Real estate agents say you’re wasting money by renting instead of buying a condo.
This is why they’re wrong.
Today in 10 minutes or less, you’ll learn:
- 🎯 Cash-on-Cash vs Multiple-on-Money returns
- 🌇 What expats are eligible to buy in Singapore
- 🔍️ How to search properties and get rental data
- 💰️ Stamp duty, mortgage & “hidden fees”
- 📊 BONUS: Rent vs Buy calculator (Link Below)*
*Many thanks to Michael Duyvesteijn for creating the Rent vs Buy calculator and his thoughtful feedback on this post.
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🏘️ Singapore residential property for expats 101
In the past year, condo rents in Singapore have increased 30-50%.
I received DMs from expats asking, “As a foreigner, is it really worth it to buy a condo in Singapore?”
My wife and I have been exploring residential property investments for a cash flow goal (ie creating a new income stream). This is what we learned.
Here are 8 steps to researching the Singapore residential property market:
🎯 1. Decide on your goals
Financial
- Wealth preservation
- Total return
- Cashflow
Lifestyle
- Starting a family
- Mobility
If your goal is purely financial, be careful of agents preying on your rental frustrations. Run the numbers.
If your goal is lifestyle, weigh the numbers AND fulfilling your life vision.
Example: Let’s say you want a 100% passive investment, so you can travel freely. Even if you buy a cashflow-generating property, you may NEED to live near the property in case of repairs and maintenance issues (like pipes bursting). Will this conflict with your passive goals?
🌇 2. Filter property type based on eligibility, goal, market dynamics, and budget
Eligibility
For residential property, foreigners are eligible to buy:
- Private condos and resale-only executive condos
- Landed properties in Sentosa Cove
- Landed properties (with special approval)
Goals
Total return → Use Multiple of Money (MoM) + expected timeframe
- Multiple of Money = total capital you receive back (sale event + cashflow) / initial capital you invested
- Example. If you invested $1,000,000 and received $2,000,000 back over 5 years, then your MoM is 2x
Cashflow → Use Cash-on-Cash (CoC)
- Cash on Cash = total cashflow you receive (after operating expenses) / initial capital you invested invested
- Example. If you invested $1,000,000 and received $50,000 of cashflow in year 1, your cash-on-cash return is 5%
Consider the opportunity cost of investing your capital in residential property versus an S&P 500 ETF, eg VOO (7% inflation-adjusted return)
For this post, we’ll focus more on cashflow (income) than total return (growth) given limited space.
Market dynamics
- Most private home buyers in Singapore are upgraders, eg families, so may be less likely to buy a 1-bedroom unit in the central business district. This impacts resale opportunities
- Rental market is driven by foreigners. 90% of property is owned, so most renters are foreigners. Your ability to rent out is heavily dependent on government policy towards foreigners (which can change rapidly)
Budget
- Higher budget → afford units in Core Central Region (CCR)
- Lower budget → afford units in Outside Central Region (OCR) or Rest of Central Region (RCR)
🔍️ 3. Search for properties and find price
Search for condos on PropertyGuru or 99.co that fit your eligibility, goal, market, and budget.
Search criteria
- Location (CCR, OCR, RCR)
- bedrooms
- bathrooms
- Area (sqft)
- Unit price ($ per sqft)
- Listing price
Example (listing)
- 1-bedroom condo (775 sq ft)
- Starlight Suites in River Valley
- Listing Price = $1.5M SGD
💡 Trying to assess an unlisted property? Check out 99.co’s handy Property Value Tool. After inputting your condo unit number, it’ll generate a value of your property based on market comps. Give it a whirl!
🧑💻 4. Collect rental income data
Go to Urban Redevelopment Authority (URA)’s database of private residential rental contracts.
Look up rental contracts for units by:
- Address
- Square footage
- Last 6 months
Example
- Three 1-bedroom units (700-800 sq ft)
- At Starlight Suites
- New contracts in 2023
- Avg Rent = ~$4,700/month
💰️ 5. Add Stamp Duties to your purchase cost
Estimate using the Singapore tax authority’s Stamp Duty Calculator.
