Asked on 07 Oct 2019
Currently working overseas and have a 4-room, 30 years old HDB flat near Simei MRT.
Caught in between renting out my HDB or selling it? Coz given the ‘old age’ of the flat, think it is better to sell?
It's a toss-up in the current market conditions. It's been a buyer's market for resale flats for the past couple years (i.e., buyers are spoilt for choice, so if your unit doesn't stand out, it might be difficult to sell it).
That said, if you're willing to put in the necessary work before selling it, now might be the only time you have in the next few years. Most of the major financial indicators are that Singapore is headed for a technical recession, which would negatively impact property prices.
Zhi Cheng raises a good point though: if you're coming back from your overseas work in a few years, it might be worth it to keep the property so you have a place to stay.
It really depends on the type of income you want as well as other factors like the current property market and your future plans.
Looking for a lump sum where you can immediately use for other forms of investments?
Sell your flat would perhaps be the better option.
Looking for consistent cash flow from your property AND you wish to have a home if you ever move back to Singapore?
Perhaps renting it out would be a better option.
Either way, I have with me property experts that can help you with selling/renting of flats. DM me if you have any questions!
08 Oct 2019
08 Oct 2019
What would you do with the money if you sell?
The key question is always the same: how to best optimize your money?
Firstly, is working overseas permanent?
When it comes to HDB, I try not to look at “current market conditions” but rather do the simple math, if you rent out your flat, it could fetch $1200 a month, you have to pay to cover some tax and commission so maybe you end up with about $10k a year extra.
If you sell the flat for $400k and put all the proceeds into CPF OA, you can get 2.5% annually compounded that is risk-free $10k.
Or if you invest it to get 5%, you get $20k annually.
The numbers surely vary so do your own homework before taking action.
I would recommend you to rent it out.
If you rent it out, you will get cashflow.
For example, based on a 4 room hdb flat, monthly rental is $2000 * 12 = $24000 per year. Furthermore, your house got only left 80 years.
So yearly rental which is $24000 * 80 years = $1920000.
So if you rent out for 80 years, the total rental earned would be potentially more than your capital gain.
Capital Gain = Sell Price - Buy Price of your property.
However, if you use this capital gain to reinvest, then I recommend you to sell your BTO due to 'old age'.
After you sell your property, you will receive capital gain.
You can use your money earned from capital gain, to reinvest in other financial instruments.