assumptions while also neglecting inflation and the use of CPF as the funding source (as well as the need to replenish your CPF along with the interest portion that would have been earned). We live in unprecedented times and things can change, especially over the course of 25 or 30 years. Here are some thoughts to consider:
With such low net yields on rental income, by investing in a second property, you would be banking almost completely on appreciation in order to make your investment worthwhile.
Property prices have actually come down over the last few quarters. Most people agree that this is primarily due to the cooling measures, since we’re still deep into ZIRP. When ZIRP ends, and interest rates rise, property prices will likely go down even further.
A mortgage uses leverage, which can be really good when it works for you or a complete disaster when conditions are not in your favour.
Investing the money that would have been used as a cash down-payment into another investment (CPF, bond, ETF, etc). could be a much better option, as it might give you the same or even higher returns, in addition to being more flexible and liquid.
Being a landlord is not always a bed of roses. I’m currently filling both roles, and while I enjoy collecting income on my investment properties (which have positive yields, because they were purchased a long time ago at fire sales), I also enjoy being a renter and having the freedom to shift to a new location and change my environment and living conditions every couple years.
If you bought your property a long time ago (when housing was more reasonably priced), then you probably have a positive rental yield on your investment since your total cost of purchasing and your rental expenses are both low. And in this case, much of this post doesn’t apply to you.
Indeed, HDB flats rental yield are very high, but net real return of owning the HDB flat over 99 years for renting out is very low because the HDB flat (and any 99-years property) has a value of ZERO at the end of 99 years lease!
So if given a chance, better buy freehold property!
it's normal to have this kind of gross yield (5.5%), even in OCR, if one is considering rental yield for a property bought a decade ago.
HDB rental, also in OCR, is slightly more than 10% for those who bought new a decade ago.
many people have been priced out of CCR property recently. And there are not really that many investment options open to the general populace.
People forget that once upon a time, Bukit Timah was considered OCR and ulu.
Much still depends on the intention for the property.
For OCR, one possibility of utilisation is own stay. The cost is still manageable for an average Singaporean family. Can an average family afford to live in the CCR FH property for sustained periods of time?
The potentially lower yields is compensated by this flexibility I feel.
Anyway, to be brutally honest to you, $6,000 for CCR FH 1300 sqft is not unheard of. It translates into a rent of $50 per sq m. But looking through the whole set of URA rental data, only a handful of developments ever cross this benchmark for median rent. Most of those that reach this rental rates are new and/or Mickey Mouse units.
https://www.ura.gov.sg/realEstateIIWeb/rental/search.action#
But in today's situation, reaching the price and location and size and rent (all four conditions met) is just not possible. Any unit selling for 1.3mil in CCR FH (1300 sqft) that has a tenancy of $6,000 (or even $5,000), let me know. I will find means to leverage or sell other units to procure. Thanks.
tonymontana
17-10-17, 10:36
Indeed, HDB flats rental yield are very high, but net real return of owning the HDB flat over 99 years for renting out is very low because the HDB flat (and any 99-years property) has a value of ZERO at the end of 99 years lease!
So if given a chance, better buy freehold property!
I disagree. Better buy your HDB first, before anything else. An HDB is 300-500k (OCR / RCR), for similar sized unit in CCR is at least 4-5 times that price. Especially for (admittedly future) rental, one need to reduce the quantum. That's why one bedder are popular for rental play.
Have a nice day, teddy.
https://frugalinsingapore.com/real-rental-yields-singapore-zero/
What Should You Do? The example here takes into account a lot of assumptions while also neglecting inflation and the use of CPF as the funding source (as well as the need to replenish your CPF along with the interest portion that would have been earned). We live in unprecedented times and things can change, especially over the course of 25 or 30 years. Here are some thoughts to consider:
With such low net yields on rental income, by investing in a second property, you would be banking almost completely on appreciation in order to make your investment worthwhile.
Property prices have actually come down over the last few quarters. Most people agree that this is primarily due to the cooling measures, since we’re still deep into ZIRP. When ZIRP ends, and interest rates rise, property prices will likely go down even further.
A mortgage uses leverage, which can be really good when it works for you or a complete disaster when conditions are not in your favour.
Investing the money that would have been used as a cash down-payment into another investment (CPF, bond, ETF, etc). could be a much better option, as it might give you the same or even higher returns, in addition to being more flexible and liquid.
Being a landlord is not always a bed of roses. I’m currently filling both roles, and while I enjoy collecting income on my investment properties (which have positive yields, because they were purchased a long time ago at fire sales), I also enjoy being a renter and having the freedom to shift to a new location and change my environment and living conditions every couple years.
If you bought your property a long time ago (when housing was more reasonably priced), then you probably have a positive rental yield on your investment since your total cost of purchasing and your rental expenses are both low. And in this case, much of this post doesn’t apply to you.
In this example, the rental income is $2800/month (or $33,600 per year) and rental expenses are roughly $47,000!!!
The writer is an idiot.... even if his scenario is true it is not negative yield. It is 33,600 - (47,000 - 33,600) = 20,200. If your initial investment is 20% of 1 million. It is still a healthy 10% yield.
