Singapore villas: do the numbers still cash-flow after full expenses?

[KeenInk]

The case for buying now seems to be that prices or borrowing costs may not improve, but I hesitate because the present numbers do not support themselves. After 84 days of searching, the Singapore villas I have modelled at about S$1,199,000 all produce negative cash flow once financing at 6.84% and operating expenses are included.

I am now separating the property return from the loan: realistic rent first, then vacancy, management, property tax, insurance and a maintenance reserve, followed by the financing. Are current purchasers simply putting in substantially more equity, or proceeding despite poor income today? Tenant turnover may be another cost I have set too low.

 

[alex_rates]

At 6.84%, negative leveraged cash flow is not surprising. More equity can make the monthly figure look better, but it does not improve the property’s underlying operating return; it just reduces interest expense.

What rent, vacancy allowance and management cost are you using? Also, is property tax already included? Those missing figures matter before deciding whether the issue is the financing or the villa itself.

 

[alex_rates]

One caveat to my first reply: waiting is not automatically better, because neither price nor financing cost is guaranteed to move in your favour. I’d run the same property three ways—your current loan, materially more equity, and no financing—then compare the operating result separately from the debt result. Add a turnover case with lost rent plus maintenance between tenants.

 

[clear_wall]

I’d be wary of solving this only by increasing equity. If the unlevered case is unattractive after property tax, insurance and a realistic reserve, extra cash merely hides the weak yield.

Before the deadline, ask for support for the expected rent and likely tenant turnover, then run a downside case rather than one average year. If it still needs optimistic occupancy and minimal repairs to work, passing is a valid outcome.