Lucky break
Sometime last month, I received bad news from my agent that tenant that we got since Feb had invoked the diplomatic clause because his company his sending him back to home country :(
As usual, I checked Propertyguru and URA to get some data on current market rental rate but this time I also checked market selling price too. To my surprise, although the former had dropped significantly the last 2 years, the latter hadn't changed by much. Doing some calculation, I determined that the proceed of a sale at current price - less money to be returned to CPF, outstanding home loan, legal fee, agent commission - could earn more than the current rental rate (net of relevant ongoing expenses and taxes) if invested in shares with dividend yield of 5%.
So far, the historical dividend yield of my portfolio is 6% and so 5% is a little conservative. Sounds good, right? However, that would mean all my investment will be in shares and that's scary given the fact that I'm not an expert at prospecting shares (which is why I go for diversification as one of the safeguards).
On the other hand, I did not wish for yet another long wait (it was 3 months previously) for a new tenant and so I had asked my agent to look for either tenant or buyer, whichever comes first.
Recently, I received a piece of good news: my agent has secured the next tenant, with a nominal 2% increase in rent. They will move in right after the current tenant leaves i.e. there will be no gap in between. Fantastic! However, the downside is that they asked for a ceiling fan with lights to be installed in the master bedroom and that their employer (once again) requires the 6-month diplomatic clause despite the 1-year contract. Normally such clause appears in contract of at least 2 years. Times are bad. Renters' market. What to do.
However, I am grateful to have this piece of news. Hopefully they'll be good tenant and stay much longer than the current one.
As usual, I checked Propertyguru and URA to get some data on current market rental rate but this time I also checked market selling price too. To my surprise, although the former had dropped significantly the last 2 years, the latter hadn't changed by much. Doing some calculation, I determined that the proceed of a sale at current price - less money to be returned to CPF, outstanding home loan, legal fee, agent commission - could earn more than the current rental rate (net of relevant ongoing expenses and taxes) if invested in shares with dividend yield of 5%.
So far, the historical dividend yield of my portfolio is 6% and so 5% is a little conservative. Sounds good, right? However, that would mean all my investment will be in shares and that's scary given the fact that I'm not an expert at prospecting shares (which is why I go for diversification as one of the safeguards).
On the other hand, I did not wish for yet another long wait (it was 3 months previously) for a new tenant and so I had asked my agent to look for either tenant or buyer, whichever comes first.
Recently, I received a piece of good news: my agent has secured the next tenant, with a nominal 2% increase in rent. They will move in right after the current tenant leaves i.e. there will be no gap in between. Fantastic! However, the downside is that they asked for a ceiling fan with lights to be installed in the master bedroom and that their employer (once again) requires the 6-month diplomatic clause despite the 1-year contract. Normally such clause appears in contract of at least 2 years. Times are bad. Renters' market. What to do.
However, I am grateful to have this piece of news. Hopefully they'll be good tenant and stay much longer than the current one.
Comments
Bad news. Next post out tomorrow.