Becoming a landlord is the course of choice for many property investors. But way too lots of individuals become landlords without appraising expenses and the responsibilities required. The truth is that you will probably have to pay a large number of dollars in initial expenses before greeting your first tenant.
Expenses you’ll be able to anticipate to pay include:
First Vacancy Cost: Chances are that in the event you don’t already have a tenant lined up to let your property, you’ll have to wait anywhere from 1 – 3 months before you can locate one.
Furnishings: You can rent out your property unfurnished, but that’ll lessen your chances of finding a tenant quickly. How much you spend on furnishing depends on you, but the more you offer (T.V., furniture, fridge, etc.) the simpler it will be to locate a renter.
Repair/Replacement Costs: If you are renting out a resale property or your old flat, it is likely that you will need to mend or replace some of the fixtures and furnishings for your renter(s).
Property Agent Fees:
Taxes: The tax on your own rent isn’t really an initial expense, but you should undoubtedly factor this into your decision to become a landlord, because Inland Revenue Authority of Singapore (IRAS) will tax up to 20% of your rental income.
Know What You Could Handle
There are two forms of landlords – the landlord who’s quite attentive to the needs of his/her tenants, as well as the landlord who simply doesn’t have the time or energy to make monthly checks his/her property and renters.
If you are the latter, you will must pay a tenancy management service that is professional collect rent, leave payment reminders, and to check up on your property. Be ready to handle that duty by yourself.
Understand Your Legal Duties
Be conscious HDB’s regulations on renting out your flat to ensure you’re not breaking any occupancy or eligibility rules before you become a landlord.
Here are some qualification/occupancy duties you must know:
If you are a HDB flat owner, you and your family will have to continue dwelling in your flat after purchasing a property that is private. However, if you receive approval from HDB, you can obtain exemption from this policy.
In case you bought a flat on the open market without a CPF housing grant (non-subsidized), you can sublet your entire flat after a 3-year Minimum Occupation Period (MOP).
In the event you bought your flat from HDB or on the open market with a CPF housing grant (subsidized), you can sublet your entire flat after a 5-year Minimum Occupation Period (MOP).
Your renters must be Singapore Citizens, Singapore PRs, or Non Citizens living in Singapore on Employment Passes, Pupil Passes, S Passes, Work Permits, Dependent Passes or Long Term Social Visit Passes with at least 6-months of validity remaining.
The maximum variety of tenants you can have depends on the size of your flat – and 2-room flats, 6 occupants for 3- 9 occupants for 4, and room flats -rooms flats and above.
Finding the Best Tenants
If you are renting out your property to make gain from your investment, then you know success lies in finding a reliable tenant. But should you end up getting an undependable renter who makes payments that are late, misses payments, or absconds – you’re just a month or two away from being in a fiscal bind.
Happily, you can avoid bad renters with these strategies:
Be Professional: Remember that it’s not only you who’s appraising your prospective tenants – they’re evaluating you too. When you intend to attract “good” tenants, you will have a better opportunity in case you look and act professional when meeting with them.
Use Conditional Promotion: This really is the simplest way to filter out the renters you don’t need. Instead of marketing which you have the “lowest rent in Jurong,” talk about how your property, Dayo Condo Toa Payoh is “ideal” for professionals who work near the CDB place, or the way it is a “relaxing” neighborhood to come home to.
Allow Compromises: If you find a renter with a secure job, great standing, and is willing to commit to a long term rental it’s worth compromising on matters such as cooking or painting the walls.
Don’t Focus on Rent Alone: Don’t only go with the renter who consents to pay you the most rent. Be sure to check on precisely what he/she does before you agree to conditions. In case your tenant is not making a fixed monthly salary or is involved in questionable action, you will need to consider a more “secure” renter instead.
Build Relationships With Your Tenants: If you’re hostile or not approachable to a tenant, he or she will be more likely to leave in the conclusion of their lease. On the flip side, if you’re sociable and friendly, tenants could be more fair with you about matters like renewing their lease and property issues like fixtures/fittings that are broken.