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Important Things to Consider Before Becoming a Landlord in Singapore

The idea of having a tenant who will cover the costs of the mortgage sounds great on paper. This situation makes owning a property seem like an easy investment. In reality, you must be ready to shoulder several fees and taxes as well as unexpected repairs. Not to mention, you must handle the stress that comes with it.

Renting out your property takes knowledge and experience. After a couple of years, you will know which strategies will work and which will not. In the meantime, consider these things before becoming a landlord in Singapore.

#1: ESTABLISH A SCHEDULE FOR SITE INSPECTIONS

Landlords cannot disturb the tenants’ home with unannounced inspections. Instead, landlords must arrange regular site inspections to ensure that the property is undamaged. You will be able to update your tenants if there are items that need replacement or repair during your visit.

With the tenant’s permission, it is a clever idea to arrange an inspection every six months. Inspecting the site will help you pinpoint or prevent severe damage. For instance, once floorboards start to rot, you will need to quickly fix the issue. Letting the problem brew for half a year may lead to ripping out the entire floor.

#2: BE PREPARED FOR PROPERTY TAXES AND MAINTENANCE COSTS

Additional fees such as property taxes and maintenance costs come with being a landlord. Most private condominiums have a monthly maintenance fee. This fee, charged by the management committee, is determined by your share value.

On the other hand, property taxes are progressive and are based on the Annual Value of your home (AV). The AV is the estimated gross rental income of your property per year. It is determined by a valuation from the Inland Revenue Authority of Singapore (IRAS). Educate yourself about it.

#3: KNOW THE TAX DEDUCTIBLES

In case you are not familiar with the regulations, mortgage interest is tax deductible. The interest rate on the mortgage loan is tax deductible only if the property concerned yields income. Likewise, maintenance costs for the property are tax deductible. This can be more complex because you need to list all the items and costs of replacements.

Image Credits: pixabay.com

To check out the list of deductibles, you may go to the IRAS website. You should have a good understanding of what you can claim as a landlord. If you are uncertain, you can always ask a property agent or a wealth manager for professional help.

#4: BRACE FOR THE IMPACT OF VACANCIES

You cannot expect that there will always be rental income to cover the cost of the mortgage. A period of vacancy can happen for a variety of reasons such as the economic constraints of the pandemic, the tenant’s inability to pay for rent, the tenant will move back to his country, or the tenant’s decision to purchase his own flat. You will need to bear the mortgage without the rental income when vacancy occurs.

Moreover, do you have the capacity to service the loan if your monthly loan repayments are greater than your rental income?

#5: HAVE AN EMERGENCY FUND

The situations stated above highlight the importance of setting up an emergency fund. Keeping six months’ worth of mortgage payments in the emergency fund is recommended. If you do not have it now, you can build your fund over time.

Your fund will give you sufficient time to find solutions in case you are faced with unpleasant scenarios. This will also help you deal with emergency repairs such as broken pipes and non-functional air-conditioner.

Sources: 1 & 2

5 Things To Consider When Buying Or Renting A Flat

Whether you are choosing a flat for rental or purchase, finding a home can be challenging and time consuming. Various expectations including interior preferences, budget, and additional charges, as well as location and safety should be considered by you.

#1: THE HIDDEN CHARGES

Ensure that all the clauses of the documents (i.e., including the penalty clauses) are read and understood. Is the builder required to pay you penalty in case you do not receive the renovated flat within the grace period?

Additional expenses such as stamp duty, home loan processing fee, and safety deposit fee should be kept in mind.

#2: THE LOCATION

Location, location, location! Find a flat that is near to a public transportation station, if transportation is a priority. Consider if your shortlisted flats are close to your place of education or employment.

Flats that are conveniently located near shopping malls and community parks are ideal. Examine how the location of the flat will affect your commute to school or work as well as your commute towards your friends and family.

#3: THE BUDGET

Be honest with yourself and calculate your budget. Utilities are not usually included in the rent or purchase of a flat. Therefore, it is important to calculate the added costs of utilities when determining whether a flat suit your budget.

The gap between renting and owning a flat is massive. Stick with the guidelines of how much you can afford and avoid defaulting for non-payment.

#4: THE SECURITY

Lower floors or stories do not offer as much privacy compared as the higher ones because they easily be accessed. If your building is located near the main road or a busy area, higher floors or stories tend to be more peaceful.