In this example, the rental income is $2800/month (or $33,600 per year) and rental expenses are roughly $47,000!!!
The writer is an idiot.... even if his scenario is true it is not negative yield. It is 33,600 - (47,000 - 33,600) = 20,200. If your initial investment is 20% of 1 million. It is still a healthy 10% yield.
Relax La, looking at the figure the writer most likely don't pay property tax.
----------Annual Value--- Tax RateTax ------- Balance as of 31 Dec 2016------- Remarks Actions
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
Southbank $32,400 Residential $548.00(DR) The outstanding tax is deducted via GIRO.
HDB $10,680 Residential $178.00(DR) The outstanding tax is deducted via GIRO.
A $1,000,000 property that rents for $2800 a month will never have a AV $3,360
https://www.iras.gov.sg/IRASHome/Property/Property-owners/Working-out-your-taxes/Property-Tax-Rates-and-Sample-Calculations/
When the writer gathers enough idiot to agree with him, he becomes the guru.
Des says:
July 27, 2016 at 3:49 am
Totally agreed with all your points and it is kinda sad to see many Singaporean still believe in buy properties as the fastest way to become rich or collecting rental as a passive income. They often assume the best case scenario and neglect to calculate the net rental yield. Its true, in the past, people get rich by flipping properties. However with these cooling measure in place, this is no longer an option.
I have read your other posts, really well written, I hope you can keep it up.
By the way, I am a financial planner
https://www.iras.gov.sg/IRASHome/Property/Property-owners/Working-out-your-taxes/Property-Tax-Rates-and-Sample-Calculations/
When the writer gathers enough idiot to agree with him, he becomes the guru.
Des says:
July 27, 2016 at 3:49 am
Totally agreed with all your points and it is kinda sad to see many Singaporean still believe in buy properties as the fastest way to become rich or collecting rental as a passive income. They often assume the best case scenario and neglect to calculate the net rental yield. Its true, in the past, people get rich by flipping properties. However with these cooling measure in place, this is no longer an option.
I have read your other posts, really well written, I hope you can keep it up.
By the way, I am a financial planner
Its sad to see folks cannot tell the different between "negative cash flow" and "negative yield". Even if you have negative cash flow, it doesn't mean you have negative yield.
The rental money that goes into servicing your mortgage is your yield. As your loan principal getting smaller, your return of investment getting larger.
Again, you are showing that you don't know how to invest in properties!
Why are you asking for low price now with respect to that kind of rental now?
Instead, You should ask yourself whether the property is worth buying now such that after buying, will your property increase in price that will beats inflation in 10 years, 20 years, and >99 years later while you continue to collect rental!
The rental yield at the time you buy your property is not important!
That is how I am able to get close to 20% p.a. rental yield now (with respect to my invested capital) while also achieving significant capital gain!
Then you also claim that my rental yield should be calculated based on current market price of my property and not my purchase price, which to me is strange because my real cost is my invested capital, why do I need to use current market price (since I am not selling anyway)?! Already told you that if you buy Freehold property, you don't have to consider current market price (You only do that for 99-years leasehold property because your property price will goes to ZERO at the end of 99-years, that is why you then use current market price which will give you artificial impression that your 99-years leasehold property has high rental yield)!
Looks like you have to listen and learn from us more instead of arguing with us! :pirate:
Much still depends on the intention for the property.
For OCR, one possibility of utilisation is own stay. The cost is still manageable for an average Singaporean family. Can an average family afford to live in the CCR FH property for sustained periods of time?
The potentially lower yields is compensated by this flexibility I feel.
Anyway, to be brutally honest to you, $6,000 for CCR FH 1300 sqft is not unheard of. It translates into a rent of $50 per sq m. But looking through the whole set of URA rental data, only a handful of developments ever cross this benchmark for median rent. Most of those that reach this rental rates are new and/or Mickey Mouse units.
https://www.ura.gov.sg/realEstateIIWeb/rental/search.action#
But in today's situation, reaching the price and location and size and rent (all four conditions met) is just not possible. Any unit selling for 1.3mil in CCR FH (1300 sqft) that has a tenancy of $6,000 (or even $5,000), let me know. I will find means to leverage or sell other units to procure. Thanks.
What is these? Care to clarify?
----------Annual Value--- Tax RateTax ------- Balance as of 31 Dec 2016------- Remarks Actions
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
Southbank $32,400 Residential $548.00(DR) The outstanding tax is deducted via GIRO.
HDB $10,680 Residential $178.00(DR) The outstanding tax is deducted via GIRO.
A $1,000,000 property that rents for $2800 a month will never have a AV $3,360
What is these? Care to clarify?
My holding and my PTX.
Free some capital quite good as well. For safety buffer, stock opportunities, or even a subsequent LH when opportunities come.
Everything stuck into something you can't afford to move into or leave empty, not scared?
Again, you are showing that you don't know how to invest in properties!
Why are you asking for low price now with respect to that kind of rental now?
Instead, You should ask yourself whether the property is worth buying now such that after buying, will your property increase in price that will beats inflation in 10 years, 20 years, and >99 years later while you continue to collect rental!
The rental yield at the time you buy your property is not important!
