I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


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Thursday 13 September 2018

HDB 4 Room Rental Soften???


Uncle8888 recently bumped into his long time no see neighbor who is living a few floors below him. 

After some chatting; he came to know that his neighbour has been living at her mother's place and rented out the entire 4 room flat.

That day; she came back to her unit to settle down her new tenant. 

Uncle8888 asked her about the rental rate. She said that the current rental is $2,000. The previous rental was $2,800. 

Down by 29%!





7 comments:

  1. Heheh, I would say $2.8K is abnormally good if it was last 2 years ;)

    Just like dividend investing, should always build up cash reserves during good times to handle the inevitable lean times :)

    My mickey mouse condo rental has dropped 25% from the heydays in 2013! At least still covers the expenses + imputed effort (we put it at $50/hr/pax) but headaches are extra! LOL!

    Renting out physical property is more like business ... got advertising, marketing, selling, pacifying customers, dealing with difficult customers, ongoing expenses, taxes...

    Being a mini-bank oops I mean shareholder means trying to manage from 30,000 feet. When the weather is good & the winds are right, just sit back & collect. But during bad times either jump ship or can scold management during AGMs! LOL!

    ReplyDelete
  2. The Moral of the story is we need more than one source of "passive" income as rental and dividend can drop drastically without any advance warning.

    ReplyDelete
  3. Dividend and/or rental income marginally exceeds expenses may not be fully FI yet.

    ReplyDelete
  4. Think this neighbour doesn't to bother her HDB flat is leasing or ownership. Monetise it for next 10 to 30 years. Her pocket full of money liao. Those who cpcb are those can't monetise it. That is the real reason!

    ReplyDelete
  5. Net rental income after 10% tax is about $1,800 for my neighbor so it should be enough to live simply on $1,800 in addition to any other sources of retirement income.

    To receive this level of dividend income of $22K per year; she will require capital injection of more than $430K at 5% yield.

    How many of us have an additional capital injection of $430K?

    ReplyDelete
  6. Hee hee Uncle8888

    Got quite a few costs need to set aside :)

    Pty tax, if you're not staying in it, is up to 10X normal pty tax.

    In S'pore, normally the landlord pays the conservancy fees ... so another expense to consider. And no more GST rebates for rented out flat haha!

    Rental income is considered as "earned income" and thus subject to income tax. If no other active income, then still OK unless your rental income is very high. Luckily now can just claim 15% of your gross rental as deductible for expenses.

    For your neighbor case, if she doesn't have any other income, then probably don't need to pay any income tax. (85% of $22K is below $20K)

    But should set aside 10% of rental as buffer for maintenance / repairs / replacements. This one can be the wildcard or joker .... depends on your luck with tenant sometimes.

    ReplyDelete

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