Rental Respite

As some of you may know, I started renting out one room to a Malaysian worker some time back and had reflected on that experience previously. It seems like I’m not the only one, as shown from a Straits Times article published today.

I have also derived some economies of scale by maxing out the number of tenants I have to 3, which brings me to the limit of 6 as imposed by HDB. I consider this whole episode to be an intersection of luck and opportunity, as I was never actively looking out for tenants. Even more grateful is the fact that the tenants have all been really easy thus far, merely using the room as a place for a good night’s sleep and little much else.

All in, I will be getting $1,000 in rental income for the foreseeable months to come. Put one way, it will still take me at least half a year to make up for the “loss in income” since there are barely any bonuses to talk about this year. I guess one should just be fortunate that my wife and I are still holding on to jobs, though actually we have been much busier than pre-COVID times!

Admittedly, I don’t have a good sense of the market rate, which this strip just provided. So for $1,000/month, compared to the market rate (which seems to be way above $1,000), I’m providing some charity since my rate is considerably lower. But I guess that’s fine because I’m not looking to make a killing from this whole endeavour. It might mean that I should consider raising the rate after the contract is up, but then who knows if it is still possible to find tenants then. Having what I have now might well be better than some hypothetical potential that may not materialise.

Put another way, since my refinancing to pay a fixed 1.5% monthly mortgage of $1,627, that means that my net outflow is just $627. Of course, this cannot compare to those who have own more than one property and rent out the whole property, because the calculus involves making sure you don’t have to fork out additional cash, i.e. rent > mortgage + all other costs. But because I’m still staying in the same place, in some sense, this translate to a daily rate of $20 for our own place. Quite a steal if you ask me!

Of course, like everybody else, we hope that this COVID-19 situation will come and go. But I guess we have found ourselves in a nice position where we are ok either ways. Good if the borders are open and we can find ourselves going back to life as normal, whatever ‘normal’ is supposed to mean. Our tenants will then likely leave and we have to start ‘paying’ for our privacy once again. But if this are to stay like this in even in the medium-to-long term, we are in a good (not great, of course) place of taking advantage of this opportunity to earn a little bit of extra, with almost no additional cost.

Just a couple of months’ back, when my wife was contemplating a job opportunity overseas and bringing our daughter along while I continued to remain in Singapore, we were talking about renting our place out since there would be additional space. And this was all before the talk about renting out our room to Malaysian workers. That deal didn’t fall through, but funny how it all seemed to work out in the end.

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