That is how I am able to get close to 20% p.a. rental yield now (with respect to my invested capital) while also achieving significant capital gain!
Then you also claim that my rental yield should be calculated based on current market price of my property and not my purchase price, which to me is strange because my real cost is my invested capital, why do I need to use current market price (since I am not selling anyway)?! Already told you that if you buy Freehold property, you don't have to consider current market price (You only do that for 99-years leasehold property because your property price will goes to ZERO at the end of 99-years, that is why you then use current market price which will give you artificial impression that your 99-years leasehold property has high rental yield)!
Looks like you have to listen and learn from us more instead of arguing with us! :pirate:
What I want to know is e.g. what is the $29,400 and $142.70(DR)?
----------Annual Value--- Tax RateTax ------- Balance as of 31 Dec 2016------- Remarks Actions
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
Southbank $32,400 Residential $548.00(DR) The outstanding tax is deducted via GIRO.
HDB $10,680 Residential $178.00(DR) The outstanding tax is deducted via GIRO.
My holding and my PTX.
What is there to scare when you only put 20% down to own a property?
Ok may be now you need 40%, but still better than paying up 100% right? :cool:
Free some capital quite good as well. For safety buffer, stock opportunities, or even a subsequent LH when opportunities come.
Everything stuck into something you can't afford to move into or leave empty, not scared?
What I want to know is e.g. what is the $29,400 and $142.70(DR)?
----------Annual Value--- Tax RateTax ------- Balance as of 31 Dec 2016------- Remarks Actions
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
Southbank $32,400 Residential $548.00(DR) The outstanding tax is deducted via GIRO.
HDB $10,680 Residential $178.00(DR) The outstanding tax is deducted via GIRO.
ic, my apology.
Annual Value = $29,400
Tax Rate = Owner-Occupier
Tax Balance as of 31 Dec 2016= $142.70(DR) The outstanding tax is deducted via GIRO.
Not scared leh. Anyway remember it started when you say OCR 3BR 1300 sqft hard to secure rental at 2,400. I looked in all my OCR area 3BR all minimum 2.8k to 3.6K regardless of size. Mine on market 3 weeks 4 -5 viewings within one month rented out. If the unit was ready earlier would also have been rented even earlier cos some tenants needed urgently.
Some other areas in OCR were problematic for large units to rent out though.
What is there to scare when you only put 20% down to own a property?
Ok may be now you need 40%, but still better than paying up 100% right? :cool:
tonymontana
18-10-17, 00:32
ic, my apology.
Annual Value = $29,400
Tax Rate = Owner-Occupier
Tax Balance as of 31 Dec 2016= $142.70(DR) The outstanding tax is deducted via GIRO.
Eh, what is this. Tax balance is not your tax payable.
Here it is:
Owner-Occupier Tax Rates
Annual Value ($) Effective 1 Jan 2015 Property Tax Payable
First $8,000 Next $47,000 0% 4% $0 $1 ,880
First $55,000 Next $15,000 - 6% $1,880 $ 900
First $70,000 Next $15,000 - 8% $2,780 $1,200
For non owner occupied
Annual Value ($) Effective 1 Jan 2015 Property Tax Payable
First 30,000 Next $15,000
10%12%
$3,000 $1,800
First $45,000 Next $15,000
-14%
$4,800 $2,100
Your southbank is 3K + 2400x0.12= 3288 p.a. terrase is 856 p.a
Your southbank is 3K + 2400x0.12= 3288 p.a. terrase is 856 p.a
??
Project - Annual Value - Tax Rate - TaxBalance as of 31 Dec 2016 - Remarks Actions
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
Southbank $32,400 Residential $548.00(DR) The outstanding tax is deducted via GIRO. 3,288.00
HDB $10,680 Residential $178.00(DR) The outstanding tax is deducted via GIRO. 1,068.00
You are right, I don't even know how much I pay my PTX.
Terrasse $29,400 Owner-Occupier $142.70(DR) The outstanding tax is deducted via GIRO.
856.00
It was 1 of my property agent who told me that OCR 3BR 1300 sqft can't even find tenant for 6 months for 1 of the property he was marketing, it is NO rental $ - not to mention securing rental at $2400 pm! In fact, he finds it difficult to find tenants for almost all the OCR properties he was marketing, taking months to even secure a tenant!
And yet he helped me to secure a tenant within 2 weeks after my previous tenant vacanted my CCR place and then another week later the tenant already moved in. That is the difference that he was contrasting. Furthermore, there isn't much touch up needed as the place has been maintained in good condition by my ex-tenant, just some cleaning up by a cleaner because of some furniture moving.
Not scared leh. Anyway remember it started when you say OCR 3BR 1300 sqft hard to secure rental at 2,400. I looked in all my OCR area 3BR all minimum 2.8k to 3.6K regardless of size. Mine on market 3 weeks 4 -5 viewings within one month rented out. If the unit was ready earlier would also have been rented even earlier cos some tenants needed urgently.
Some other areas in OCR were problematic for large units to rent out though.
OCR is not all the same.
Remember even you were confused which areas are OCR versus RCR.
In my area, 1300 sqft for 4K will find tenants within a month. I also knew some who can't rent out at their minimum prices for other OCR areas.
