Newbie
true in certain way... let say you can rent $2k per mth and earned $24k a year. After 10 years, you have earned $240k if rent is still the same. And 10 years later, I bet your punggol HDB flat valuation will still be aroundOriginally Posted by jitkiat
$400k or even higher as punggol will become mature estate. But thats in thoery. In real life renting of flat come with some troubles like problem tenant, problem of finding of tenant etc.
Junior
not to forget that as the flat gets older, you need to renovate it (even if it costs $10k) to attract new tenants.. that negates ur rental income.
I would think property rental is just to keep the dream alive(ie pay the installment) until an appropriate time for you to cash out from significant capital appreciation.
Consideration should be the allocation of capital to the house that you think will give the greater capital appreication. Rental Yield is secondary. For example, I am living in a 20-30yr old HDB in AMK that is fetching $600k+ on the market. But now I have a chance to get duxton or queenstown at around 600k for a new flat, I will switch to the new flat. So I have extended the life of my HDB by another 20yrs without costing me anything plus the potential for appreciation is greater. (Maybe it will be smaller, but it will still have the same number of rooms and you can attract tenants who are willing to pay more for a new flat at a good location)
Newbie
Few things to consider:
1) You have sufficient minimum sum in you and your spouse CPF accounts? If not, the condo has to be serviced in cash. Then the next question naturally is - do u have sufficient cash to service the monthly installment, even with the assumption that no rental income might be obtained from your HDB for considerable length of time?
2) If you cash out now, can the $$$ be used to finance a better property? Or rather, do you expect Punggol to have significant appreciation in prices (eg move from $400k to $500k) in time to come, given large tracts of Punggol is still undeveloped and the existing HDB developments are away from the major waterway devts?
3) The tenant profile for the HDB market is typically foreign workers, skewed towards the China Chinese who will squeeze 8 people into 1 flat. That's how they can cough up the $2K rental. One couple rents it from you, stay in the MBR with their kids, and sublet bedroom 2 to another couple for $500, and bedroom 3 to another couple for $500. The state of your flat after 2 years will be different. You must be prepared for this reality. You just need to take a stroll ard SengKang where many Chinese nationals congregate - u will get the pic pretty soon.
As to whether u wish to rent or sell, at the end of the day it is a personal decision. The returns are good, but for a flat in Punggol, I'd personally cash out now and buy a property elsewhere. The main waterway devt in Punggol is not in existing HDB devt areas; and there is just too much land for HDB housing.... which means there are always newer, better, and more ideally located (with better views of the over-hyped Punggol waterway) flats being available for sale from the Govt. You rent your unit for another 4 years, it would be a 10-12 years HDB flat located in a place where there will be a continuous stream of launches. You just cannot beat 'em.
At the end of the day, property is all about location, location and location. And THEN tenure tenure tenure. If urs is a freehold unit in Punggol (which is flooded with 99-year tenure devts), then it would be a different story again.
My 2 cents.
Senior
well done, that is the way to do it ! when TOP, live in condo and enjoy the facilities, using HDB rental to sustain ur lifestyle there (of course depending on ur monthly instalment for condo). The govt owes that to you...
Junior
Sell your punggol ahgogo flats. Buy somewhere else better. Take out a 30 years loan. Continue to stay in ur condo
Newbie
Hi Nochoice, I went to HDB website and found these:
HDB flats sold under the Home Ownership Scheme are meant for owner-occupation by the owners and their families. However, flat owners may sublet their whole flat or spare rooms if they meet the eligibility conditions.
To sublet the whole flat, prior approval from HDB is needed. For subletting of rooms, no approval from HDB is required but flat owners must continue to live in the flat during the period of subletting and comply with other subletting conditions.
Eligibility of Flat Owners
You have satisfied a 3-year or 5-year Minimum Occupation Period (MOP)
You are allowed to sublet your whole flat if :
If you do not meet the MOP for subletting, you are still allowed to sublet your whole flat if you fall under any one of the following circumstances :
- You have occupied your non-subsidised flat (flat purchased from the open market without a CPF housing grant) for at least 3 years; or
- You have occupied your subsidised flat (flat purchased directly from HDB or from the open market with a CPF housing grant) for at least 5 years.
