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
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