I am happy for you as well.
I already said based on my experience, CCR freehold in D9, 10, 11 is still the best!
Easy to find tenants, and good long term price appreciation, even beyond 100 years! A treasure to leave behind for your descendants!
Care to share which are the OCR regions/areas which based on your experience are easy to find tenants at good rental and which are difficult to find tenants?
Well, I don't know of any OCR area where 1300 sqft can find tenant at $4k pm rental in current market! Care to share where is this place?
OCR is not all the same.
Remember even you were confused which areas are OCR versus RCR.
In my area, 1300 sqft for 4K will find tenants within a month. I also knew some who can't rent out at their minimum prices for other OCR areas.
I am happy for you as well.
tonymontana
18-10-17, 13:28
top rental yield from squarefoot.com.sg
https://www.squarefoot.com.sg/market-watch/rental-yield
POSTALDISTRICT PROJECT NAME TENURE COMPLETIONDATE AVERAGEPRICE($PSF) #TRANSACTIONS AVERAGERENT($PSF PM) #RENTALCONTRACTS RENTALYIELD(%)
9 SUITES AT ORCHARD 99 YRS FROM 2007 2014 1,483 8 6.17 65 5.0
2 LUMIERE 99 YRS FROM 2006 2010 1,472 7 5.99 170 4.9
12 ASCENT @ 456 FREEHOLD UNCOMPLETED 1,020 9 4.11 11 4.8
14 WING FONG MANSIONS FREEHOLD 1997 681 4 2.53 58 4.5
21 THE HILLFORD 60 YRS FROM 2013 2016 1,225 5 4.48 153 4.4
14 WING FONG COURT FREEHOLD 1997 739 5 2.69 33 4.4
1 PEOPLE'S PARK COMPLEX 99 YRS FROM 1968 1972 973 6 3.52 80 4.3
14 # 1 SUITES FREEHOLD 2016 953 23 3.41 36 4.3
14 SUNFLOWER COURT FREEHOLD 2001 693 4 2.48 14 4.3
7 THE PLAZA 99 YRS FROM 1968 1979 957 4 3.41 61 4.3
15 HAIG 162 FREEHOLD 2013 1,288 5 4.56 49 4.2
18 MELVILLE PARK 99 YRS FROM 1992 1996 664 39 2.35 300 4.2
12 RIVERBAY 999 YRS FROM 1882 2014 1,129 7 3.93 32 4.2
5 VIVA VISTA FREEHOLD 2014 1,455 5 5.05 101 4.2
5 WHITEHAVEN FREEHOLD 2016 1,061 7 3.67 78 4.2
16 LAGUNA GREEN 99 YRS FROM 1995 1998 940 4 3.25 29 4.2
14 ATRIUM RESIDENCES FREEHOLD 2008 829 6 2.78 45 4.0
3 MERAPRIME 99 YRS FROM 2003 2006 1,419 5 4.75 53 4.0
28 FLORAVILLE FREEHOLD 2017 1,162 7 3.89 4 4.0
12 PARC HAVEN FREEHOLD 2004 1,028 7 3.36 22 3.9
7 BURLINGTON SQUARE 99 YRS FROM 1996 1998 1,197 5 3.90 76 3.9
2 SPOTTISWOODE PARK 92 YRS FROM 1989 UNKNOWN 813 8 2.64 73 3.9
22 THE FLORAVALE 99 YRS FROM 1997 2000 617 24 2.00 78 3.9
12 SKYSUITES17 FREEHOLD 2014 1,406 6 4.57 57 3.9
7 SUNSHINE PLAZA 99 YRS FROM 1997 2001 1,193 6 3.87 52 3.9
12 PRESTIGE HEIGHTS FREEHOLD 2011 1,440 10 4.67 72 3.9
4 THE INTERLACE 99 YRS FROM 2009 2013 1,051 43 3.41 189 3.9
14 THE CENTREN FREEHOLD 2016 1,163 14 3.76 18 3.9
23 REGENT GROVE 99 YRS FROM 1997 2000 680 23 2.20 84 3.9
5 WEST BAY CONDOMINIUM 99 YRS FROM 1991 1993 818 8 2.64 75 3.9
5 HERITAGE VIEW 99 YRS FROM 1996 2000 1,116 25 3.60 170 3.9
8 CLYDES RESIDENCE FREEHOLD 2005 1,097 6 3.53 19 3.9
4 HARBOUR VIEW TOWERS 99 YRS FROM 1990 1994 965 6 3.10 48 3.9
22 SUMMERDALE 99 YRS FROM 1997 2000 682 24 2.18 77 3.8
23 KINGSFORD . HILLVIEW PEAK 99 YRS FROM 2012 2017 1,006 26 3.21 124 3.8
28 RIVERBANK @ FERNVALE 99 YRS FROM 2013 2017 988 79 3.15 24 3.8
14 CASA AERATA FREEHOLD 2012 1,258 6 4.01 44 3.8
19 EVERGREEN PARK 99 YRS FROM 1995 1999 678 14 2.16 37 3.8
3 ALEXIS FREEHOLD 2012 1,609 14 5.12 142 3.8
19 CARDIFF RESIDENCE 99 YRS FROM 2011 2014 1,199 6 3.82 62 3.8
25 NORTHOAKS 99 YRS FROM 1997 2000 597 23 1.90 90 3.8
13 SANT RITZ 99 YRS FROM 2012 2016 1,174 11 3.73 72 3.8
14 ASTON MANSIONS 99 YRS FROM 1995 1998 799 6 2.53 26 3.8
23 PARKVIEW APARTMENTS 99 YRS FROM 1994 1998 712 20 2.25 83 3.8
25 WOODGROVE CONDOMINIUM 99 YRS FROM 1997 1999 629 9 1.98 40 3.8
As I have said before, such data are meaningless because you will see lots of 99-years leasehold properties seemingly having high rental yield based on current (depreciating to ZERO) market price! :pirate:
What people need to seriously consider is the NPV of the property 99 years down the road! :excitement:
Usually those properties with high current rental yield (with respect to current market price) tends to have low capital appreciation prospect!
