Dear Reuel: I Don’t Want To Rent My House To Indians And PRCs

Dear Reuel,

I am having difficulties finding a tenant but I do not want to rent my property to Indians and PRCs. Indians cook ‘heavy curry’. I have read horror stories of how PRCs leave properties in shitty conditions, or built partitions to rent to their compatriots.

I am not taking any chances. What’s your opinion on this?

– Worried Landlord


Dear Worried Landlord,

Stop being choosy. Did you know that our country is in quite a pickle right now? According to Department of Statistics Singapore, from 2010 to 2016, our total population grew from 5,076,700 to 5,607,300. That’s a population growth of around 88,400 people every year.

If we look at 2017 figures, we are sitting at 5,612,300 in total population. That’s 5,000 in population growth.. Only 5,000 people for crying out loud!

There just aren’t enough tenants coming in to rent homes because our Government has been holding back on issuing work visas (because they fear losing votes come election hur hur).

And if I can be totally blunt, we Singaporeans are the perfect example how Singapore is still centuries away from eliminating racial discrimination. We know it’s a serious problem when even the BBC headlined the article ‘No Indians No PRCs’: Singapore’s rental discrimination problem, some years ago.

For all that talk about Singapore being a ‘racially harmonious’ country and a melting pot of different cultures, our foreign friends have to be screened for their nationality before being ‘allowed’ to rent a house. How sad is that?

First of all, how do we define a ‘good tenant’? A good tenant is one who pays rent on time, doesn’t give trouble to the landlord, makes a concerted effort to keep the said property in a reasonable condition (amid normal wear and tear).

Next, may I clarify that property agents are NOT allowed to ‘indicate preference for any race or religion in all advertisements’ according to the Council of Estate Agencies’ Practice Guidelines on Ethical Advertising. Asking your agent to indicate the racial preference is akin to telling him to get his license suspended.

The chief concern most landlords have is that Indians will do a lot of ‘heavy cooking’ which will wreck kitchens or which stench is hard to remove. Yes, I do understand from my Indian national friends that many of them have no choice but to cook from home because they are vegetarians (by Singapore standards). This promptly eliminates much of their choices from the available food offerings in Singapore restaurants and food courts.

Now, who’s to say that renting to a Malaysian, Korean, Japanese, British, Russian, Canadian, German, American [or insert whichever nationality you are biased for] means there will confirm plus chop guarantee not be any problems with your house?

So, their need to cook is undeniable. But instead of denying them from renting your property in this challenging rental market especially when the Indian (and PRC) community forms majority of the renters, why not talk things out? Here’s what I suggest. Talk things through and inform the tenants, “I’m going to need you to return my apartment in the same state as it was before it was rented out to you.”

A good tenant is one who pays rent on time, doesn’t give trouble to the landlord, makes a concerted effort to keep the said property in a reasonable condition (amid normal wear and tear).

Next, many landlords fear renting to PRCs (People’s Republic of China) because they are [perceived to be] rowdy, makes lots of noise, do not take care of the house, or worst of all – illegally partitions out the landlord’s home to make rental income.

So, most of us probably had that first relationship which ended really bad. Are you going to swear off dating and marriage because of that? Does that mean we let that first bad experience stop us from finding the ‘right partner’? If yes, then I give up. Please keep trying to rent your property to non-PRCs.

The truth is that yes, some of their compatriots have made headlines for all the wrong reasons. But that does not mean ALL of them are rowdy troublemakers who wreck homes and partitions properties for profit!

Find a responsible property agent who will do a good screen-through of the tenant. As mentioned earlier, a PRC tenant may be a far better tenant than the British tenant whose dog chews on everything or that Mexican tenant who refused to allow any viewings when you try to sell your property.

All good articles end with a good story, so here’s one. Now suppose you paid for a ticket on a swanky Western airline to fly to your dream destination. You’re in the plane all set and ready to go when there’s an announcement over the intercom, “The plane is overbooked, and we gonna have to ask one of you to vacate your seat for the next flight instead.” Now you’re the only Asian in the plane and somehow, you’re the only one told to vacate your seat. Sounds familiar? Well, that’s exactly how we make our Indian and PRC friends feel too, isn’t it?

In the end, a good tenant isn’t defined by his nationality or place of birth but by his/her ability to pay rent on time and maintain the house in reasonable condition. And the bank installments don’t pay for itself, especially in this challenging rental market as shared in the previous Dear Reuel.

Be a smart landlord, not a choosy and broke one. RW

 

Editor’s note: Every week, Reuelwrites dishes out uncensored, practical advice to friends, family members or strangers regarding real estate. Got a question for Reuelwrites? Email it to eugenetayhy@gmail.com.

Consultation: There is no one-advice-fits-all solution. For more in-depth advice, contact Reuelwrites at eugenetayhy@gmail.com or call +65 9833-6450.

Disclaimer: While the author Reuelwrites is a certified real estate agent with Huttons Asia, the above thoughts represents his own and is in no way representative to that of Huttons Asia.

