To All Homeowners: Should You Rent Out or Sell Your Properties?
When it comes to the property market, every homeowner or property agents would have their own individual take especially when it boils down to this controversial issue that would leave many debating for countless of hours. Based on statistics as of Dec 2017, Singapore is the 3rd highest country with a whooping 90.7% home ownership rate. That being said, Singapore has a huge population comprising of its citizens, permanent residents, foreign workers and expats, the government has a tight regulation when it comes to properties here.
RENTING VS SELLING
It is a tough choice to make should you have fully paid for your property and wish to involve it as one of your investment portfolio. End of the day, we would naturally lean towards the option that would yield us a higher return overall. However, there are some prior considerations that should be carefully scrutinized beforehand.
Here are some pros and cons when it comes to renting out or selling of your property. Revolve your choice around your financial situation and if you have the capability to upgrade or there are potential buyers or tenants that would fetch a higher than market price to yield better returns, go for it.
Homeowners should take the above pros and cons into deliberation and do their prior homework to know when is the right time, right audience and market price to rent out their property. For instance, if their property is around the marine parade/east coast district, their target audience should be expats, or businessman as it is relatively near to the east coast lagoon, as they offer a wide array of food accompanied by a sea view, expats are able to enjoy the local delicacies and take a stroll to enjoy the sea breeze after which. Furthermore, there are multiple public buses and it is convenient for drivers as they are a stone throw away from orchard road, suntec city, and many other prime working areas.
However, if the tenants were to not take care of the unit well, abusing certain stuff such as the air condition, bathrooms, or even furnitures, most of the time, landlords would be the losing end, having to paid for the repairs and maintenance if the upkeep is not done right.
Apart from the above, most Singaporeans have the mindset that renting out their property would mean an extra avenue of income. No doubt that there would be money coming in from the rent, but that is only if the property is fully paid, else the rental payment would typically go directly to refinance the mortgage loan for the property. This could potentially be dangerous for the landlord, because if the property is not able to fetch any price that is on par or surpasses the monthly mortgage repayment, that would mean that the landlord has to fork out the difference from their pockets. This is an unforeseen costs where homeowners have to be prepared to dispense if there were to be no tenants.
On the flipside, upon the selling of the property, homeowners would have a lump sum of money on hand. If this is your first and only property, we strongly urge that you should look for another home before letting go of your current property so as to bridge the gap in between where you would potentially lose the chance of not having a home.
Unless if this is your second property where most probably is considered to be an investment, you should wait for the right time to let it go in the market, as most Singaporeans are superstitious, property investors should avoid periods such as 7th month of the Hungry Ghost Festival, school holidays where parents would take their kids overseas, and the year end holidays where everyone would be busy celebrating the festive seasons instead of shifting houses.
To conclude, the choice is ultimately in your hands, you should go involve your partner and go through the idea of either renting or selling thoroughly and take as much time as you need because this is a huge decision to make. Both of them have their own pros and cons and every homeowner would place their importance based on different life stages to align with their current financial condition and needs.
All things considered and taken into account, the most obvious edge that selling would bring is the capital gain in comparison with renting. Because if a property went to be rented out, the rental fees would most probably go back to the property to build up your equity in hopes that it will appreciate in the years to come. There would be no instant yield rather than selling your property, at the right time when you will get to enjoy great returns if you manage to catch the opportunity.
Life will never be the same as you will never get the same privacy if you decide to rent your room out while co-living with your tenants. Or should you rent the whole unit out, there will be lesser control over things like the upkeep or the cleanliness of the property.
When you sell your property, if this is a second property, it should not affect you that much unless if it is your first home where you are still living in. There would be the challenge of not being able to look for a buyer based on several factors such as location, design/structure of the house, negative vibes, bad impression of seller, etc. Challenges such as adapting to a new district and getting used to taking different public transport, time management has to be changed to suit the location of the place especially when it comes to commuting to and fro from home and office.
AFTER SELLING OF YOUR PROPERTY, THEN WHAT?
Homeowners with a bad sense of managing their money or a bad foresight to reinvest in another property will lead to their downfall. Do seek professional help if you decide to delve into investments as there are multiple ways to invest your lump sum that will provide great yields from accredited financial institutions. Else, you would need a help of a property agent to help provide insights and offer their professional advice to procuring the next property to add to your investment portfolio.