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Thread: Would there be Negative Yield Eventually or Soon?

  1. #61
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    Calculating gross yield using market value

    Gross rental yield = Annual rental income (weekly rental income x 52) / market value x 100

    I often seen gross yield calculations made using the current rent and original purchase price. These sorts of calculations can be misleading as they don’t take into account the time value of money or the change in value of the underlying asset. After all, a dollar today is not the same as a dollar yesterday. If you want to draw comparisons between historic versus current rental return, you’re better off making separate calculations.

    It’s also important to remember that a high gross rental yield is not the be all and end all. A property may have a high gross rental yield but the rental return may be low when expenses are accounted for.

    For these reasons, I think net yield is a better measure than gross yield when assessing returns.

    Calculating net yield

    Net yield is particularly useful when determining your financial capability as it will give you a truer indication of whether you can afford to invest, what your financial position will be and whether your investment will be self-sustaining.

    To calculate net yield, you’ll need to know or estimate:

    Annual expenses: managing agent fees, vacancy costs (lost rent and advertising), repairs and maintenance, insurance(s), strata levies (if applicable), rates and charges, etc.

    Total property costs: purchase price plus transaction costs (e.g. stamp duty, legal fees, pest and building inspections, loan set up fees, etc.) and the cost of any renovations or furnishings needed before tenants can move in.

    Here’s how to calculate net yield:

    Net yield = (Annual rental income – Annual expenses) / (Total property costs) x 100

    You’ll note that I haven’t included mortgage interest or tax in the above example. This is because these vary depending on the circumstances of the owner and aren’t directly related to the property itself. They should of course be included in any return on investment calculations.

    https://www.yourinvestmentpropertyma...ds-148067.aspx


    The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

  2. #62

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    Quote Originally Posted by stalingrad View Post
    You buy a home for $100,000 and your annual gross rental yield is $12,000? This kind of home is not available for purchases in Singapore. What is available in Singapore is homes at $600,000 to yield annual rental income of $12,000. Many such homes can be had, if you are stupid enough.
    If you can’t tell that the above is an illustration from website, it’s obvious who’s the 傻逼
    Last edited by jwong71; 12th July 2018 at 01:10 PM.

  3. #63

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    Quote Originally Posted by jwong71 View Post
    If you canít tell that the above is an illustration from website, itís obvious whoís the 傻逼
    Hey, take it easy. I did not say you were stupid. Read my post again. It says if a person is willing to shell out 600k to purchase a property to generate 12,000 a year in rental income, then he is probably stupid.

  4. #64
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    Quote Originally Posted by stalingrad View Post
    Hey, take it easy. I did not say you were stupid. Read my post again. It says if a person is willing to shell out 600k to purchase a property to generate 12,000 a year in rental income, then he is probably stupid.
    Base rental is still minimum $1,500 per month even for outskirts 1BR units, which technically costs 600-700k onwards. Well located sites rent for minimum 2k and above.

    Nonetheless, the downpayment if no ABSD is about 150k, or up to 200K onwards with the new ABSD.

    Even full cash down (600-700k), which people rarely ever does (unless their mind works quite differently), the rental income still ranges from $15,000 to $20,000 deducting what you wish to deduct.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  5. #65

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    Quote Originally Posted by Kelonguni View Post
    Base rental is still minimum $1,500 per month even for outskirts 1BR units, which technically costs 600-700k onwards. Well located sites rent for minimum 2k and above.

    Nonetheless, the downpayment if no ABSD is about 150k, or up to 200K onwards with the new ABSD.

    Even full cash down (600-700k), which people rarely ever does (unless their mind works quite differently), the rental income still ranges from $15,000 to $20,000 deducting what you wish to deduct.
    We have a condo at west coast. The gross rental yield is 2.5% (based on current market values). But if you take into considerable the period between tenants (we one time went without a tenant for 6 months), the gross yield goes down to 1.8-2%. That doesn't sound like a good return. Considering the expenses and income taxes, we are looking at less than 1%.

  6. #66
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  7. #67
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    She is talking without knowing enbloc process.
    Developers buying enbloc is paying the sellers upfront, and no way to wait for the launch. (5:53)...

    give up listening...

  8. #68

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    Quote Originally Posted by stalingrad View Post
    We have a condo at west coast. The gross rental yield is 2.5% (based on current market values). But if you take into considerable the period between tenants (we one time went without a tenant for 6 months), the gross yield goes down to 1.8-2%. That doesn't sound like a good return. Considering the expenses and income taxes, we are looking at less than 1%.
    I sold my unit at the Infiniti, though I drive. I still find inconvenient. Not sure if yours is just nearby

  9. #69
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    Quote Originally Posted by stalingrad View Post
    We have a condo at west coast. The gross rental yield is 2.5% (based on current market values). But if you take into considerable the period between tenants (we one time went without a tenant for 6 months), the gross yield goes down to 1.8-2%. That doesn't sound like a good return. Considering the expenses and income taxes, we are looking at less than 1%.
    Yes, I am aware of your condo. It is a good buy for store of value and appreciation (due to its implied land price and ultra-long lease), but not so much for rental yield. The location at the moment is not too ideal. With West Coast MRT coming up, it might have a stronger rental demand.

    This is also why calculating yields based on current market price is unwise and risky.

    1. Price might be really high due to the land and lease price. This causes yield to appear depressed.

    2. Price might be psychologically inflated due to "market value" which may or may not be real. I.e. the last done price might not be a real price you can achieve even as a sincere buyer.

    3. The price can also go steadily down in poor market conditions and raise your yields! But does this bode well for holding this particular property?

    Seriously, if you think badly of your yield and believe there are better yielding instruments, why don't you sell?
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  10. #70
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    Pt 2 should read sincere seller. Typo.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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