Things to Consider as Property Landlord

Things to Consider as Property Landlord

Things to Consider as Property Landlord 

Being a house owner definitely gives you the bragging rights but do not judge a book by it’s cover. Not all property owners are glorious as it seems especially renting out your house as a landlord. If you’re lucky enough to secure a good tenant, life is easy for you. But, if you’re not, in many ways you will get frustrated with all the time, money and effort you have wasted being a landlord. Before draining all your time, money and effort, there are couple of things to consider, regardless if you are a property owner for a posh condo in Orchard or a 3-room HDB flat in Choa Chu Kang. Here are some thoughts for you to ponder.

What is your affordability?

Before deciding to be a landlord, one of the biggest consideration you will need to think through is your finances affordability. Although renting out may help you to lighten your finances burden but there are some costs you will need to pay, for example, refurbishment costs, furnishing costs, property agent fees and etc. So, you got to ask yourself if you’re ready to bear the costs after paying a hefty amount of downpayment for your house whether it is HDB flat and private condominium. Here are some of the essential expenses that landlords will be expected to cover:

Furnishing, repair and replacement

There are some fixtures and fittings required repair and maintenance especially if your unit is an old one. Tenants expect landlords to cough up the costs for wall paint, plumbing or door/gate repair. Although, some could be petty costs but adding it all up could cost a bomb. Hence, do not snowball the repair work, get it fix immediately before it becomes a bigger issue. Do furnish and touch up some of the furniture or electrical appliances to make it looking more appealing to your potential tenant. Nobody likes to deal with ‘vintage’ furniture and electrical appliances.

Property Agent Fees

If you are lack of marketing skills to market your property, do not skimp on agents’ commission. The fees that you’re paying are to help you making your transactions, dealings and negotiations smoothly. They are the professionals in the industry and they have all the information they need in their fingertips. For example, the laws and regulations of rental in Singapore, scanning your potential tenants and other matters. But with the professional service, be prepared to pay at least a month’s rental to agent.

Insurance

There are few insurances you will need to consider purchasing such as fire insurance, home insurance and rent protection insurance. Rent protection insurance is to protect you from nasty tenants that don’t pay or skip your rental payment but one thing for sure is that, expect to pay for yearly premiums of $500++. After all, paying for your insurance is to give peace of mind.

Tax

Rental income is part of income tax. Although, Inland Revenue Authority Singapore (IRAS) was kind enough to include tax deductions but do expect to pay your taxes up to 20% of rental incomes.

What do you know about the laws?

Are you familiar with the rental regulations in the industry? If no, please read up the HDB regulations easily available in their website. Before we go further, ask yourself if your property is still in the Minimum Occupation Period (MOP), where the owner must reside for at least five years. The regulations do not allow the property owner to rent out the unit in whole if they have not reached five years of occupancy. Unless, if you have extra room to rent, you may consider listing your room in PropertyGuru, online property listing platform. However, it is advisable to check HDB regulations before deciding to sublet, you wouldn’t be penalized by the HDB authorities.

Besides, you will need to prepare yourself tenancy agreement to protect yourself to avoid inevitable tenant dispute. It is vital that you draft your agreement with clarity and strong, that will help you if the tenants decided to take it against the court for petty matters or any violations. The basic ‘must-haves’ in any of the tenancy agreement is the 1-month security deposit, immigration status (if you’re renting to foreigners), maintenance, termination, notice period and etc. These basic conditions cover all type of property like HDB flat, private condo and even landed properties.

Can you handle the stress?

Dealing with property is already a headache, what more when you to deal with tenants. Imagine all the stress that tenants can give like not paying their rental, vandalizing the furnishings, not paying the utilities bill. Perhaps you may consider to engage professional tenancy management service to help you from A to Z even if you’re owner of HDB in Choa Chu Kang or landed property in Bukit Timah.

What are your future plans for your property?

Is there anything you would like to accomplish by renting out your property? In 10 to 15 years, do you still want to be landlord and gain some profit to fund your retirement or your kids education? Or do you want it to be your income stream during your retirement? What happened to your property when you have passed on? Are you going to pass down to your next generation? Or are you going to split the proceeds amongst your family members? If you decide to hold on to your property, make sure that there’s a will to protect your property’s interests.

These are some of the thoughts you would want to plan and think about because we will never predict the future. At least, for now you have a property to secure your future. However, before reaching there, do keep at least six months of mortgage payments as an emergency fund.