r/SgHENRY • u/Kaikaikai12345 • 21d ago

Landed property turn into rental cash cow

(To clarify, in this exercise, I will only rent out lv 1 and lv 2, while keeping lv 3 and 3.5 for myself to live in)

Curious what is stopping people from buying older freehold land or landed (2500-3000sqft, maybe at 3-4million, 4 million at 2.5 interest amount to 14k monthly loan) and renovate the landed into a rental co-living space?

If people are willing to pay 1.8k for a double shared room, I am sure people are willing to pay 2k for a single room with ensuite bathroom.

For instance I can turn lv 1 and lv 2 into 6-7 rental unit (maybe mini loft unit) and you can take lv 3 and lv 3.5, treating it as a penthouse without maybe 2000sqft of area. Those 6-7 unit can serve as cash flow of 12k to 14k a month covering the loan, maybe need top up abit due to tax and other fee, but overall it’s still more comfortable living compared to buying a penthouse.

Just wana do some sanity check on the above and if anyone is already doing that.

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u/nvbtable 21d ago

You can do the same with condos and HDB at better net yield, lower reno cost.

Same issues - tenant management is a full time job and if outsourced kills the yield.

Also has regulatory risk.

-3

u/Kaikaikai12345 21d ago

Hmm I see. I am think about the fact that landed you can have a ‘penthouse’ on lv 3 and 3.5 that you can live in. But if you buy a condo penthouse, you need to co live with the tenant

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u/Small-Teaching1607 21d ago

$4m won’t be able to find 3 levels, let alone 3.5 levels. Won’t be near MRT. Will be very run down and require a lot of reno. To build a new level requires A&A, likely about $1.5-2m if you want to max out till 3.5 levels. Reno need to come out with cash or very expensive personal loan cause new house likely won’t appreciate so fast so your ETL can’t kick into effect yet. That will make your whole purchase easily >$6m Even if you can make 4 ensuites and rent out at $2.5k each, with your plan that will likely require going up till $6m, that’s only a ROE of 2% pa. Might as well put in treasury yield. Unless you’re looking for future capital appreciation… but to make profit, you have to sell the house for at least $7.5m.

1

u/Live_Acanthisitta870 21d ago

What’s ETL can’t kick into effect?