You are living in quarters provided by employer
You are going overseas to work or study
You are living in commercial properties
Other circumstances
Sorry if i took up too much space cutting and pasting...the thing is I am currently staying in a pte prop, and wishes to buy a HDB flat to rent it out as a whole (yield better mah)...a few years back, i also checked and found that HDB do not allow such activities. One can buy a HDB from resale market, but need to stay in there and rent out the pte prop instead. I supposed the reasoning is the aim of HDB is to provide affordable housing for low to middle income folks, not to faciliate subletting businesses.
- You are the sole owners and occupiers of the flats and need care from relatives because of illness; or You are the sole owners and occupiers of the flat and are hospitalised for more than six months; or
- The flat owners have passed away and left behind an orphaned minor child (i.e. child under 21 years of age). The guardian or public trustee of the minor child may sublet the whole flat.
Then recently, i did come across news article mentioning HDB has relaxed the rules allowing subletting of whole HDB flats while owners are staying in pte prop.
From the HDB website, seems HDB still have many criteria to fulfil before allowing such activity (such as the 3 year stay in rule).
My question is: Can I buy a HDB from resale market now and rent it out as a whole right away? Has the rule been relaxed to this extent?
Can any experts advise? Thanks in advance. MITS
Newbie
Agree... sell your Punggol flat now at Value to 20k at least (assuming you are between 11 -15 floor... and near enuf to LRT/ MRT)
If you wait another 5 years to sell, you may face lots of competition from those new flats that are at surrounding of the MRT station... it'll be harder to sell cos yr flat will be older and not as near to the Punggol central and MRT.
But for the hdb loan for 30 years if you buy resale ...... you may not be able to qualify for the loan at all if your family combine income is more than $8k.
Of cos, u will need to declare u have a pte pty when you buy a re-sale hdb flat....
Newbie
[quote=new2mondrian]Few things to consider:
2) If you cash out now, can the $$$ be used to finance a better property? Or rather, do you expect Punggol to have significant appreciation in prices (eg move from $400k to $500k) in time to come, given large tracts of Punggol is still undeveloped and the existing HDB developments are away from the major waterway devts?
The main waterway devt in Punggol is not in existing HDB devt areas; and there is just too much land for HDB housing.... which means there are always newer, better, and more ideally located (with better views of the over-hyped Punggol waterway) flats being available for sale from the Govt. You rent your unit for another 4 years, it would be a 10-12 years HDB flat located in a place where there will be a continuous stream of launches. You just cannot beat 'em.
[quote]
Precisely... this is exactly why I sold...
But I'll consider Punggol again in 15 years time when they fully develop the area, especially the part near the waterway and better still, around Coney Island! (To prep for retirement!)
The only thing I enjoy in punggol is the peace in the day and the fresher air due to the breeze from the sea..... if you are observant, you can actually spot beautiful migrant birds in the morning!
Newbie
Ans is - Cannot... must still stay 3 years before legal rent out...
Newbie
Wakatta...Thanks mate!
Newbie
I look at your situation a bit differently.
1) Since you only paid 240k and not the currrent valuation of 400k.
Your actual rental yeild works out to be $24k/$240k x 100= 10%Even if rental falls, you will still get a pretty decent yield.
2) The profit you make by selling now is 160k. Worse case situaition is that there is an oversupply in punggol flats and the price drops back to 240k forgoing your gains. Assuming you can get tenants, this loss can be offset by renting out your flat for 6 plus years.
After 6 plus years you can still get rental income of 24k per year so your upside is higher than the 160k profit that you will have by cashing out now.
3) Since you bought your HDB at a low price, you are in a strong position to grow your wealth. It is unlikely that the price of punggol will drop back to 240k so your downside risk is very small and any potential loss can be coverd by your rental.