top rental yield from squarefoot.com.sg
https://www.squarefoot.com.sg/market-watch/rental-yield
POSTALDISTRICT PROJECT NAME TENURE COMPLETIONDATE AVERAGEPRICE($PSF) #TRANSACTIONS AVERAGERENT($PSF PM) #RENTALCONTRACTS RENTALYIELD(%)
9 SUITES AT ORCHARD 99 YRS FROM 2007 2014 1,483 8 6.17 65 5.0
2 LUMIERE 99 YRS FROM 2006 2010 1,472 7 5.99 170 4.9
12 ASCENT @ 456 FREEHOLD UNCOMPLETED 1,020 9 4.11 11 4.8
14 WING FONG MANSIONS FREEHOLD 1997 681 4 2.53 58 4.5
21 THE HILLFORD 60 YRS FROM 2013 2016 1,225 5 4.48 153 4.4
14 WING FONG COURT FREEHOLD 1997 739 5 2.69 33 4.4
1 PEOPLE'S PARK COMPLEX 99 YRS FROM 1968 1972 973 6 3.52 80 4.3
14 # 1 SUITES FREEHOLD 2016 953 23 3.41 36 4.3
14 SUNFLOWER COURT FREEHOLD 2001 693 4 2.48 14 4.3
7 THE PLAZA 99 YRS FROM 1968 1979 957 4 3.41 61 4.3
15 HAIG 162 FREEHOLD 2013 1,288 5 4.56 49 4.2
18 MELVILLE PARK 99 YRS FROM 1992 1996 664 39 2.35 300 4.2
12 RIVERBAY 999 YRS FROM 1882 2014 1,129 7 3.93 32 4.2
5 VIVA VISTA FREEHOLD 2014 1,455 5 5.05 101 4.2
5 WHITEHAVEN FREEHOLD 2016 1,061 7 3.67 78 4.2
16 LAGUNA GREEN 99 YRS FROM 1995 1998 940 4 3.25 29 4.2
14 ATRIUM RESIDENCES FREEHOLD 2008 829 6 2.78 45 4.0
3 MERAPRIME 99 YRS FROM 2003 2006 1,419 5 4.75 53 4.0
28 FLORAVILLE FREEHOLD 2017 1,162 7 3.89 4 4.0
12 PARC HAVEN FREEHOLD 2004 1,028 7 3.36 22 3.9
7 BURLINGTON SQUARE 99 YRS FROM 1996 1998 1,197 5 3.90 76 3.9
2 SPOTTISWOODE PARK 92 YRS FROM 1989 UNKNOWN 813 8 2.64 73 3.9
22 THE FLORAVALE 99 YRS FROM 1997 2000 617 24 2.00 78 3.9
12 SKYSUITES17 FREEHOLD 2014 1,406 6 4.57 57 3.9
7 SUNSHINE PLAZA 99 YRS FROM 1997 2001 1,193 6 3.87 52 3.9
12 PRESTIGE HEIGHTS FREEHOLD 2011 1,440 10 4.67 72 3.9
4 THE INTERLACE 99 YRS FROM 2009 2013 1,051 43 3.41 189 3.9
14 THE CENTREN FREEHOLD 2016 1,163 14 3.76 18 3.9
23 REGENT GROVE 99 YRS FROM 1997 2000 680 23 2.20 84 3.9
5 WEST BAY CONDOMINIUM 99 YRS FROM 1991 1993 818 8 2.64 75 3.9
5 HERITAGE VIEW 99 YRS FROM 1996 2000 1,116 25 3.60 170 3.9
8 CLYDES RESIDENCE FREEHOLD 2005 1,097 6 3.53 19 3.9
4 HARBOUR VIEW TOWERS 99 YRS FROM 1990 1994 965 6 3.10 48 3.9
22 SUMMERDALE 99 YRS FROM 1997 2000 682 24 2.18 77 3.8
23 KINGSFORD . HILLVIEW PEAK 99 YRS FROM 2012 2017 1,006 26 3.21 124 3.8
28 RIVERBANK @ FERNVALE 99 YRS FROM 2013 2017 988 79 3.15 24 3.8
14 CASA AERATA FREEHOLD 2012 1,258 6 4.01 44 3.8
19 EVERGREEN PARK 99 YRS FROM 1995 1999 678 14 2.16 37 3.8
3 ALEXIS FREEHOLD 2012 1,609 14 5.12 142 3.8
19 CARDIFF RESIDENCE 99 YRS FROM 2011 2014 1,199 6 3.82 62 3.8
25 NORTHOAKS 99 YRS FROM 1997 2000 597 23 1.90 90 3.8
13 SANT RITZ 99 YRS FROM 2012 2016 1,174 11 3.73 72 3.8
14 ASTON MANSIONS 99 YRS FROM 1995 1998 799 6 2.53 26 3.8
23 PARKVIEW APARTMENTS 99 YRS FROM 1994 1998 712 20 2.25 83 3.8
25 WOODGROVE CONDOMINIUM 99 YRS FROM 1997 1999 629 9 1.98 40 3.8
Don't know how many 10 years do I have.
