There is also concentration risk: one property, one tenant and one large repair schedule. Even if the stressed net yield looks acceptable on paper, compare it with what the same capital could earn elsewhere after costs and with less operational concentration.
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Singapore coastal 3-bed at S$1.776m and S$10,470 rent — does 7.1% gross survive costs?
- Thread starter LocalGrain
- Start date
post.field
Homeowner
Following Bianca’s three-case idea, I’d add a break-even rent. Start with all recurring ownership costs plus financing and solve for the monthly rent that leaves no cash surplus. The distance between that number and S$10,470 is more informative than debating whether 7.1% sounds high.
Yes, and calculate break-even both before and after financing. Before financing tests the property; after financing tests your structure. If only the leveraged version is fragile, the answer may be a smaller loan rather than rejecting the home. If both are fragile, the rent or price needs challenging.
The remaining diligence list seems short now: verify comparable signed rents, clarify tenure and strata responsibilities, obtain actual recurring charges, confirm tax treatment for the buyer’s circumstances, inspect coastal wear, and price a full tenant change. I would not set a required net yield until those figures replace the allowances.
Agreed, though I’d retain one deliberately uncomfortable scenario after the figures arrive. Good documentation can improve the inputs without removing uncertainty. If the purchase still meets the buyer’s cash-flow requirement with softer rent, turnover and a repair in the same period, the 7.1% headline has real support rather than merely looking attractive.