Please examine the security arrangements in the housing complex (e.g., CCTVs) if you are keen on staying on the lower floor or story.

#5: THE INTERIOR

The interior’s cleanliness demonstrates how responsible the property owner is. However, there is more to see beyond its freshly painted walls. You should check the water pressure and find out whether the windows and doors are closing well.

Image Credits: pixabay.com

You should be given an inventory if the property was listed as fully furnished. During the first visit, you may establish whether all the items are part of the contract.

Sources: 1, 2, & 3

4 Rental Tips For Expats In Singapore

Ring in the reality check! Singapore is a country which considers “space” as a luxury. Singaporeans do not usually keep their spare rooms open for annual guests to lounge on. More often than not, they keep these extra rooms for rental. You would be suprised to learn the amount of bedrooms that landlords can squeeze in a seemingly small condominiums.

It goes without saying that it is cheaper to rent out a single room than the entire flat. So, set a minimum bedroom requirement as well as a minimum size requirement before signing a contract. Equip yourself with rental strategies such as this.

UNDERSTAND THE DISTRICTS

What are the Singapore’s districts? Well, watching the Hunger Games series was probably the last time you have heard about a nation’s divisions. Similarly, Singapore’s districts offer distinct living experiences. You cannot get away from these categories as an expat or someone who is looking for a place to live at.

You must study the district codes initially. These codes tell you whether a rental unit is located at the core of the central region (e.g., District 10 including Tanglin Road), within the radius of the central region (e.g., District 2 including Chinatown), or outside of the central region (e.g., District 28 including Yio Chu Kang).

EMBRACE THE OUTSKIRTS

Location is one of the most important factors interplaying with the market’s property prices. Now that you have a grasp of the twenty-eight districts, you can distinguish between the “central region” and the outskirts. Rent is cheaper in areas away from the central region and the MRT (Mass Rapid Transport) stations.

The central region may not necessarily apply to your lifestyle. As Singapore is compact and accessible, odds are, you are about an hour away from the central region with public transportation. For instance, you can easily travel from the Boon Keng “heartlands” to the Orchard “central” through MRT or buses. You can even walk from one town to another (e.g., I once walked from Toa Payoh to Novena for 20 minutes).

Furthermore, the government seeks to make every town self-sustaining. Almost every neighboorhood has its own parks, shopping malls, and eateries. Ask yourself: Is a central location too overrated?

PLAN YOUR ROUTE

One cannot deny that we all have distinct personalities. If you are not a morning person and you find it difficult to allot an hour of leeway every morning for your commute then, opt for another strategy. Maximize your preparation time and lessen your transportation costs by finding an affordable place near your workplace.

As pointed above, location is an essential factor. Do a quick Google search on the possible routes you may take to get to your destination. Choosing the smartest way gets you to work on time. Being punctual is a respectable trait to have as an employee.

The humble country has a network of buses and trains. However, the vehicle interval or arrival time of buses is more unpredictable than the trains. Taking the MRT is generally a better choice.

CONSIDER THE HDB

In the recent years, more and more foreigners have warmed to the Singapore’s public housing or HDB (Housing and Development Board). Before you completely frown upon this idea, here are some of the reasons why this is a viable option:

a. There is a significant difference between private and public rentals. HDB flats with 2 rooms start at S$1,500. While, the same space costs about S$3,000 at private condominiums.

b. HDBs are usually walking distance from town facilities and public buses.

c. Food is insanely cheaper than the ones available at the condominiums as hawker centres are typically at the ground floor of the building.

Image Credits: pixabay.com

If you are planning to stay in Singapore for a long period of time, staying at an HDB flat will allow you to absorb the local culture better.

Sources: 1, 2, & 3

How To Earn Extra Cash While Growing Your Business Empire

As an entrepreneur, you may be aware that you can get financially unstable at times due to the market’s condition and other factors. So, consider ways to get income on the side that will help alleviate some of the financial stress. Try these 5 ways…

1. CAR FOR RENT

Rent your personal vehicle to others in need. You may post an Ad for free at Gumtree or spread the word through self-printed flyers. Get acquainted with the user first to have a firm and trusting agreement regarding the car’s usage. This will allow you to focus on your business while your car is making money on its own.

2. RENT YOUR GUEST ROOM

If you are okay with sharing your house with other tenants then rent out the empty room/s. Once again, get to know the tenants first (i.e., personality or cleaning habits) and set some ground rules because you might be living with them for more than a month. In an event that you need to go overseas for business, then you may rent the whole house to them and charge them more.