My 99 years leasehold property should outlast me.
Only one regret, not buying private property earlier.
Now can buy still don't buy, welcome to be in the statistic.
tonymontana
18-10-17, 17:02
As I have said before, such data are meaningless because you will see lots of 99-years leasehold properties seemingly having high rental yield based on current (depreciating to ZERO) market price! :pirate:
What people need to seriously consider is the NPV of the property 99 years down the road! :excitement:
Usually those properties with high current rental yield (with respect to current market price) tends to have low capital appreciation prospect!
data is data, up to u how to interpret, is a snapshot in time.
99 yrs from now is a long way
no one can say how it will pan out
every silver lining has a cloud
I already said based on my experience, CCR freehold in D9, 10, 11 is still the best!
Easy to find tenants, and good long term price appreciation, even beyond 100 years! A treasure to leave behind for your descendants!
Care to share which are the OCR regions/areas which based on your experience are easy to find tenants at good rental and which are difficult to find tenants?
Well, I don't know of any OCR area where 1300 sqft can find tenant at $4k pm rental in current market! Care to share where is this place?
Actually mostly are in this range in this region. Please see a list of some of the rental caveats from July to September 2017. Mostly above 3,500 when approach 1000 sqft and 4000 when about 1300 sqft.
I believe in the whole stretch of South (Southeast, Central and Southwest) region.
Far East, Far West and Far North may face some difficulties for renting at good prices, but ownership demands will still be equally strong.
I have done and shown my homework. How about your caveats of $6,000 for 1300 sqft? Which developments in CCR FH category are great?
Why your list of OCR condos of about 1300 sqft that can rent out for $4000 pm are so short (only 3 condo estates!) when you said "Actually mostly are in this range in this region"?????????
In CCR, there are many condo units of about 1300 sqft (or less) that can rent for $6000 or more p.m.!
I won't show the details rental transactions (because too long!), just give you the list of condo estates in D9, D10 and D11 - you can check and verify for yourself:
Viva
OUE Twin Peaks
Scotts Square
Visioncrest
One Devonshire
Martin No 38
Martin Place Residence
The Suites at Central
The Wharf Residence
(....+Many more!!!!!!!!)
So back to you, why your list so short? Is it that OCR has so few condo estates with units of about 1300 sqft that can rent for $4000 or more p.m.?????????? :crushed:
Actually mostly are in this range in this region. Please see a list of some of the rental caveats from July to September 2017. Mostly above 3,500 when approach 1000 sqft and 4000 when about 1300 sqft.
I believe in the whole stretch of South (Southeast, Central and Southwest) region.
Far East, Far West and Far North may face some difficulties for renting at good prices, but ownership demands will still be equally strong.
I have done and shown my homework. How about your caveats of $6,000 for 1300 sqft? Which developments in CCR FH category are great?
You said you don't know of any... my job is just to show you a few samples here.
It's not my full time job.
Why your list of OCR condos of about 1300 sqft that can rent out for $4000 pm are so short (only 3 condo estates!) when you said "Actually mostly are in this range in this region"?????????
In CCR, there are many condo units of about 1300 sqft (or less) that can rent for $6000 or more p.m.!
I won't show the details rental transactions (because too long!), just give you the list of condo estates in D9, D10 and D11 - you can check and verify for yourself:
Viva
OUE Twin Peaks
Scotts Square
Visioncrest
One Devonshire
Martin No 38
Martin Place Residence
The Suites at Central
The Wharf Residence
(....+Many more!!!!!!!!)
So back to you, why your list so short? Is it that OCR has so few condo estates with units of about 1300 sqft that can rent for $4000 or more p.m.?????????? :crushed:
There are actually many more in OCR in my region that regularly clocks those figures. The Stellar (FH), Seahill, The Vision, just to name a few more.
And most importantly, the prices of these units are all around 1200-1400 PSF, and generally are LH as well unless otherwise indicated.
Looking through your list carefully, all are priced upwards of $1,800 PSF, some even 3,000 PSF including the 99LH OUE Twin Peaks. Such a high PSF definitely warrants higher rents (but yields are actually extremely low).
I am more interested in your unit - CCR FH bought at 1,000 PSF and current market price is 1,400 PSF, around 1300 SQFT in size, and can rent for $6,000. Kindly share this lobang if available.