Becuase you have bought a private property while still owning a hdb flat, the other option of relocating or downgrading your hdb flat is out. The next best course of action is to hold your hdb flat for rental due to your low purchase price and high rental yield provided you have the cash flow and meet the cpf minimul sum or can pay by cash.
Also do the maths and max out your hdb punggol HDB loan to 30 years. Dun worry about the interest you will be paying, your rental more than makes up for it. If you do it right you will have 2 fully paid up houses down the road and can look to buy a third.
Newbie
I look at your situation a bit differently.
1) Since you only paid 240k and not the currrent valuation of 400k.
Your actual rental yeild works out to be $24k/$240k x 100= 10%
2) The profit you make by selling now is 160k. Worse case situaition is that there is an oversupply in punggol flats and the price drops back to 240k forgoing your gains. Assuming you can get tenants, this loss can be offset by renting out your flat for 6 plus years.
After 6 plus years you can still get rental income of 24k per year so your upside is higher than the 160k profit that you will have by cashing out now.
3) Since you bought your HDB at a low price, you are in a strong position to grow your wealth. It is unlikely that the price of punggol will drop back to 240k so your downside risk is very small and any potential loss can be coverd by your rental.
Becuase you have bought a private property while still owning a hdb flat, the other option of relocating or downgrading your hdb flat is out. The next best course of action is to hold your hdb flat for rental due to your low purchase price and high rental yield provided you have the cash flow and meet the cpf minimul sum or can pay by cash.
Also do the maths and max out your hdb punggol HDB loan to 30 years. Dun worry about the interest you will be paying, your rental more than makes up for it. If you do it right you will have 2 fully paid up houses down the road and can look to buy a third.
Thanks for the advices, i cannot extend to 30yrs again becoz at the first place i chose to pay in 10yrs, so what i can do is to pay another 4 yrs to fully own the house. BTW thanks for teaching me how to calculate the rental yield it really useful.
Junior
sell ur current hbd, get a resale with 30yrs loan. do u know what is compound interest???
Newbie
John is correct in calculating the rental yield. annual rent/purchase price
I look at your situation a bit differently.
1) Since you only paid 240k and not the currrent valuation of 400k.
Your actual rental yeild works out to be $24k/$240k x 100= 10%
2) The profit you make by selling now is 160k. Worse case situaition is that there is an oversupply in punggol flats and the price drops back to 240k forgoing your gains. Assuming you can get tenants, this loss can be offset by renting out your flat for 6 plus years.
After 6 plus years you can still get rental income of 24k per year so your upside is higher than the 160k profit that you will have by cashing out now.
3) Since you bought your HDB at a low price, you are in a strong position to grow your wealth. It is unlikely that the price of punggol will drop back to 240k so your downside risk is very small and any potential loss can be coverd by your rental.
Becuase you have bought a private property while still owning a hdb flat, the other option of relocating or downgrading your hdb flat is out. The next best course of action is to hold your hdb flat for rental due to your low purchase price and high rental yield provided you have the cash flow and meet the cpf minimul sum or can pay by cash.
Also do the maths and max out your hdb punggol HDB loan to 30 years. Dun worry about the interest you will be paying, your rental more than makes up for it. If you do it right you will have 2 fully paid up houses down the road and can look to buy a third.
Senior
what if you paid ..say 240k and spent 50k in renovation ?
woould you use 290k ? for the calculation ?
Newbie
I assume yours is a hdb loan. You can refinace with a bank and get a 30 yrs or longer loan. some banks loan to you till you are 70 yrs old. The only setback is rental is an income, you have to pay more for your income tax
Newbie
when you buy, you have pay stamp duty and legal fees etc
Newbie
I should use gross rental yield.
For nett rental yield: (annual rent - expenses)/ purchase price
example of expenses include agent comm, MCST management fund, sinking fund, town council etc
In your case, I would add in the renovation cost in purchase price to get my nett rental yield
Newbie
Kawailing, after reading all the post here, only you can decide what to do, you have to weigh all the pros and cons, and decide what is best for you.
