Property Rental Returns : AlteQ

[lifeafter41]

Was talking to a friend earlier on when he had gone on to view a new development at Tanjong Pagar known as the AlteQ. A 62 storey development, with certain floors, I believe it was the 20th story onwards going for at S$2000psf. Asked him about the rental and was told to him by the agent that it's about S$4psf. or 4k for a 1000sq ft place.

Buying price would be S$2million. Would the rental be worth the price for investment purpose?. Just wondering.....

 

[Sperminator]

Was talking to a friend earlier on when he had gone on to view a new development at Tanjong Pagar known as the AlteQ. A 62 storey development, with certain floors, I believe it was the 20th story onwards going for at S$2000psf. Asked him about the rental and was told to him by the agent that it's about S$4psf. or 4k for a 1000sq ft place.

Buying price would be S$2million. Would the rental be worth the price for investment purpose?. Just wondering.....

First of all, if you buy from AGENTS directly, they already make the minimum 1% commission from the SELLER, and I am not sure if he makes the 1% from you the BUYER.

So, there is a 2% Commission you have to take note.

Next, is there any CASH ON VALUATION (uniquely Singapore).

Is this a HDB 99 years or Private Condo 99 years? or FREEHOLD 999 years?

The rental yield, assuming you pay one lump sum of SGD 2 Million for the 1,000 square feet apartment, and get a rental returns of about SGD 4,000 per month, the yearly rental yield is 2.4%.

This yield rate is lower than the HDB Loan rate... meaning to say that you are making a loss in this investment.

However, if you take a loan, say a 30 year loan, and you put a down payment of 10% of SGD 200,000... you have a loan of SGD 1,800,000

Assuming lowest interest rates of HDB 2.5% P.A.

Monthly repayment for 30 years or 360 times

Loan Calculator

Loan Balance: $1,800,000.00
Adjusted Loan Balance: $1,800,000.00
Loan Interest Rate: 2.50%
Loan Fees: 0.00%
Loan Term: 30 years
Minimum Payment: $0.00

Monthly Loan Payment: $7,112.18
Number of Payments: 360

Cumulative Payments: $2,560,382.75
Total Interest Paid: $760,382.75

Note: The monthly loan payment was calculated at 359 payments of $7,112.18 plus a final payment of $7,110.13.

So, if you use this above to do a financial calculation;

assuming you rent out the home at SGD 4,000 (INCOME), your expense to maintain + service the debt = SGD (~ 200 for 1000 square feet) + SGD 7112.18 = SGD 7312.18 (expense)

CASHFLOW = INCOME - EXPENSE

CASHFLOW = -$3112.18

Conclusion:

You are making a LOSS!!!

This is certainly a bad investment, only people with too much money will go for this...

 

[Brightkid]

First of all, if you buy from AGENTS directly, they already make the minimum 1% commission from the SELLER, and I am not sure if he makes the 1% from you the BUYER.

So, there is a 2% Commission you have to take note.

Next, is there any CASH ON VALUATION (uniquely Singapore).

:

Hey, this is a brand new launch by the developer. The agents are the appointed marketing agents.

Commission received by agents for new project sales is a pittance paid by the developer and after split with agent's company. Buyers pay only what is stated as selling price for such projects, no commission payable by buyers.

Further, new projects price are typically same a bank's valuation.

 

[Sperminator]

Hey, this is a brand new launch by the developer. The agents are the appointed marketing agents.

Commission received by agents for new project sales is a pittance paid by the developer and after split with agent's company. Buyers pay only what is stated as selling price for such projects, no commission payable by buyers.

Further, new projects price are typically same a bank's valuation.

From the cashflow analysis of this housing, I am sorry to say that only the super rich, who got too much money can buy.

For people to buy it as investments, it's a sure loss...

unless there is a chance of capital gains... but must have holding power, and able to sustain the potential ups and downs of the housing pricing.

To rent it out at SGD 4,000 per month surely make loss.

So, if you are the marketing agent, your target base should be rich foreign investors with too much money. In SGP, not too many have such money... perhaps can target the ministers?

 

[pc2009]

This kind of investment is based on 'bigger fool theory'.

If the investment is making a loss, why should the super rich go for it?

 

[Zombie]

Was talking to a friend earlier on when he had gone on to view a new development at Tanjong Pagar known as the AlteQ. A 62 storey development, with certain floors, I believe it was the 20th story onwards going for at S$2000psf. Asked him about the rental and was told to him by the agent that it's about S$4psf. or 4k for a 1000sq ft place.

Buying price would be S$2million. Would the rental be worth the price for investment purpose?. Just wondering.....

just do a very simple calculation

buying price S$2m
bank interest cost at rate say 4% pa
total cost per year = S$80K ie per month $6667
plus misc cost ie tax, mgt fee, maintenance etc etc say 10-15% approx $7500

so if you are not getting more than $7500, you are losing money

 

[Sperminator]

This kind of investment is based on 'bigger fool theory'.

If the investment is making a loss, why should the super rich go for it?

Exactly the point!

 

[lifeafter41]

First of all, if you buy from AGENTS directly, they already make the minimum 1% commission from the SELLER, and I am not sure if he makes the 1% from you the BUYER.

So, there is a 2% Commission you have to take note.

Next, is there any CASH ON VALUATION (uniquely Singapore).

Is this a HDB 99 years or Private Condo 99 years? or FREEHOLD 999 years?

The rental yield, assuming you pay one lump sum of SGD 2 Million for the 1,000 square feet apartment, and get a rental returns of about SGD 4,000 per month, the yearly rental yield is 2.4%.

This yield rate is lower than the HDB Loan rate... meaning to say that you are making a loss in this investment.

However, if you take a loan, say a 30 year loan, and you put a down payment of 10% of SGD 200,000... you have a loan of SGD 1,800,000

Assuming lowest interest rates of HDB 2.5% P.A.

Monthly repayment for 30 years or 360 times

Loan Calculator

Loan Balance: $1,800,000.00
Adjusted Loan Balance: $1,800,000.00
Loan Interest Rate: 2.50%
Loan Fees: 0.00%
Loan Term: 30 years
Minimum Payment: $0.00

Monthly Loan Payment: $7,112.18
Number of Payments: 360

Cumulative Payments: $2,560,382.75
Total Interest Paid: $760,382.75

Note: The monthly loan payment was calculated at 359 payments of $7,112.18 plus a final payment of $7,110.13.

So, if you use this above to do a financial calculation;

assuming you rent out the home at SGD 4,000 (INCOME), your expense to maintain + service the debt = SGD (~ 200 for 1000 square feet) + SGD 7112.18 = SGD 7312.18 (expense)

CASHFLOW = INCOME - EXPENSE

CASHFLOW = -$3112.18

Conclusion:

You are making a LOSS!!!

This is certainly a bad investment, only people with too much money will go for this...

Another words, based on the calculation, rental income would need to be at least S$7500 for this place just to break even.

Have any forummers come across where a place of 1000sq ft commands a rental of S$7500.

Orchard Road areas?, River valley area?, or even Newton area?. Just wondering.