Renting vs Buying Properties
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Is renting a place (room/ private property/ whole HDB flat) worth it, compared to buying a flat?
Your comments, pls..
(PS: I did some calculations of my own the other day, but it's rather lengthy, so i'll post my comments later.) -
U see u rent wat kind of property la...Originally posted by k4korny:Is renting a place (room/ private property/ whole HDB flat) worth it, compared to buying a flat?
Your comments, pls..
(PS: I did some calculations of my own the other day, but it's rather lengthy, so i'll post my comments later.)
multiply up to ten yrs see how much it is lor...
1st, u dun have to worry about property tax...
dun have to worry about losing money when u sell...
dun like the location? change lor...
if u rent condo... better...
coz condo like 99 yrs sure lose money when u sell. and Facility all there. -
hdb.. i'm not sure of all the stuff u hav to pay for.. those insurance etc.. but i am sure of one thing. rent is about 1k for a 4-5 room place.. excluding utilities n telephone.. the mthly payback to hdb or the bank is about 500 - 800 i tink..
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relative to cost of rental/loan payments .... property tax is relative insignificant.Originally posted by mach10:U see u rent wat kind of property la...
multiply up to ten yrs see how much it is lor...
1st, u dun have to worry about property tax...
dun have to worry about losing money when u sell...
dun like the location? change lor...
if u rent condo... better...
coz condo like 99 yrs sure lose money when u sell. and Facility all there. -
renting is actually cheaper than buying a property.. esp for private property. coz supply is greater than demand, owners are willing to lower the rental these days. it is possible to find rental for 4 room condo for less than $1500 these days. few yrs back, my family rented a 3 room condo for $1500 at the highest floor in highview and we only rented for 6 months. that time is when the property mkt was declining.
but i guess the thing is ppl feel a sense of accomplishment and security if they own the house even if they have to play thousands every month for the mortgage payment. I think it depends alot on your financial situation, what you intend to do and stuff.
im thinking like during good mkt times sell house, then go rent. and when the property value drop, go n buy. but it's hard to time the mkt. plus watever profit u made from the sale during good times, my be eaten away by the rental. so it's not an easy game -
I've heard a lot about renting being a better solution to buying, but I'm not really convinced. I was thinking on a long term basis..
say, there is a 4-rm HDB apartment. Mr A wants to buy it, Mr B wants to rent it.
Mr A buys it at 300k plus 10k renovation. Pay 20% downpayment, and gets a bank loan at abt 5% interest over 25 years. The downpayment and reno will be spread over the loan period. Means he has to pay abt (liabilities) -> 13k per year.
Mr B rents it at 1.1k per month (expenses) -> Pays 13.2k per year
Both have to pay utilities anyway, so that is out of the question. In any unfortunate downturn of economy, both will be sacked from their jobs and evicted from their houses anyway.. so that's out oso.
The thing is, after the 25yr Loan period.:
- Mr A owns the flat,
- while Mr B has nothing, has to continue paying rents, and constantly worry about being evicted by the land lord in the meantime.
Since you are annually spending the same amt, if you intend to live in it for a long time, how is renting a house better than buying? Or have I left out some hidden cost?
(My analysis may be wrong.. please feel free to comment
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I prefer investing in Suntec Reit or MLT.
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oi! not toking about Reit here lah!Originally posted by shade343:I prefer investing in Suntec Reit or MLT. 
will create a separate thread on REITs later when have time..
Anyway, I just created this forum on investments.. hope u drop back often leh! -
Originally posted by k4korny:oi! not toking about Reit here lah!
will create a separate thread on REITs later when have time..
Anyway, I just created this forum on investments.. hope u drop back often leh! Even My lecturers advised me against investing in properties. Say to buy and then rent out and this period is very risky...unless its commercial space or you manage to find an ang moh that can pay you good money. -
you have answered you own question.Originally posted by k4korny:I've heard a lot about renting being a better solution to buying, but I'm not really convinced. I was thinking on a long term basis..
say, there is a 4-rm HDB apartment. Mr A wants to buy it, Mr B wants to rent it.
Mr A buys it at 300k plus 10k renovation. Pay 20% downpayment, and gets a bank loan at abt 5% interest over 25 years. The downpayment and reno will be spread over the loan period. Means he has to pay abt (liabilities) -> 13k per year.
Mr B rents it at 1.1k per month (expenses) -> Pays 13.2k per year
Both have to pay utilities anyway, so that is out of the question. In any unfortunate downturn of economy, both will be sacked from their jobs and evicted from their houses anyway.. so that's out oso.
The thing is, after the 25yr Loan period.:
- Mr A owns the flat,
- while Mr B has nothing, has to continue paying rents, and constantly worry about being evicted by the land lord in the meantime.
Since you are annually spending the same amt, if you intend to live in it for a long time, how is renting a house better than buying? Or have I left out some hidden cost?
(My analysis may be wrong.. please feel free to comment )
rental is an outlay, you are paying for something that is not yours.
whereas for purchase, you spend the money, but the property belongs to you. -
The thing is I have quite a few friends who are renting houses leh. (some renting rooms in condo at prices where you can rent the whole flat somemore.)Originally posted by TehJarVu:you have answered you own question.
rental is an outlay, you are paying for something that is not yours.
whereas for purchase, you spend the money, but the property belongs to you.
for some reason or other, they are convinced that they have a good deal. Anyone care to enlighten? -
They are either too poor to buy one or they are single....Originally posted by k4korny:The thing is I have quite a few friends who are renting houses leh. (some renting rooms in condo at prices where you can rent the whole flat somemore.)
for some reason or other, they are convinced that they have a good deal. Anyone care to enlighten? -
Hello...