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Dear Reuel: Should I Compromise On My Asking Rent?

Dear Reuel, 

I have been putting my 3 bedroom condo unit for rent at an asking price of $3,000. I’m willing to negotiate to $2,800 since it was last rented out at $2,800. That’s reasonable right? I have an offer of $2,500 and the tenant can move in by end of the month.

I was told by my agent to consider the offer since the recent transaction is hovering between the $2,300 to $2,600 range due to the weakened rental market. That’s so low! Do you think I should compromise on my asking rent?

– Reasonable Landlord


Hi Reasonable Landlord,

So you have an offer of $2,500 and the tenant can move in at the end of the month.. What are you waiting for?! Take the offer already!

While the property market is beginning to pick up as supply of new launch properties diminishes, the takeup rate in the rental market is slower in response. According to a Singapore Business Review article, private residential vacancy rate stands at 30,100 at the end of Q3 2017.

The root cause is due to the fact that there just aren’t enough Foreign talents coming to S’pore to work. And it isn’t because Singapore is undesirable. Rather, the reason why we are in a pickle is because of us – our dear fellow netizens who complained about having too much Foreign talents in S’pore. Our dear PAP-run Government responded in kind by granting lesser work visas.

Simple economics of supply and demand has it that when demand is not able to meet the supply, prices slide and vice versa. I hope you weren’t one of the netizens because you would have literally sabo yourself. #ownselfsaboownself

Here’s a true story. I had a landlord who wanted to rent a 3 bedroom condo unit in East. The condo is an older condo and requires a ten minutes walk from Tanah Merah MRT. Landlord has previously enjoyed past rentals of around $3,000/month and was determined to keep it that way.

She asked me to assist to rent her property out at $3,000. I explained to her it was difficult since the recent rentals was around $2,600 but advertised at $3,000. After three months of marketing and arranging viewings, I managed to get her an offer from a local tenant family of three, at $2,800.

Guess what? She refused! She insisted that the tenant increase the offer by $50 to make it $2,850. The tenant was unwilling to do so and the deal fell through. And it took another four months before she rented her unit out to a tenant at.. drumroll please$2,500. *Shakes head*

The opportunity cost was more than seven months loss of rental income. While this is one of the more extreme (true) cases, it can happen to you if you are asking for sky-high prices for your property.

If your property agent convinced you to buy a new property promising high rental returns, chase him or her to rent it out at the promised rental yield. 

Your priority is to make sure your unit isn’t vacant, or at least not for too long. Get your unit occupied so you still get rental income coming into to help you shoulder the monthly installments. While you may feel butt-hurt that you couldn’t rent out at the price you wanted, remember – it’s better than having it vacant for months.

But good news, the rental market WILL recover. I quote TODAY Online’s 5 December 2017 article, “Raising the intake of working-age foreigners will help shore up growth and fiscal revenue, and reduce the tax burden on younger Singaporeans”.

It’s only a matter of time before the Government open the floodgates to bring in more foreigners. Soldier on fellow landlords! RW

 

Editor’s note: Every week, Reuelwrites dishes out uncensored, practical advice to friends, family members or strangers regarding real estate. Got a question for Reuelwrites? Email it to eugenetayhy@gmail.com.

Consultation: There is no one-advice-fits-all solution. For more in-depth advice, contact Reuelwrites at eugenetayhy@gmail.com or call +65 9833-6450.

Disclaimer: While the author Reuelwrites is a certified real estate agent with Huttons Asia, the above thoughts represents his own and is in no way representative to that of Huttons Asia.

Dear Reuel: What Is This ‘Sell 1 HDB Flat, Buy 2 Private Properties’ All About?

Dear Reuel, 

I have been seeing Facebook ads from property agents telling me that I can sell my HDB flat and with the sales proceeds – buy two private properties. A HDB flat for two condominiums? For real? How is that even possible? Is it a scam or some sales talk?

– Skeptical


Dear Skeptical,

You are right to be skeptical (like me). It’s this killer street-smart instinct that stops you from falling prey to ridiculous scams like the DHL episode, Nigerian prince inheritance bullocks and magic stone horsesh*t.

Here’s the true-true. It’s actually possible. But there’s a caveat though and for it to work, there must be some conditions to be met. In order to show you how it works, I am going to create a fictitious (but realistic) Singaporean homeowner profile.

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PHOTO: A 4-room Punggol flat sold by Reuelwrites

John and Mary’s Profile:

  • John and Mary are both 35 years old and make $6,000 and $3,500 respectively for the past 10 years.
  • They got married, successfully applied for their high-floor, 4-room, Punggol BTO HDB flat in 2008 and moved in upon its completion in 2011.
  • They took a 90% HDB loan for the $200k flat and have been paying $817 in monthly installments. They do not have any other debts and loans.
  • Because their monthly CPF contribution into their Ordinary Account is $1,840, they have more than enough to pay the monthly installment and put into their CPF OA.
  • John and Mary has accumulated around $220k and $120k in their CPF OA respectively.

