Should I sell or rent my property in Singapore?
Should I sell or rent my property in Singapore? This is a tough question. Although we are now facing the pandemic with Covid-19 spread around the world, the real estate market is still hot here in Singapore and poised to get hotter once the pandemic ended.
If you’re looking to sell your property, you’re entering one of the strongest seller’s markets in history and demand for housing continues to grow despite the crisis that the people in every country in enduring. So why would you choose to sell your property right now instead of rent it?
Jumping into the world of property investment, renting, and tenants is a big decision with serious implications; you need to clearly define why you want to rent your property instead of selling it to determine if renting is really the right decision.
In the hopes of talking you out of renting out your property and into selling your property, let’s go through the most common reason we hear from people here in Singapore about why they chose to rent and let’s dig into the logic a little bit.
There’s a reason why rentals are typically referred to as investment properties – this is their primary function. Investing in real estate beyond your own property is an appealing venture; it’s more tangible than the stock market and it’s something you already know.
For those seeking financial independence, a passive source of income like rental property is ideal. What’s more, if you buy another property in Singapore for yourself, you’re building equity in two properties, while only paying a single mortgage. If you’re bringing in enough cash from your rental, you can put it toward your own mortgage.
However, the finances of a rental property are far beyond what first-time landlords typically expect. Before you sign on the dotted line with a property manager, get the answers to these basic financial questions:
What is the average rent in your area?
Simply call every For Rent sign you see in your neighborhood and ask for their home size and monthly rent. This will give you a rough idea of what you can charge.
Does rent in your area cover your mortgage?
This one is essential unless you can afford to pay for part of the mortgage as well as your own.
Can you handle paying the mortgage for the months between tenants?
Even experienced landlords need time to give a property a good turn between tenants – there’s a lot that needs to be done. Not to mention the process of actually finding a new tenant, which can require marketing and advertising.
Can you afford a property manager?
Property managers handle the vast majority of headaches for property owners. However, they do cost more (generally between 8-12% of the monthly rental value) than managing the property yourself. P/s: Ping Property only charge you as low as 4% management fee. You probably want to have some reading about our Property Management services. Just give us a call to know more.
Beyond these basic questions, there are tax implications and expenses you should discuss with both a real estate agent and accountant before you make a decision. As you can see, rental property income is pretty far from “passive”.
As you can tell, there are considerations to be made before you decide to rent or sell your property. And once you’ve spoken to your local real estate pros, you’ll probably find another slew of questions that need answering.
Renting out a property in Singapore is a bit hard and in current market with the pandemic going on, probably not your best option. Indeed, with some warning of a potential downturn, selling while prices are high is likely your best option. But if you do decide to rent, do your homework, save your money, and get ready to unclog some drains.