I agree that renting is not owning. This has many implications.
If we talk about this point, we can talk about the long term/ short term financial effects, the psychology (some people don't like to own, but move about, vice versa), etc.
For me I look at the opportunity cost, financially. In Singapore, ownership needs Down Payment. Usually not less than tens of thousands, and can be much more. If this money can be put to work elsewhere, this means u have incurred an opportunity cost.
If this opportunity cost is bigger than the actual benefits of ownership (financial or otherwise, because ur opportunity cost also has non-financial implications), then renting is better. And vice versa.
The thing is, everyone's opportunity cost is 'different'. If u have more opportunities, ur cost is bigger.
For example, let's say ur Down Payment is 60k. If u have an opportunity to invest with a modest 20% annual return, if u pay 60k for Down Payment:
- After 1 year u would have forgone 12k. (72k-60k)
- 2 years, 26.4k (86.4k-60k)
- 3 yrs, 43.7k
- 4 yrs, 64.4k
If u have an opportunity to invest with 100% return, ur opportunity cost:
- 1 year, 60k
- 2 yrs, 180k
- 3 yrs, 420k
- 4 yrs, 900k
More opportunities will cost u more.
If u have the opportunity to invest in deposits and savings only, ur cost is much lower.
People think about the financials and calculate, but they shouldn't forget that opportunity cost is a real cost and should be included in their calculations too. -
Wah, steady lah, kayu.........k4korny........I never knew of this thread until today. And you are the mod ah? Wah, pei fu, pei fu. Impressed, impressed!!! Okay, now I will come and kaypoh a bit.
Errr....renting vs buying ah. Is it for primary residence? If primary, then of course buy lah.
Renting is only for.....1) not enough down payment or can't afford mortgage; 2) not sure where to buy, so rent first and then scout for permanent residence; 3) temporary accommodation, like awaiting to emigrate or awaiting closing of your purchase.
Rent for sure is money down the drain. In my whole life, I have only rented twice and for a year each time. First was we bought a newly built home and waiting for closing. The second time was because we didn't know what was our next step/move. -
Investment is a double edge sword and I think opportunity cost also depends on your appetite for risk. E.,g. the higher the return the higher the risk, which also mean higher opportunity cost.Originally posted by Li Ka Shing:Hello...
I agree that renting is not owning. This has many implications.
If we talk about this point, we can talk about the long term/ short term financial effects, the psychology (some people don't like to own, but move about, vice versa), etc.
For me I look at the opportunity cost, financially. In Singapore, ownership needs Down Payment. Usually not less than tens of thousands, and can be much more. If this money can be put to work elsewhere, this means u have incurred an opportunity cost.
If this opportunity cost is bigger than the actual benefits of ownership (financial or otherwise, because ur opportunity cost also has non-financial implications), then renting is better. And vice versa.
The thing is, everyone's opportunity cost is 'different'. If u have more opportunities, ur cost is bigger.
For example, let's say ur Down Payment is 60k. If u have an opportunity to invest with a modest 20% annual return, if u pay 60k for Down Payment:
- After 1 year u would have forgone 12k. (72k-60k)
- 2 years, 26.4k (86.4k-60k)
- 3 yrs, 43.7k
- 4 yrs, 64.4k
If u have an opportunity to invest with 100% return, ur opportunity cost:
- 1 year, 60k
- 2 yrs, 180k
- 3 yrs, 420k
- 4 yrs, 900k
More opportunities will cost u more.
If u have the opportunity to invest in deposits and savings only, ur cost is much lower.
People think about the financials and calculate, but they shouldn't forget that opportunity cost is a real cost and should be included in their calculations too.
At the moment, I think it is hard to find any low risk investment that will give you 20% to 100% returns. Yes, investing in stocks and equities you can get this kinda of return, but for 4 years in a row, I am not sure. -
u forgot about insurance, n town council stuff n the tv licenseOriginally posted by k4korny:I've heard a lot about renting being a better solution to buying, but I'm not really convinced. I was thinking on a long term basis..
say, there is a 4-rm HDB apartment. Mr A wants to buy it, Mr B wants to rent it.
Mr A buys it at 300k plus 10k renovation. Pay 20% downpayment, and gets a bank loan at abt 5% interest over 25 years. The downpayment and reno will be spread over the loan period. Means he has to pay abt (liabilities) -> 13k per year.
Mr B rents it at 1.1k per month (expenses) -> Pays 13.2k per year
Both have to pay utilities anyway, so that is out of the question. In any unfortunate downturn of economy, both will be sacked from their jobs and evicted from their houses anyway.. so that's out oso.
The thing is, after the 25yr Loan period.:
- Mr A owns the flat,
- while Mr B has nothing, has to continue paying rents, and constantly worry about being evicted by the land lord in the meantime.
Since you are annually spending the same amt, if you intend to live in it for a long time, how is renting a house better than buying? Or have I left out some hidden cost?
(My analysis may be wrong.. please feel free to comment ) -
cannot rent a place using CPF ...... but can buy/service using CPFOriginally posted by k4korny:Is renting a place (room/ private property/ whole HDB flat) worth it, compared to buying a flat?
Your comments, pls..
(PS: I did some calculations of my own the other day, but it's rather lengthy, so i'll post my comments later.)
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I think over time you will have to replace furniture and do some reno. This might be the hidden cost, which you can avoid if you rent a place.Originally posted by shinta:u forgot about insurance, n town council stuff n the tv license -
cos this is supposed to be covered by the flat owner.. unless... the rent an unfurnished flat to u..Originally posted by Gazelle:I think over time you will have to replace furniture and do some reno. This might be the hidden cost, which you can avoid if you rent a place.