Thursday, 2 February 2017

Passive income from renting your apartment

One of the passive incomes that one can have and is achievabled will be from rents. It is quite easy and most people know but didn't want to move forward and do it. Why? Most of the time, I hear people say, "Wait for the price of houses to come down." Well, I can tell you this that the price of houses will come down a bit and then stabilise before moving up again.

A number of cooling measures have put in place by the government to curb the housing prices to shoot through the roof. Overall, the prices will be in a upward trend despite the ups and downs. As long as you can afford the price, I think there is no right time or wrong time to enter (do your due diligence on the pricing and try not to buy at all time high).

Say, you are a Singaporean, maybe single and 35 and above years old. You can purchase a resales housing flat from HDB and stay there for 5 years before renting it out. Let's say you rent it for $2000 a month and move in with your parents. The house price maybe $300K. You will receive $24K per annum and in 10 years' time, you will probably have $240K. Basically, by 12 to 13 years, you will pay off your housing loan. By that time, you will be around 53 years old and enjoying a "free house" plus renting out a room or two to get passive incomes.

Another scenario will be the same single Singaporean can purchase a studio condominium apartment after the MOP of 5 years, you can rent out the HDB and use the rent to pay for the downpayment for the private apartment. Say, you pay off everything by age 60 years old, you can enjoy passive income from the rental of the HDB.

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