Fortune smiles upon them and their flat has appreciated to $450k based on the most recent market transactions.

After staying in their HDB flat for six years;

  • They still have a loan balance of $146,800, with an assumed accrued CPF interest of $2,000.
  • If they sell their flat, they will have an extra $60,000 in combined CPF monies and accured interest credited back into their CPF OA.
  • After taking away all the deductibles, they will get to pocket a cool $232,700 in cash proceeds.
  • John and Mary will have $251k and $151k in CPF monies respectively.
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PHOTO: Sims Urban Oasis Showflat

 

How the ‘Sell 1 HDB flat, Buy 2 Private Properties’ Work:

John:

  • As the higher income earner, John buys a 3 bedroom condo in Punggol which costs around $1m, as a sole owner.
  • Based on his salary of $6,000, he can borrow a maximum bank loan of around $800k.
  • His monthly installment amounts to around $2.8k/month, which he can pay using his existing CPF monies for minimum 20 months (if John happens to go on a sabbatical or loses his job due to misfortune).
  • His monthly CPF contribution is $1,380, which means he needs to top up the difference of $1,420 in CPF (or cash).

Mary:

  • With a salary of $3,500, Mary can borrow a maximum bank loan of around $468k which she loans to purchase a 1 bedroom apartment in Aljunied at $550k, as a sole owner as well.
  • Her monthly installment amounts to around $1.7k/month, which she can pay using her existing CPF monies for minimum 33 months (if Mary happens to go on a sabbatical or loses her job due to misfortune).
  • Mary rents it out for $1.7k, thereafter having the tenant cover her monthly installments.
  • Mary can sell it four years later at $650k (based on an inflation of 4-5%/annum), thereafter pocketing another $120k in cash proceeds and rental income, which she can use to roll on another property.
  • Her monthly CPF contribution is $805, which means she needs to top up the difference of $895 in CPF (or cash).

Outcome:

  • Together, John and Mary are now cool owners of two private properties instead of one.
  • After paying the 5% option fee for both properties, they still have $155,200 from the sale of their HDB flat which they can use to renovate their new home and put into their children’s education fund.
  • They have also saved 7% Additional Buyers’ Stamp Duties since they each bought the properties under individual names.
  • They have upgraded to a private property where their entire family can enjoy a better quality of life while also growing their monies through another property investment at the same time.

Sounds good yea? This is granted homeowners such as yourself share the same or similar profile as the clients above. But alas, the world is not fair ya.

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PHOTO: Parc Life Executive Condominium Artist Impression

When Does It Not Work:

I have done plenty of presentations and financial calculations for clients. Here are some common reasons why the above method do not work all the time.

  1. Not all HDB flats can be sold with such high cash proceeds (some might even be a negative sale)
  2. Homeowners make the mistake of fully/partially paying the flat with their CPF monies early, resulting in high CPF accrued interests which diminishes the cash proceeds.
  3. Homeowners have been staying in the HDB flat for decades, resulting in super high CPF accrued interests payable back to their own CPF OA when they sell the flat.
  4. Homeowners’ salaries are insufficient to take loans to buy two separate properties.
  5. Loan is insufficient to finance 80% of the property as home buyers have many loans and debts which include but are not limited to credit card debts, car loans, renovation loans, etc.
  6. Banks are unwilling to loan home buyers as home buyers have a history of bad debts, resulting in a low credit score.
  7. Home buyers are self-employed and declared a low income (dum dum dum).
  8. Home buyers are conservative and fear having too much debts (loans) to pay – even if they have the ability to pay for them.

My Thoughts:

The ‘Sell 1 HDB flat, Buy 2 Private Properties’ can work. But for it to work, you will really need to have a sit-down sharing session with a good and capable real estate agent with a conscience (which I highly and shamelessly recommend myself for obvious reasons!) and share all information with him/her, including your debts (if any).

Overall, ‘Sell 1 HDB flat, Buy 2 Private Properties’ is good but it’s not for everyone. There is a Chinese saying that goes这么大的头就别戴这么大的帽子” (If you don’t have a big head, don’t wear a big hat). Don’t be greedy (or carried away to another planet by the property agent’s flowery words) and leverage beyond your means.

Even if you can’t buy two private properties, exchanging a used 99-year leasehold flat for a brand new condo (or even an Executive Condominium) with a fresh lease is pretty sweet too, isn’t it? RW

 

Editor’s note: Every week, Reuelwrites dishes out uncensored, practical advice to friends, family members or strangers regarding real estate. Got a question for Reuelwrites? Email it to eugenetayhy@gmail.com.

Consultation: There is no one-advice-fits-all solution. For more in-depth advice, contact Reuelwrites at eugenetayhy@gmail.com or call +65 9833-6450.

Disclaimer: While the author Reuelwrites is a certified real estate agent with Huttons Asia, the above thoughts represents his own and is in no way representative to that of Huttons Asia.