Stamp Duties
- Buyer Stamp Duty (BSD). Pay up to 6% of the purchase price as of 13 Feb
- Additional Buyer Stamp Duty (ABSD). If you’re a foreigner, you'll have to pay 60% ABSD as of April 27
How to pay
- Stamp duty must be paid in full (can’t be paid in installments)
- Mortgage cannot be used. According to PropertyGuru, you cannot borrow using a mortgage for your stamp duty
- CPF can be used. If you’re a PR/Citizen, you can use CPF funds for stamp duty
- Must be paid within 14 days of agreement signing
- Payment methods. GIROS, AXS, Internet banking, Cashier’s check
Example
- Purchase Price = $1.5M
- BSD = $44.6k
- ABSD = $900k
- Total Cost = ~$2.45M
What does this mean?
- Even if you get a mortgage, you will need to pay $944,600 upfront for stamp duties
- If you buy with 100% cash, it'll take ~44 years to recoup your investment (including stamp duty)
🤝 6. Factor in a mortgage, 25% down
If you’re reading this, you’re probably not buying all cash.
Here are the numbers for a mortgage.
Example (PropertyGuru)
- 25% downpayment = $375,000
- 75% loan-to-value = $1,1125,000
- 30-year fixed interest rate = 3.5%
- Est. mortgage payment = $5,052/month
To calculate cashflow, compare against rental income:
- Monthly rent = $4,700
- Mortgage payment = $5,052
- Net = -$352
You're in the red 🚩
You’re paying ~$350 cash per month just to keep the property.
🛠️ 7. Factor in “hidden costs” like condo maintenance fee, property tax, and income tax
Condo maintenance fee
- Typically $200-$700/month
- Look for condo maintenance fee on property listings
Property tax (for rental property)
- Up to 27% of your Annual Value (monthly rent * 12)
- Higher rates if it’s rented out (versus owner-occupied)
- Use Singapore tax authority’s Property Tax Calculator
Income tax
- Up to 22% of taxable rental income
- Taxable rental income = Annual Value - deductible expenses
- Deductible expenses = mortgage interest + deemed expenses (15% of Annual Value or more)
Example
- Condo maintenance fee for Starlight Suites = ~$450/month
- Property tax = ~$675/month
- Income tax
- = (22% * ($56,400 rental - ($38,688 interest + $13,500 deemed expenses))) / 12
- = (22% * $4,212) / 12 = ~$77/month
- Net = -$1,554/month
For cashflow, you’re now paying ~$1.6k/month to keep this condo.
And don’t forget you have already sunk $944,600 into the property to pay stamp duties. 🤯
Finally, we haven’t even added other expenses:
- Repairs
- Insurance
- Vacancy costs
🏘️ 8. Factor in property value appreciation
For Singapore residential property, it can be tough to make the numbers work for cashflow goals (see above analysis).
Examine historical private condo price movements. It’s critical to look at different time horizons:
Core Central Region (see data)
- Q4 2010 to Q4 2020: ~0% CAGR (Compound Annual Growth Rate)
- Q4 2004 to Q4 2022: ~3.6% CAGR
Outside Central Region (see data)
- Q4 2010 to Q4 2020: ~2.9% CAGR
- Q4 2004 to Q4 2022: ~5.5% CAGR
Choose your price appreciation assumption. Based on the above examples, you can see that assumptions can vary widely: from 0% to 5%.
Pick one based on an appropriate time horizon that matches your risk appetite.
Personally, I lean towards conservative assumptions: 0% to 2% annual growth, depending on market segment.
Why? My wife and I prioritize cashflow goals and find appreciation less predictable. It’s also unclear to me how demographic trends will drive condo demand in the future. (Your mileage may vary.)
💪 Implement in your life
🔢 Run the numbers. Now you’re going to put into practice what you’ve learned from this edition.
📊 Copy this Singapore Property Purchase Calculator. My solopreneur friend, Michael, built this comprehensive Google Sheet tool to help his own family to analyze the P&L (Multiple on Money) & Cash Flow Statement (Cash-on-Cash) for three different scenarios:
- Scenario 1: Don't Buy & Rent
- Scenario 2: Buy & Occupy
- Scenario 3: Buy & Rent (Out)
I personally found this tool very helpful to visualize the trade-offs. Take it for a spin and let me or Michael know what you think!
📚️ Further reading
🌐 Beyond your borders
- 🇨🇳 Foreign investors ditched China stocks for $9B of Indian stocks (ET)
- 🇯🇵 Japan’s tourism and economic growth attracted 5x more hotel foreign investments or $691M YTD (SCMP)
- 🇮🇪 Ireland will pay you $92k to help refurbish and live in beautiful island home — check out the (CNN)
- 🇮🇩 Indonesia temporarily pauses visa-free policy for 159 countries, except ASEAN countries (Star)