For me, property investment is all about capital appreciation or ROI, rental is secondary, if rental can pay for 2 property, very good.
My take, go for location regardless pte or hdb
PS, for multiple properties, have to take cpf minimum sum into considersation
Newbie
correction, for your case, after the 4th yr, your rental is declared as 100% income
Newbie
If you took a hdb loan, just go down to the branch office and ask them to change the loan period to 30 years.
If you are confident to pay off in 4 years that would be good. But I personally will try to clear off my condo loan first and let the hdb loan run for 30 years.
Newbie
Hi guys,
Please accept my apologies for resurrecting this thread. Stumbled upon this thread which reflects the dilemma which i am facing at the moment.
I have fulfilled the HDB 5-year rule and likewise am weighing the advantages/disadvantages of renting or selling my flat at Jurong West (bought at $170k, valued now at $400k). Based on HDB's statistic, median rental rate here is $2k.
On paper, it makes a lot of economical sense to use the flat rental as a passive income and buy myself a private apartment. However, the price has been creeping up in the last quater and i have been priced out of my desired area.
Does it then still make sense to rent out my flat and jump into the current unpredictable fundamental-less private property market?
Junior
How much does your family unit earn, and how much loan/quantum you gonna need to take for your pte property?
Newbie
Household income (without rental income) is currently at $8k.
I am only going to take a max loan of $450k.
Junior
forgive me if i'm wrong. i'm assuming you are in your very early 30s. your capital gains and residual cpf is not much. you are looking at a suburban smallish 1-2 bedder condo no?
first blush you may not hv enuff buffer, and mass mkt is now at v risky prices. i would stay put and be worry free
of course if you are taking only 50-70% loan and repayments do not exceed 20% gross then you can take a risk if you're buying to stay
Newbie
No worries. You are right in a number of areas. I am in my late 20s. My CPF is quite healthy as the installment for the flat is very low. I was looking for a freehold 2bedder (buying to stay) for $650k but have been priced out since.
It's so difficult to "predict" the market and the mass market condo are surging to the 2007 prices. This is the reason why i am currently holding back my decision.
Just my 2 cent worth..
my thoughts is, singapore is breaking into new territory to attract international buying (through the IR and other attractions), if this succeeds, property price (high end) is likely to break into new height.
At the bottom, HDB price is more or less stabilize at the current level due to inflow of foreigners and surge in population. This will form support for mass market condo prices.
3rd factor, the world is on the recovery from recession (Property prices in HK and CN may be very high or "bubble" level), unless there is another major event that hit us for double dip. this recovery will be carefully monitor by all governments (as the european and american are on the same recovery boat).
the above already give good indication that price will either maintain at current level or move upward.
To me, HDB price has already near its max value, there will always be a cap on HDB pricing to satisfy the ppl, so it will be good time to jump the bandwagon from HDB to private. Choose a traditionally popular location on the city fringe (inside the city will be too expensive for you) where you can still find gems at reasonable price (resale units).
Forget about suburb new condo, those have been overpriced. and price movement at suburb is also limited.
Just committed another FH 3 bedder at D15. Bank just up their home loan package.
F01 N54 Sheer Driving Pleasure
Err ... "committed another FH 3-bedder at D15"?
You're a East-Coast "Property_Collector"? Just kiddin'. Cool!
Newbie
The factors paints a very good picture for the coming years, but it also the same reason why sellers and developers are pushing the prices up so rapidly. Some of the units that i have seen has increased their asking price by 30% since May 09 (especially D15 and D16). I know the sellers are trying to bank in the profits in the event of a double dip in 2010.
I am more wary about the uncertainty of the rise in interest rate which will impact the maket.
Junior
I am very tired of waiting for prices to be reasonable..
is it a good time to buy a marina bay or sentosa cove condo?
I don't want to be left behind.. help....
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