Just signed a new TA, should I sell? or collect rental?

[BuySellOrHold]

Hi all,

Am very new to property investment as this is my first investment property. Looking for some advice from the experienced folks here.

Have managed to rent out my place to a corporate client at a fantastic rent (I got $4.4 psf rent vs the usual S$3.4 psf for my condo).

Should I hold on to my unit and enjoy the rental income at 4.2% yield? Or should I use the higher rental to try and get a good price for my unit, maybe price it at 3% yield?

My considerations are because I am of the view that property prices will go down next year and also I might not get such good rentals from my subsequent tenants.

Thank you.

[samsara]

It may help to visualise all investments as moving boats on the sea that is the market. Your boat is your total investment portfolio. The speed at which your boat moves is dependent on the nature of your investments and the behavior of the market.

In a bull market, most boats move forward (except for shorts). In a bear market, the currents are reversed. The power of the motors on your boat is directly proportionate to the quantum of exposure, the leverage as well as the nature of the investment instrument.

The following are the sell or hold guidelines that I use for my own personal property investments which are rented out:

a. is the capital gain equal to at least three years of nett rental earnings? If this condition is satisfied, your boat gets a boost in speed because of the immediate realisation of capital appreciation viz-a-viz receiving the funds over the next three years.

b. what will I invest in with the funds from the liquidation? In your case, when you sell the property, you are effectively reducing the power of the motor on your boat at the expense of getting a one-off boost forwards. It thus makes sense to sell only if criterion a above is satisfied and/or you are able to find a replacement investment instrument that provides at least the same amount of power to your boat so that overall you are still better off than the original situation.

c. are there any micro/macro factors which may cause faster-than-market appreciation for the property (but not priced in yet) within the next one year? Your boat may have additional invisible sails which can catch the wind to boost the power of your motor. The wind is a metaphor for the micro/macro factors pertaining to the investment e.g. transport infrastructure upgrades, new major shopping mall, estate redevelopment.

Based on the analogy of investments to boats in the ocean, one would see also that it is risky to be totally vested (no more additional means to power the boat in case the currents stall the vessel) or totally out of the market (high possibility of getting left behind or even moving backwards due to the consistent and immense drag of inflation when the other boats are pushed forwards by the huge currents of a bull market).

With slight tweaking, the above methodology is also relevant when it comes to evaluation during a potential en-bloc sale.


Hi all,

Am very new to property investment as this is my first investment property. Looking for some advice from the experienced folks here.

Have managed to rent out my place to a corporate client at a fantastic rent (I got $4.4 psf rent vs the usual S$3.4 psf for my condo).

Should I hold on to my unit and enjoy the rental income at 4.2% yield? Or should I use the higher rental to try and get a good price for my unit, maybe price it at 3% yield?

My considerations are because I am of the view that property prices will go down next year and also I might not get such good rentals from my subsequent tenants.

Thank you.

[ysyap]

After any potential dip in the property market, prices will climb back up. Sell property only when you need the cash, like buying another property, etc. otherwise, keep property and collect rent. Ride out any economic downs before you sell eventually when you finally need to. :spliff2:

[hopeful]

Hi all,

Am very new to property investment as this is my first investment property. Looking for some advice from the experienced folks here.

Have managed to rent out my place to a corporate client at a fantastic rent (I got $4.4 psf rent vs the usual S$3.4 psf for my condo).

Should I hold on to my unit and enjoy the rental income at 4.2% yield? Or should I use the higher rental to try and get a good price for my unit, maybe price it at 3% yield?

My considerations are because I am of the view that property prices will go down next year and also I might not get such good rentals from my subsequent tenants.

Thank you.

If you can think of that, other people cannot think of that? So would they buy 3% yield knowing that rental is an outlier.
reverse the role. would you buy it yourself?

[august]

If you can think of that, other people cannot think of that? So would they buy 3% yield knowing that rental is an outlier.
reverse the role. would you buy it yourself?

i thought what he meant is the mkt now is 3.2% yield (based on his numbers), but he got lucky and managed to get 4.2% yield. Selling at 3% yield is still quite close to the mkt and not that unreasonable.

