Rentals in Singapore

[malcontent]

Buying makes sense. But not when you’re on EP

It would make good sense on an EP if you are a National of the U.S. or National/Permanent Resident of Iceland, Liechtenstein, Norway or Switzerland.

[Wd40]

I am renting a 3 bedder condo, and been asked to vacate by Feb (LL wants to move in). Listings I see around my place are at least 70%+ higher! This is outright robbery! Even then, it's really hard to get an agent even to show the units.

p.s. My current rental is not abnormally low (in case you thought so). I know of at least 10 other families living in the same condo in similar sized units, and paying within +/- $50 of my monthly rental.

What do you mean asked to vacate by Feb? When is your lease expiring? If it is beyond Feb, you can just refuse to move out unless you are very well compensated the difference in rent + hassle of moving out early.

[Wd40]

Buying makes sense. But not when you’re on EP

It would make good sense on an EP if you are a National of the U.S. or National/Permanent Resident of Iceland, Liechtenstein, Norway or Switzerland.

If you are a national of any of these countries, I wonder if it even makes sense to come here? Okay I am just kidding

[malcontent]

Buying makes sense. But not when you’re on EP

It would make good sense on an EP if you are a National of the U.S. or National/Permanent Resident of Iceland, Liechtenstein, Norway or Switzerland.

If you are a national of any of these countries, I wonder if it even makes sense to come here? Okay I am just kidding

The vast majority of nationals from those countries will have their employer paying their rentals and could care less.

But for the few who are not so lucky, and are not inclined to repatriate for whatever reason, owning can be a game changer financially.

[Lisafuller]

The whole reason I decided to buy here (after renting for 16 years) was precisely because I could no longer afford to rent, mortgage rates had dropped to nothing and the numbers finally added up (prior to that, the rent I was paying was definitely a negative rental yield for the LL, so I gladly paid it).

If I was renting today, I would still be inclined to buy in the current market, even with the rising mortgage rates.

Yup, there really isn't much sense in renting (at least in SG). In other cities like NY, on the other hand, where property can be exceptionally unaffordable, most have no choice but to rent.

[Lisafuller]

Buying makes sense. But not when you’re on EP

The whole reason I decided to buy here (after renting for 16 years) was precisely because I could no longer afford to rent, mortgage rates had dropped to nothing and the numbers finally added up (prior to that, the rent I was paying was definitely a negative rental yield for the LL, so I gladly paid it).

If I was renting today, I would still be inclined to buy in the current market, even with the rising mortgage rates.

That's tough, but on the other hand, if you're on EP, there is a chance that your employer is footing, or at least supplementing the cost of housing, which is always helpful.

[Lisafuller]

Rent is not just burning money every month. One needs to consider the opportunity cost of tying up money into one property. We can calculate rent vs. interest + maintenance fees + taxes and that will give you a number to look at. We can also look at money "saved" (or avoided spending) via owning vs returns on investment portfolio.

Additionally, owning offers (more) stability and the ability to reno a unit to your liking while renting offers flexibility (change location when jobs/schools change) and the ability to consume something new/different. People will have different views about spreadsheet monkey math and utility from actual living.

Also, the rental yield (positive or negative) needs to include capital appreciation or depreciation. Can swing wildly for or against you depending on the cycle. Truthfully, a factor that is hard to know for certain ex-ante.

I believe a more Singaporean consideration is value, which in this case, I believe refers to the equity one has in their home. Regardless of how inexpensive renting may be, at the end of the day the money still goes poof and you are left with nothing.

[Lisafuller]

The whole reason I decided to buy here (after renting for 16 years) was precisely because I could no longer afford to rent, mortgage rates had dropped to nothing and the numbers finally added up (prior to that, the rent I was paying was definitely a negative rental yield for the LL, so I gladly paid it).

If I was renting today, I would still be inclined to buy in the current market, even with the rising mortgage rates.