Why your list of OCR condos of about 1300 sqft that can rent out for $4000 pm are so short (only 3 condo estates!) when you said "Actually mostly are in this range in this region"?????????
In CCR, there are many condo units of about 1300 sqft (or less) that can rent for $6000 or more p.m.!
I won't show the details rental transactions (because too long!), just give you the list of condo estates in D9, D10 and D11 - you can check and verify for yourself:
Viva
OUE Twin Peaks
Scotts Square
Visioncrest
One Devonshire
Martin No 38
Martin Place Residence
The Suites at Central
The Wharf Residence
(....+Many more!!!!!!!!)
So back to you, why your list so short? Is it that OCR has so few condo estates with units of about 1300 sqft that can rent for $4000 or more p.m.?????????? :crushed:
I did a Propertyguru search for the properties fulfilling your criteria (District 9,10,11 which are FH) and up to 1500PSF in those locality, and 98 results came up. I went through all the developments in the list and they all come up short as compared to yours.
Newton Edge - has not exceeded $5,000 since June
Dunearn Suites - has not exceeded $3,000 since June, mostly small units
The Spinnaker - last rental caveat is in June, $3,500
Sylvan Lodge - has not exceeded $4,000 since June, even for 1,700 sqft unit
Cube 8 - highest was indeed $6,000 in August, but for a 1,900 to 2,000 sqft unit
Wilkie 87 - $4,000 for both units rented from June, indeed about 1,300 sqft
Studio 3 - mostly not above 1,000 sqft, maximum $3,400
Sixth Avenue Centre - $2,000 to $2,200 for units about 1300 sqft
The Cornwall - getting close with 1400 sqft units hitting $5,000 but no $6,000 caveat
The Lincoln Modern - Uniformly about $4,000 for 1,400 sqft unit
Montebleu - about $4,000 for 1,100 sqft units
Pavilion 11 - maximum single 6.2K for June, 1,400 sqft unit, but all the rest between $4,000-$5,000 +- for 1,400 sqft units.
So what you have, Teddy, is a real treasure, because its better than all these caveats. Kindly share the locality at least.
tonymontana
19-10-17, 10:09
There are actually many more in OCR in my region that regularly clocks those figures. The Stellar (FH), Seahill, The Vision, just to name a few more.
And most importantly, the prices of these units are all around 1200-1400 PSF, and generally are LH as well unless otherwise indicated.
Yup.
Examples in the east:
flamingo valley psf below 1400 FH and rent around 4k region
the seawind units 900-1200 psf around 1400 or less, FH , rental around 4k (give or take couple of hundred)
however there is one piece of data that is a black hole, namely actual occupancy rate for individual condos. that could be a spanner in the works for aspiring landlords.
D9/10/11 should be quite easy to rent out, no?
Agree on that generally. Most people who rent prefers central.
But generally, they still do not want to or cannot pay high rent and that is the market trend with dwindling expat packages.
Definitely, there are CCR areas that can easily meet 6-7K rent, but the prices for these are generally in the $4 million (and/or 2500PSF) category. I only wish Teddybear can share with us his CCR FH 1,300 sqft unit that has a market price of $1,400 PSF, and rent out for $6,000. Hope he is generous enough to share this lobang.
Yup.
Examples in the east:
flamingo valley psf below 1400 FH and rent around 4k region
the seawind units 900-1200 psf around 1400 or less, FH , rental around 4k (give or take couple of hundred)
however there is one piece of data that is a black hole, namely actual occupancy rate for individual condos. that could be a spanner in the works for aspiring landlords.
D9/10/11 should be quite easy to rent out, no?
Think you hit the nail on the head!
Example you see high rental amount for OCR condo units but you don't know how long it takes for the unit to be left vacant before the landlord managed to get a tenant at that kind of high rental.
As I have mentioned before, 1 of my agents was saying some of these condo units takes more than 6 months and still no takers even if they are asking for slightly above median rental rate.
So, what does all this mean? It means we need to assess property return based on NPV and IRR and not current market rental yield!
Yup.
Examples in the east:
flamingo valley psf below 1400 FH and rent around 4k region
the seawind units 900-1200 psf around 1400 or less, FH , rental around 4k (give or take couple of hundred)
however there is one piece of data that is a black hole, namely actual occupancy rate for individual condos. that could be a spanner in the works for aspiring landlords.
D9/10/11 should be quite easy to rent out, no?
Why are you looking for current market price of up to $1500 psf?
I only said my unit current market price is more than $1400 psf!
Anyway, current market price is immaterial since my cost is the 20% of $1000 psf that I paid for my that property years ago! I am sure >99 years later, my CCR freehold property will have a market price that is much more than today, whereas 99-years leasehold property will have value of $0!
So, you should start to learn that property investment is more about NPV and IRR say 99 years down the road and not current rental yield (since e.g. 99 years later if I sell my freehold property my total return is much higher than 99-years leasehold property)! :rolleyes:
I did a Propertyguru search for the properties fulfilling your criteria (District 9,10,11 which are FH) and up to 1500PSF in those locality, and 98 results came up. I went through all the developments in the list and they all come up short as compared to yours.
