Are you looking to invest in rental property in Singapore? Do the projects like The Florence Residences top fascinate you and motivate you to put in some investments? If yes, then don’t go anywhere. Investing in rental properties is growing in Singapore with each passing day. More and more businesses are stepping into the market and with big new projects being launched, the market is getting competitive. However, one has to be careful when making an investment or else you may regret your decision.
Getting a property
You cannot get the Housing Development Board Flat in Singapore as a foreigner. It is a public housing scheme limited to the citizens on Singapore and even the permanent residents cannot avail its benefits. If you rent this, the flat should be occupied for minimum of 5 years. A minimum 6 months to maximum 3 years rental contract offering can be provided. A single room flat provides 4 occupant residency whereas a 5 room flat gives 6 occupant space.
However, you can rent the private property, landed or condominium. The minimum rental period is three months but many people add a no-penalty early termination clause to facilitate lesser stay. However, this would be considered against the rules and first time fine is up to S$200,000. A private property, regardless of how big or small it is, can facilitate 6 unrelated occupants only.
Prices of properties
The prices tend to vary from place to place. Central locations like Orchard and Bukit Timah are costly options as compared to other places. Some prime locations include the Bukit Merah, Queenstown, and Bishan. If you think that you are on a low budget, you can go for Punggol, Wodlands, and even Tishun. Overall, Hougang Condo can be a great option.
Expenses of property
You have to keep your eyes on the property expenses too. One is likely to deal with the renovation costs which would cost S$50,000 to S$100,000. It depends largely on the kind of renovation you want. One has to assure basic amenities within the property to make it livable for tenants. Other than that, the payment as landlord to source a tenant and maintenance fee.
Certain cooling measures are taken by the authorities for the prevention of speculative investing in Singaporean real estate. A Buyer’s Stamp Duty is payable, 1% for first S$180,000, 2% for the next S$180,000, and if your property exceeds this cost the BSD for remaining amount will be 3%. An additional buyer stamp cost of Singapore permanent residents is 5% for first and 15% for the rest of the property purchases. As a foreigner, you have to pay 20% ABSD on each purchase.
To calculate the rental yield, you can use a simple formula. It is:
((Monthly rent x 12 months) / property price) x 100
Selling investment property
Take a good look at the seller’s stamp duty before selling the property. If it is a bit too high, try to avoid selling the land and maximize the income by rent.
Don’t forget the taxes that come with your property investment. Have a good look at both property tax, which varies depending on your annual value, and rental income for which the tax rate starts at 0% and goes all the way up to 22%.