My purchase of my HDB flat in Jan '99 was for exactly the same reason. When my rental rate increased by over 200% (over a period of 2.5 years) and the interest rates at the banks make Interest rates look like they are at the bottom of the Mariana's Trench at .25% It no longer made sense to leave that money there doing nothing so I bought a 5 Room resale and played with figures to only pay cash that would leave me with payments that were the same as my current rental before the next increase started. This was using a 14 year mortgage with the HDB.

Smart, and probably the only sensible decision that could be made in such a situation. This is one of the reasons I prefer buying to renting in most markets, nowadays rent has become so crazy that an average mortgage payment is equal to if not only a little bit more than rent. At that rate, it would be silly not to buy. Although I do get how this wouldn't be possible for some people, for example, if they were not ready to settle down.

[Lisafuller]

Buying makes sense. But not when you’re on EP

It would make good sense on an EP if you are a National of the U.S. or National/Permanent Resident of Iceland, Liechtenstein, Norway or Switzerland.

If you are a national of any of these countries, I wonder if it even makes sense to come here? Okay I am just kidding

LOL my thoughts exactly

[omshastry]

Well not in most cases (including mine). These ‘expat package’ benefits these days are generally given only to EP holders from western/developed countries.

That's tough, but on the other hand, if you're on EP, there is a chance that your employer is footing, or at least supplementing the cost of housing, which is always helpful.

[NYY1]

Rent is not just burning money every month. One needs to consider the opportunity cost of tying up money into one property. We can calculate rent vs. interest + maintenance fees + taxes and that will give you a number to look at. We can also look at money "saved" (or avoided spending) via owning vs returns on investment portfolio.

Additionally, owning offers (more) stability and the ability to reno a unit to your liking while renting offers flexibility (change location when jobs/schools change) and the ability to consume something new/different. People will have different views about spreadsheet monkey math and utility from actual living.

Also, the rental yield (positive or negative) needs to include capital appreciation or depreciation. Can swing wildly for or against you depending on the cycle. Truthfully, a factor that is hard to know for certain ex-ante.

I believe a more Singaporean consideration is value, which in this case, I believe refers to the equity one has in their home. Regardless of how inexpensive renting may be, at the end of the day the money still goes poof and you are left with nothing.

I don't know why you think things go "poof." Example, one owns a $2 MM condo that would cost $80k to rent per year. By owning it looks like they "save $80k per year) and the value of the condo grows over time. Win-win right? Alternatively, sell the condo and invest the $2 MM. Say it throws off $150k per year; you pay the rent and the $2 MM base grows as well (by the $70k difference between investment return and cost of rent, hence the $150k it throws off will grow too). At the end of 20 years one strategy gives you the value of an aging property. The other gives you the value of investments.

I'm not saying the above (invest and rent) is universally better. Owning offers stability. But if real estate is a "low yielding asset" (mentioned in these threads many times by various people), why is everyone so proud to have the return of a low yielding asset (in just monetary terms, not owning a home itself)? Reason? Most people accept a "lower" return on the property that they live in for a number of reasons ("roof over your head" being one).

Again, I'm not sure you understand the concept of opportunity cost. It's not the only consideration (investments can have crummy returns too), but to ignore it completely doesn't make sense either. The timeframe one looks at is also key. Invest and rent was great from 2013-2020, absolutely terrible over the last 12-18 months or so.

[NYY1]

I am renting a 3 bedder condo, and been asked to vacate by Feb (LL wants to move in). Listings I see around my place are at least 70%+ higher! This is outright robbery! Even then, it's really hard to get an agent even to show the units.

p.s. My current rental is not abnormally low (in case you thought so). I know of at least 10 other families living in the same condo in similar sized units, and paying within +/- $50 of my monthly rental.

What do you mean asked to vacate by Feb? When is your lease expiring? If it is beyond Feb, you can just refuse to move out unless you are very well compensated the difference in rent + hassle of moving out early.

