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Anonymous

09 Feb 2020

Should I sell my HDB flat which I am collecting rental income and buy reits, equity and bonds or continue to rent the property out?

I have a 30years old HDB that I am renting out. In the last few years, the price of the property has been falling quite quickly. This property is meant to collect rental for retirement and I am wondering if thee are more efficient ways of generating passive income. The sale would be a definite lost from the initial purchase price.

What are the factors that I should consider?

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    Discussion (5)

    What are your thoughts?

    Leslie Koh

    Leslie Koh

    30 Dec 2019

    Level 8·Associate Financial Services Manager at Prudential Assurance Company Singapore

    Firstly, is the HDB paid off?
    Secondly, calculate your rental yield, which you can refer to this website: https://www.99.co/blog/singapore/calculate-rental-yield-singapore-property/

    Thirdly, do you have access to any other instruments that can provide better and more stable returns that your rental yield?

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      Pang Zhe Liang

      Pang Zhe Liang

      30 Dec 2019

      Level 14·Senior Financial Services Consultant at AIA Singapore Private Limited

      It depends on your needs. If you are looking to create a guaranteed source of passive income, then property may not be the best option with the situation that you are encountering right now.

      At this point, the best way to deal with the situation is to perform a detailed calculation. Some of the factors for consideration include:

      • When do you intend to sell the house? E.g. 10 years' time

      • Rental yield

      • Probability of getting a tenant

      • Maintenance

      With the timeline set, find out the total yield (from valuation of property and rental income) and whether it fulfils your expectation.

      If it fits into your expectation, keep it or consider similar alternatives with better liquidity.

      If it doesn't fit into your expectation, consider alternatives that are capable of mimicking the yield, e.g. a life annuity.

      Here is everything about me and what I do best.

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        Renting out your property for passive income would likely to works only if you are looking at long t...

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