By Stella Thng
Many of us dream of having a “1+1”, i.e. owning your home in addition to a second property to let for passive income. The key thing about letting your property is, of course, to get as much rental yield as possible. Who should you target: families or singles? Western or Asian expats? Is it always necessary to furnish your unit? Here’s what the experts say.
PRICE IT RIGHT
Correct pricing is the most important factor in ensuring you don’t waste precious months waiting for a tenant willing to pay what you’re asking (which may be out of line with the market). Do check with a few property agents about what apartments in your condo are going for, and what your target market is willing to pay. Gone are the days when expats lived the high life and picked the fanciest apartment possible just because they could simply charge it to their company’s account. These days, many are given a fixed housing allowance; some may even be hired on local terms without the allowance.
“For single professionals, paying slightly over $2,000 a month on a small apartment is the norm these days. Those on a lower budget may rent a room or share an apartment with friends,” says Shernice Gow, marketing director at Century 21 Alliancz Real Estate.
Older expats, who are likely to hold higher positions in companies, tend to have fatter budgets. Some are lucky enough to be on a corporate lease. This stable, lucrative arrangement is what most landlords dream of. Experienced landlord Jimmy Ng, for example, has a two-bedroom unit at The Sail which fetches a decent $7,000 on a corporate lease.
KNOW YOUR TARGET AUDIENCE
Whether you are targeting tenants of a particular professional class or nationality, singles or families, it pays to know what they need and want. “Singaporeans renting a home tend to stay in the heartlands regardless of where they work because they prefer the bigger size and lower prices,” says Sabestian Mak, a property agent with ERA Realty Network. “However, for expats, it’s all about the right location and unit that best matches their needs and budget.”
Families usually prefer a condominium near to the international schools, with family-friendly facilities such as barbecue pits and a pool for the kids. They’re also hungry for space, especially expats who’ve moved here from Dubai and are used to roomy mansions. “No shoebox units for them – they usually want at least three bedrooms,” says Shernice.
The savvy agent also shares an interesting tip: Should you raise the rent, families usually don’t mind forking out a little more to avoid the hassle of scouting around for another apartment and paying for a mover. While a unit in a prime location is always attractive, families don’t mind not being in the heart of the action as long as the project has facilities that suit the family. “In fact, some prefer not to stay too close to the office. Many like areas such as Novena, Balestier, Toa Payoh or even Tiong Bahru – just four or five stops on an MRT line to their workplace in town. “Unlike singles who like staying near pubs or shopping malls, families tend to look for supermarkets and good food nearby,” says Sabestian.
Singles, especially those who travel frequently for work, want a fuss-free arrangement. They come in with just their suitcases and usually require a fully furnished apartment, says Benjamin Heng, associate marketing director at Propnex.
Owners leasing out shoebox units should furnish it fully to attract such busy singles. They like staying near work, which could be in the suburbs near a business park in Changi or Jurong. Single male tenants in particular prize convenience and a nice environment. “They don’t mind paying more, even if the place is small,” says Shernice. Top must-haves for them include being near an MRT station and food outlets since they don’t usually cook. So, it’s even more attractive if there’s a 7-Eleven in the vicinity. “However, singles are more price-sensitive than families. They can move around every year if they spot a more attractive deal.”
Sabestian also notes that some young expats under 35 prefer condos in central areas such as Clarke Quay, Orchard, Newton and Novena. “Although the rent they pay can get them a bigger unit in the suburbs, they don’t mind living in a smaller place if it’s closer to town and within their budget.”
So, before you leap into that million-dollar investment, ask yourself: Where is your property located? Does it have lifestyle facilities, and is it located close to amenities and schools popular with the type of tenant you are targeting? One landlord with a unit in a condo with a large Japanese community even got her agent to co-broke it with Japanese agents, and managed to lease out her apartment to a Japanese expat family within a week for a better-than-average rental.
When all’s said and done, your property’s location and the rental you’re asking for are still the key considerations for most tenants. Before you start targeting tenants, take a good, honest look at your property and what you have to offer.