Some rental contracts have provisions that the landlord can cancel with X months notice. Similar to the diplomatic clause from the tenant's side. The option to renew terms can vary too depending on which agency's forms you are using. Possible things have "conformed" over the years but at one point there were differences.

[omshastry]

Well you know what I meant. The big majority of EP holders don’t come from these countries and have to pay way too high ABSD for it to make sense. Definitely not now with the 30% tax.

Buying makes sense. But not when you’re on EP

It would make good sense on an EP if you are a National of the U.S. or National/Permanent Resident of Iceland, Liechtenstein, Norway or Switzerland.

[omshastry]

Yes similar case as you guess here.

I am renting a 3 bedder condo, and been asked to vacate by Feb (LL wants to move in). Listings I see around my place are at least 70%+ higher! This is outright robbery! Even then, it's really hard to get an agent even to show the units.

p.s. My current rental is not abnormally low (in case you thought so). I know of at least 10 other families living in the same condo in similar sized units, and paying within +/- $50 of my monthly rental.

What do you mean asked to vacate by Feb? When is your lease expiring? If it is beyond Feb, you can just refuse to move out unless you are very well compensated the difference in rent + hassle of moving out early.

Some rental contracts have provisions that the landlord can cancel with X months notice. Similar to the diplomatic clause from the tenant's side. The option to renew terms can vary too depending on which agency's forms you are using. Possible things have "conformed" over the years but at one point there were differences.

[malcontent]

Rent is not just burning money every month. One needs to consider the opportunity cost of tying up money into one property. We can calculate rent vs. interest + maintenance fees + taxes and that will give you a number to look at. We can also look at money "saved" (or avoided spending) via owning vs returns on investment portfolio.

Additionally, owning offers (more) stability and the ability to reno a unit to your liking while renting offers flexibility (change location when jobs/schools change) and the ability to consume something new/different. People will have different views about spreadsheet monkey math and utility from actual living.

Also, the rental yield (positive or negative) needs to include capital appreciation or depreciation. Can swing wildly for or against you depending on the cycle. Truthfully, a factor that is hard to know for certain ex-ante.

I believe a more Singaporean consideration is value, which in this case, I believe refers to the equity one has in their home. Regardless of how inexpensive renting may be, at the end of the day the money still goes poof and you are left with nothing.

I don't know why you think things go "poof." Example, one owns a $2 MM condo that would cost $80k to rent per year. By owning it looks like they "save $80k per year) and the value of the condo grows over time. Win-win right? Alternatively, sell the condo and invest the $2 MM. Say it throws off $150k per year; you pay the rent and the $2 MM base grows as well (by the $70k difference between investment return and cost of rent, hence the $150k it throws off will grow too). At the end of 20 years one strategy gives you the value of an aging property. The other gives you the value of investments.

I'm not saying the above (invest and rent) is universally better. Owning offers stability. But if real estate is a "low yielding asset" (mentioned in these threads many times by various people), why is everyone so proud to have the return of a low yielding asset (in just monetary terms, not owning a home itself)? Reason? Most people accept a "lower" return on the property that they live in for a number of reasons ("roof over your head" being one).

Again, I'm not sure you understand the concept of opportunity cost. It's not the only consideration (investments can have crummy returns too), but to ignore it completely doesn't make sense either. The timeframe one looks at is also key. Invest and rent was great from 2013-2020, absolutely terrible over the last 12-18 months or so.

I agree, back when I rented, I did so because when I added up the mortgage interest, maintenance fees and property taxes (which all go “poof” when you own), it was more $’s than renting back then.

However, one thing I didn’t factor in was the value of leverage. Taking that same $2m condo example, if you borrow $1.5m, you only have $500k “invested” in the home initially. If the value increases by 10%, that is +$200k, representing a 40% gain on the $500k you have invested (3x leveraged). And while you can use leverage with other investments, property is special because of the lower rates on mortgages.