Newton Edge - has not exceeded $5,000 since June
Dunearn Suites - has not exceeded $3,000 since June, mostly small units
The Spinnaker - last rental caveat is in June, $3,500
Sylvan Lodge - has not exceeded $4,000 since June, even for 1,700 sqft unit
Cube 8 - highest was indeed $6,000 in August, but for a 1,900 to 2,000 sqft unit
Wilkie 87 - $4,000 for both units rented from June, indeed about 1,300 sqft
Studio 3 - mostly not above 1,000 sqft, maximum $3,400
Sixth Avenue Centre - $2,000 to $2,200 for units about 1300 sqft
The Cornwall - getting close with 1400 sqft units hitting $5,000 but no $6,000 caveat
The Lincoln Modern - Uniformly about $4,000 for 1,400 sqft unit
Montebleu - about $4,000 for 1,100 sqft units
Pavilion 11 - maximum single 6.2K for June, 1,400 sqft unit, but all the rest between $4,000-$5,000 +- for 1,400 sqft units.
So what you have, Teddy, is a real treasure, because its better than all these caveats. Kindly share the locality at least.
I thought got good lobang. If your unit is >$3000 PSF then 6-7K easily doable.
But in terms of yield, NPV or IRR calculations all pointless.
But which unit is 1300sqft, bought at 1K PSF and now can rent out at 6K? Really cannot find anything close in CCR FH group, only certain OCR sites can achieve this.
Why are you looking for current market price of up to $1500 psf?
I only said my unit current market price is more than $1400 psf!
Anyway, current market price is immaterial since my cost is the 20% of $1000 psf that I paid for my that property years ago! I am sure >99 years later, my CCR freehold property will have a market price that is much more than today, whereas 99-years leasehold property will have value of $0!
So, you should start to learn that property investment is more about NPV and IRR say 99 years down the road and not current rental yield (since e.g. 99 years later if I sell my freehold property my total return is much higher than 99-years leasehold property)! :rolleyes:
I will let you go and do your homework (since you have not been putting in effort to find it as you claimed you did).
When you finally know the effects of inflation on freehold properties, you will know why CCR freehold properties are best property investment choice in Singapore (and not OCR 99-years leasehold properties)!
What I want to remind you is that what I have quoted here is a real example (not numbers that I plucked from the sky, though obviously the size is ABOUT 1300 sqft (and not exactly 1300 sqft as you claimed you are searching for, similarly for the $6000 pm)) of how we make money from capital gains over long term from investing in CCR freehold properties and the rental income is just a bonus! (instead of worrying whether you can successfully flip your 99-years leasehold property to another greater fool at a higher price before your property is >30 years old and there will be few buyers around)!
I thought got good lobang. If your unit is >$3000 PSF then 6-7K easily doable.
But in terms of yield, NPV or IRR calculations all pointless.
But which unit is 1300sqft, bought at 1K PSF and now can rent out at 6K? Really cannot find anything close in CCR FH group, only certain OCR sites can achieve this.
If everything is suka suka round up and down, there is no way to do this homework as URA only publishes 3 year data as well.
Thanks but no thanks for not being able to share any specifics.
I will let you go and do your homework (since you have not been putting in effort to find it as you claimed you did).
When you finally know the effects of inflation on freehold properties, you will know why CCR freehold properties are best property investment choice in Singapore (and not OCR 99-years leasehold properties)!
What I want to remind you is that what I have quoted here is a real example (not numbers that I plucked from the sky, though obviously the size is ABOUT 1300 sqft (and not exactly 1300 sqft as you claimed you are searching for, similarly for the $6000 pm)) of how we make money from capital gains over long term from investing in CCR freehold properties and the rental income is just a bonus! (instead of worrying whether you can successfully flip your 99-years leasehold property to another greater fool at a higher price before your property is >30 years old and there will be few buyers around)!
I cannot share specifics for privacy reasons.
Still, the round up and round down doesn't really affect the return figures much and is sufficient to convey the most important message to you -------
That is, when it comes to investing in properties, Gov ensures that you can only make money by buying and holding over very long term (through slow appreciation that correlates to inflation and income growth of the population) - not buy to flip within a few years which are what all those property cooling measures are targeting!
If everything is suka suka round up and down, there is no way to do this homework as URA only publishes 3 year data as well.
Thanks but no thanks for not being able to share any specifics.
20-30 years hold until enbloc still not enough?
I cannot share specifics for privacy reasons.
Still, the round up and round down doesn't really affect the return figures much and is sufficient to convey the most important message to you -------
That is, when it comes to investing in properties, Gov ensures that you can only make money by buying and holding over very long term (through slow appreciation that correlates to inflation and income growth of the population) - not buy to flip within a few years which are what all those property cooling measures are targeting!
If enough then some properties won't be 40 years old and still fail to enbloc!
20-30 years hold until enbloc still not enough?
tonymontana
19-10-17, 23:42
just heard happy news one of my kaki got enbloc, is an lh ocr apartment. meanwhile another kaki holding d9 fh condo renting out at 5% gross yield, bought almost a decade ago. lots of normal ppl done well investing in local property, be it ocr ccr lh or fh
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