Singapore 2-bed at S$1.099m renting for S$5,165/month — what am I missing?

[gate.strong]

The surprising part is how quickly a 5.6% gross yield stops looking generous once the recurring costs are separated. I’m looking at a 2-bed coastal home in Singapore for S$1,099,000, with projected rent of S$5,165 a month.

I have allowances for empty periods, management and repairs, but I’m not confident about the actual property tax, building charges or the reserve needed for future maintenance. I’m also concerned that additional local supply could weaken the rent or lengthen tenant searches. If verified rent and costs still leave dependable positive cash flow, I may continue; if the deal needs full occupancy and minimal repairs, I would step back. What figures should I obtain first to decide between those two outcomes?

 

[pia_lending]

The gross calculation is right: S$5,165 × 12 is S$61,980, or about 5.6% of S$1,099,000. The likely gap is that the purchase price alone is not your full capital outlay, while rent is not fully collectible income. I’d want the actual property tax, insurance and any recurring building charges before naming a sensible net yield.

 

[loft.balanced]

Is this being assessed as an all-cash purchase or with financing? That could change the conclusion more than a slightly higher maintenance allowance. Also missing: the assumed vacant period between tenants, leasing-related costs, whether S$5,165 reflects a furnished or unfurnished tenancy, and evidence that this rent is achievable rather than simply advertised.

 

[jade_deals]

I’d separate property performance from financing. First calculate the unlevered net yield using rent actually received minus recurring ownership and operating costs. Then stress the loan separately for changes in financing cost. Otherwise leverage can make a mediocre property look attractive—or make a sound one look worse than it is.

 

[jade_deals]

One caveat to my previous comment: the net-yield target cannot be chosen in isolation. If local supply is the main concern, rerun the model with lower rent and a longer turnover gap at the same time. A repair reserve will not protect you from having to accept S$5,165 less often, or from cutting the rent to secure a tenant.

 

[MinaReed]

“Coastal home” also needs clarifying. If this is a unit in a managed building, establish which external maintenance and insurance costs sit with the building and which remain yours; otherwise you may either omit costs or double-count them in the reserve. If it is not such a unit, exposure to exterior upkeep could be quite different. The building looking sound today does not settle that allocation.

 

[friendly_kite]

Rather than pick one compensating yield, I’d build three cash-flow cases: S$5,165 with normal turnover, lower rent with extra vacancy, and the same downside case plus the larger repair. Include property tax, insurance, management, recurring building costs and tenant-change expenses in each. If the deal only looks worthwhile in the first case, the 5.6% headline is doing too much of the selling.