Renting5 Condos With The Best Rental Yield And Lowest Maintenance Fees
- by Ryan J Ong
- July 28, 2020
- 6 min read
You’ve bought your first condo unit for rental income, and all the numbers seem in order – you have your tenant, they’re paying the utilities, and the property taxes are more than covered.
Then three months in, the maintenance bill arrives, and you feel that cold wind take your breath away. In your case, it’s well over $1,200 every quarter; and you suddenly realise you’re making much less money than expected.
Condo maintenance bills are a whole different issue compared to HDB conservancy fees, and it’s one of the first big shockers you face if you’ve just upgraded, or never bought a private property before.
So for first-time investors or aspiring landlords, we’ve hunted down some condos that have shown top rental yields, as well as the lower-end of maintenance fees.
A note on how we derived the numbers
For the following properties, we are showing the gross rental yield. This is based on the past 12 months of rental income (as available), divided by the average price of a unit in the development*. This is done on a per-square-foot basis.
The picks were based on a combination of above-average yield (the typical residential property has a yield of around three per cent), with the lowest-end for maintenance fees.
*The average price is based on available data lodged with URA.
1. People’s Park Complex
1 Park Road (District 1)
Average price: $794 psf
Average rent: $3.15 psf
Average rental yield: Approx. 4.76%
Average maintenance: $100 excluding parking (three-bedroom)
People’s Park Complex is one of the oldest developments in Singapore, dating back to 1968; it’s almost halfway through it’s 99-year lease at the time of writing.
People’s Park Complex is a difficult property investment call. The development is plagued with management issues: in 2017, for instance, poor lift maintenance results in waits of up to one hour for residents to get to their units. Illegal subletting, including issues of prostitution, have also occurred here; and attempts to rectify the issues in 2019 resulted in draconian measures that included “black marking” visitors who stayed beyond two hours.
Nonetheless, People’s Park Complex is two minutes from the Chinatown MRT station, is in a central region, and can have maintenance fees of just $100 for even three-room units*. People’s Park Complex is also a mixed-use development famous for its food amenities; but the retail portion has not aged well, and consists mainly of travel agents / massage parlours.
Despite its prime location, low cost, and high rental yield, this is not an advisable investment for every landlord; as we’ve shown above, the risk of drama is high.
*Which may explain the state of the lifts.
2. The Hillford
Jalan Jurong Kechil (District 21)
Average price: $1,167 psf
Average rent: $4.75 psf
Average rental yield: Approx. 4.88%
Average maintenance: $200 (one-bedroom)
The Hillford was designed as a retirement development, specifically aimed at independent senior citizens. The Hillford is on a 60-year lease only, and was completed in 2017 (hence the lower price tag, resulting in the high rental yield).
This is a mixed-use development; the location was chosen because of nearby healthcare (e.g. St. Luke’s Hospital and NUH are both nearby). By happy coincidence, it’s also only 11 minutes from the Beauty World MRT station.
This project is not an easy investment decision, as landlords need to weigh the higher rental yield against the much shorter lease – the 60-year lease is likely to impact resale potential (e.g. buyers cannot get bank loans for properties with 30 years or less on the lease).
That said, it has one of the highest rental yields for a residential property to date, with reasonably low maintenance costs.
3. Melville Park
12 Simei Street (District 18)
Average price: $672 psf
Average rent: $2.30 psf
Average rental yield: Approx. 4.1%
Average maintenance: $230 (two-bedroom)
Melville Park was once referred to as “Simei’s Little India”, due to its popularity with the Indian expatriate community. It’s a favourite among landlords because expatriates often recommend Melville Park to colleagues or friends coming to Singapore, setting up a ready group of prospective tenants.
In the past few years, however, Melville Park has also found a new demographic in the form of SUTD students (the SUTD campus is about two kilometres away, and they can take bus number 12 to get to school).
The only issues are the age (it was completed in 1996 and has a 99-year lease), and rather long unsheltered walk to Simei MRT (about one kilometre away, or 12 minutes’ walk).
4. Suites @ Paya Lebar
Upper Paya Lebar Road (District 19)
Average price: $1,406 psf
Average rent: $4.20 psf
Average rental yield: Approx. 3.6%
Average maintenance: $200 (one-bedroom)
Suites @ Paya Lebar can be counted as a small development, numbering just 99 units. It’s about twelve minutes’ walk from Serangoon Nex, which gives it a big prospective tenant pool (Nex is a megamall that serves as the area’s food and retail hub). This is also the only freehold development on this list, hence the slightly higher price point.
However, Suites @ Paya Lebar could face more competition from Forest Woods, once it’s complete in 2021. The newer development is even closer to Nex, and may put some downward pressure on rental rates here.
5. Northoaks EC
20 Woodlands Crescent (District 25)
Average price: $538 psf
Average rent: $1.94 psf
Average rental yield: Approx. 4.3%
Average maintenance: $268 (three-bedroom)
Northoaks is one of the older Executive Condominiums (ECs), which has since been privatised (it was completed in 2000). The rental rates for Northoaks are not high – this development is the cheapest one to rent on this list. Its high rental yield comes down to a simple matter of cost – at $538 psf, it’s hard to find a more competitive price.
$268 per month is also low for the maintenance fee of a three-bedroom unit (you’d pay over $300 in most private condos).
The main issue with this condo is accessibility. It’s about one kilometre away from the Admiralty MRT station, which makes for quite a walk. And apart from the 688 Eating House nearby, the area is sparse in terms of amenities; landlords may have rentability issues, as this condo may not be attractive to tenants who don’t drive / intend to use Private Hire Vehicles all the time.
Remember to factor in your net rental yield, for your specific unit
This article is just to start you looking. Beyond this, you’ll need to know the net rental yield of your unit. This means also accounting for:
- Monthly interest repayments
- Renovation and furnishing
- Property agent fees
- Upkeep and utilities
- Maintenance fees (for which we’ve tried to find the lowest here)
Unfortunately, all of these vary based on your specific unit, so there’s no way for us to give you all the numbers here. You can contact us on Facebook, however, and we can help you work out the figures.
For a more in-depth look at specific properties, and further details on rental yield and other landlord concerns, follow us on Stacked.