3. TRY ONLINE OUTSOURCING

Some online websites allow users to outsource their skills on a freelance basis. If you can do website development, clerical jobs, writing an essay, video editing, or any other skill…try signing up for Odesk to get decent extra income. Salary payment in Odesk is painless because Credit Cards, PayPal accounts, and Bank Accounts are accepted.

4. INVEST IN REAL ESTATE

There are a lot of methods for making money in real estate that do not require your full-time effort so you can focus more on your growing business. You can consider purchasing properties and resell them for profit (flipping houses) or real estate wholesaling. If this area is unknown to you, find your friends or people in your area with the expertise that you do not have and partner with them.

5. CREATE A NETWORKING EVENT

Image Credits: Image Credits: Cydcor Offices via Flickr

Organize networking events to help young professionals interact with the environment. You not only help others to make valuable connections but you also make money by charging the participants for the food or the registration fee.

How Much Will It Cost To Live in USA, Singapore, Australia or Italy?

Cost of living is the total expense of maintaining a standard of living in a certain country. This changes over time and is often operationalized in a cost of living index.

In this chart is the comparison of the cost of living of four countries namely: United States of America, Australia, Singapore, and Italy.

Clothing And Shoes Ave. (in SGD)	USA	SG	AUS	ITALY

1 Pair of Jeans (Levis)	54.95	111.92	111.35	129.67
1 Summer Dress in a Chain Store (Zara, H&M, F21, etc.)	47.82	63.24	76.26	53.99
1 Pair of Men Leather Shoes	113.77	136.22	147.41	166.62

Total Clothing:	216.54	311.38	335.02	350.28

Rent Per Month Ave. (in SGD)

Apartment (1 bedroom) in City Centre	1,359.20	3,312.03	1,944.27	928.25
Apartment (1 bedroom) Outside of Centre	1,032.05	2,133.33	1,380.82	709.08
Apartment (3 bedrooms) in City Centre	2,313.77	5,955.30	3,335.58	1,634.16
Apartment (3 bedrooms) Outside of Centre	1,743.47	3,579.49	2,186.44	1,192.56

Total Rent:	6,448.49	14,980.15	8,847.11	4464.05

Ave. Salary After Tax (in SGD)

Monthly Salary	4,103.69	3,875.20	4,732.34	2,439.03

All the data were collated from Numbeo. It is a website that stores the world’s largest database of user contributed information about global living conditions.

Before discussing the variables in the chart, let us first explore a brief introduction of these four countries. United States of America, commonly referred to as U.S., is a federal republic country that is consists of 50 states. According to the International Monetary Fund, U.S. has the world’s largest national economy. It is considered as a developed country.

Australia, or Commonwealth of Australia, consists of the mainland and numerous smaller islands. In 2012, International Monetary Fund ranked Australia as the fifth highest per capita income among the world. It is also considered as a developed country.

Singapore, officially known as Republic of Singapore, is an island country in Southeast Asia. Despite its size, Singapore had the third highest per capita income around the world. It boasts its high regard on education, healthcare, and economic competitiveness.

Lastly, Italy is a parliamentary republic in Southern Europe. Human Development Report highlighted that Italy is a very developed country with its economy being the eighth largest in the world.

In the comparative chart above, Italy was shown to have the highest cost in Clothing and Shoes. Most of the famous chain brands originated from the U.S., which is why the country had the least cost on clothing and shoes. Furthermore, it is the reason why some items are cheaper when you buy it on its online store.

The Average Rent per Month is overwhelmingly dominated by Singapore. Renting a bedroom apartment at the city center will cost you about S$3,312.03 in Singapore. With that amount, a person can already rent two 3-bedroom apartments in Italy’s city center. The higher cost of rent in Singapore is due to the 718.3 km2 total area of land wherein millions of people reside.

Image Credits: Lina Hughes via Flickr

Lastly, in most of the factors, Australia sits strong on the second place. Although rent and clothing may be costly in Australia, the average salary per month is S$4,732.34. It is the highest among the other four countries.

So, if you are moving to a different country and curious about its cost of living, look it up on Numbeo. It has been mentioned in internationally renowned newspapers and magazines such as BBC, Forbes, The Economist, and New York Times among others.

Sources: International Monetary Fund, Numbeo, and Wikipedia

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