[dmonddd]

dun forget
1) onstream supplies next year
2) project getting older. same concern i hv.ppl prefer new. can rent but lower ur expectations la. spend some money to maintain
3) demand may slow down. analysts are never accurate
4) globally everyone is on caution mode
5) transactions so much lower and lower prices psf..looked at ura stats

[DC33_2008]

Look at the mid to long term view. Otherwise, it will be like someone here who said should not have sold terrace house 30 years ago. Rental helps to fund for your mortgage and any surplus can accumulate for capital repayment or save them when there is a interest rate hike. The house becomes yours someday with capital appreciation just by leveraging on the bank's money. This is true for people with holding power.

[hopeful]

i thought what he meant is the mkt now is 3.2% yield (based on his numbers), but he got lucky and managed to get 4.2% yield. Selling at 3% yield is still quite close to the mkt and not that unreasonable.
lets do the sums shall we?
He is currently enjoying
$4.4 @ 4.2% yield = 1257psf (his purchase price)

$3.4 @ 3% yield = 1360psf (current market rental and yield)
$4.4 @ 3% yield = 1760psf (his selling price)

so this fellow want the next carrot head to pay extra 400psf or 29% above market so that the carrot head can enjoy 3% yield for 2 years. :doh:.
I really congratulate him (and jealous also;)) if he can find such a carrot head.

[august]

lets do the sums shall we?
He is currently enjoying
$4.4 @ 4.2% yield = 1257psf (his purchase price)

$3.4 @ 3% yield = 1360psf (current market rental and yield)
$4.4 @ 3% yield = 1760psf (his selling price)

so this fellow want the next carrot head to pay extra 400psf or 29% above market so that the carrot head can enjoy 3% yield for 2 years. :doh:.
I really congratulate him (and jealous also;)) if he can find such a carrot head.
sure he can try his luck and hope buyer does not do homework and pay based on his 3% instead of mkt rental's 3% ~ :D

[sh]

I am of the view that property prices will go down next year

You answered your own question.

But how certain are you?

[newbie11]

No one can say for sure la, whether mkt will go up or down. As some of u said, sell until you need to. Which is what? When u need $ for children education? Maybe mkt is in recession at that point.

[dmonddd]

as all would know property prices go up over time...but there are always the down and falls throughout the years

why some made it big some didnt because.....

[laidback]

thanks for all your comments

Dun need the money now but was thinking of amassing capital for buying a bigger place for my family if downturn comes next year.

1760psf I agree would be a stretch and would be a new record for this condo. Only glimmer of hope would be because new units next door have been sold at 1800 psf on average for big 1800 sqft units :D.

have decided to hang on and enjoy the rent for now :cheers6:

[howgozit]

thanks for all your comments

Dun need the money now but was thinking of amassing capital for buying a bigger place for my family if downturn comes next year.

1760psf I agree would be a stretch and would be a new record for this condo. Only glimmer of hope would be because new units next door have been sold at 1800 psf on average for big 1800 sqft units :D.

have decided to hang on and enjoy the rent for now :cheers6:


Eh?... how come reply different nickname from TS... looks like same forummer with different nicknames here.

Some other forummers have one nic for serious discussions, another nic to throw spanner. ;)

[Geylang OKT]

Eh?... how come reply different nickname from TS... looks like same forummer with different nicknames here.

Some other forummers have one nic for serious discussions, another nic to throw spanner. ;)

pichar lobang! He apparently forgot that he was signed on to another nick! ;) :p :D

[dmonddd]

lmao.my dad always says be a man or a gentleman and confront things direct. dont go round the bush and hit from the back..never use hit below the belt tactics.
hope our kids have such traits and not emulate the bad ones.
what we do will impact our kids.

but good luck...if i'm renting i will be renting from neighbour's newer project

when mkt down, ur this unit will be down on price psf....anyway u have the $$$.. for me I have sold off my rental unit..my friend said to me - dun b greedy ..u can never win them all. leave some for others otherwise none will be left