Things To Consider Before Buying A Tenanted Property in Singapore

Singapore is a city known for its assets and property. Best Real Estate Agency Singapore has its value and worth. Many people are attracted to property in Singapore and invest in buying and selling these properties. Before you buy a tenanted property, you should remember the following six things:

1. Inventory List: In the case of a tenanted property, if the seller rents a fully furnished property, then according to the industrial norms, you will have to buy FF&E (Fittings, Furnishings & Equipment). These must include refrigerators, kitchen stoves, washers and dryers, air conditioning systems, etc. Since you have to take them, make sure the tenant has given you all these products in proper and efficient working conditions. There are also cases where tenants may offer semi-furnished or completely unfurnished. So, none of the items from bed to dryer come in your purchase. 

2. Tax Deduction Claims: Before buying, you should look into rental expenses, which are taken as tax deduction claims. These include:

• Internet connections bills.

• Cost of maintenance like pest control, utility bills, etc.

• Rent for furniture or any replacements and fitting. 

It is up to you how you wish to claim for a particular deduction. Like you can claim for 15% of the gross monthly rent as your expenses or for the entire cost. Property prices in Singapore are negotiable and well suited.

      3.  Current Net Rental Yield:  The net rental yield can be calculated by (Annual Rental Income - Recurring Costs)/total cost of property * 100. You need to compare the net rental yield, with other tenanted properties around you.Real estate in Singapore is worth investing in if you are sure about the TA and rental yield for now and the future as well.

      4.  Existing Tenant Agreement: You are ready to buy a house in Singapore, make sure you have read the existing tenant agreement. Since 2018, most of the TAs have a format of the template that is proposed by the Council of Estate Agencies (CEA). TA can vary from tenant to tenant. In some cases, new landlords have to pay for utilities and services that a tenant is supposed to pay; due to the lack of information, they have for the house and missing points in TA. Even CEA does not impose its template TA. 

      5.  Unstated Arrangements(if any): Some tenants do not follow the TA up to the mark. So, it is better you clear cut the violations that the tenant is not going to accept. These may include:

• Taming pets

• Smoking inside the house

• To have a large number of people who are not tenants.

• Any inventory not present in TA. 

Also, check out for late rent fees, security deposits, or money owned by previous landlords. Usually, the security deposit is equivalent to one month’s payment for one year lease. Also, make sure to see if the security deposit is transferred to your account before the deal is closed.

      6.  Tenant’s Intention At the End of the Lease: Before you let them make sure to find what your tenant is expecting from your property. Are they willing to stay here for a year-long period or beyond? Are they here for a short period of six months or so? In such a case, you need to compare between similar tenanted properties because such short period spans are not cost-effective or cost generating. If your customer wishes to stay till the lease and leave just after, you should know this thing already. If you are only interested in investment and keep earning by getting from rentals, you have to make sure for your customers that they look to renew their lease for another year or so.

Wrapping Up

If you are looking for a tenanted property purchase in Singapore, these are the important points you should keep in mind for ensuring safe and the best deals. It is also recommended, you should read the TA carefully because that is the most necessary piece of information that will help you negotiate and prevent any misunderstanding. If you are interested to buy a house in singapore contact the best custom homes developer.