Investing in Singapore Property for Rental Income



Singapore, being a major commercial hub in Southeast Asia, has an investor-friendly real estate market. The Lion City has earned a reputation as a vibrant investment sector, attracting a wide range of speculators and investors, national and international alike. 

Are you considering an investment in Singapore’s property for rental income? You have plenty of options that can turn out to be really profitable. But that will certainly require an informed approach. Let’s take you through a quick guide here.

How to make an investment in Singapore property?

Singapore’s real estate market is as diverse as the population that makes the city so vibrant. Grand Dunman is just an example of the emerging and flourishing real estate vision of the city. Although lucrative an investment option, you should be aware that investing in Singapore property would require you to prepare for tough price competition. Property prices can be high, but buyers don’t abstain from buying them. However, the government has certainly intervened in recent years to pass laws to regulate the market and cool down the soaring prices. 

When you invest in Singapore property, you will have to consider the additional costs you will have to bear in the wake of these cooling measures and investment restrictions. Total Debt Servicing Ratio (TDSR) and Additional Buyers’ Stamp Duties (ABSD) are two taxes you should be aware of while investing in Singapore property.

 For instance, citizens of Singapore buying a second property are required to pay an ABSD of 12 percent, as well as an ABSD of 15 percent for their third and subsequent real estate investments. Moreover, the TDSR framework requires that the sum of loan repayment of an individual (for example, credit card debt, housing loans, auto loans, etc.) cannot cross 60 percent of his or her income. 

How to go about renting out your Singapore property?

Once you invest in a property of your choice, your next step would be to start capitalizing on it. The buy-to-rent method is what you should follow if you wish to get a steady and reliable source of income every month. It’s passive income that you can use to pay off your mortgage or invest in personal pursuits. Instead of buying a Singapore property to sell it, you can use it to create a stable, long-term earning method. If you change your mind, you still have the option to sell your property when the right market conditions prevail.

From a financial standpoint, you will need to make sure your rental income exceeds your monthly mortgage payments to make the deal profitable. At the same time, it’s essential to set aside some spare money to defray the costs of potential repairs and renovations. 

Generally, you should aim for a gross rental yield of 2 to 3 percent and pay off mortgage payments as soon as possible. Also, don’t forget that if your rental home is your second property, you may have to pay ABSD. If you are a Permanent Resident or a foreigner in the city, then you might even have to pay ABSD on your first property. Make sure you get in touch with a reliable real estate agent who knows the nitty-gritty of investing in Singapore property for rental income.

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