A little insight for bloggers who want to achieve crazy traffic – the best performing posts on my blog are actually how-to guides (convert DBS points to KrisFlyer miles, $100 business class hack etc) and informational posts (STI ETF dividends, CPF basic healthcare sum etc).
Always happy to value-add so here is another guide on how I unwittingly became a landlord. I basically had to wing it as I went along, as it was not something that I have considered previously. Good experience, obviously, if we ever had to rent out the entire HDB apartment and live overseas in future.
Some of my previous blog posts have touched on how I’m planning to help my parents deal with retirement primarily in the financial aspect. Over the last one or two months, I have had to put in a little bit of time and effort into learning how to be a landlord.
Turns out that my mum decided to rent out the en-suite bedroom i.e. room with bathroom attached at my parents’ place. It has been quite a few years since my brother and I have moved out, and our bedrooms have since been converted to a guest room and a storage room. Renting out the en-suite bedroom is a good idea in the sense that the tenants prefer to keep to themselves, then having their own bathroom would be a major plus point for privacy.
Anyway, the plan is now to monetize the HDB flat partially by renting it out. My parents aren’t getting any younger, so I have to help them out with the process.
My goals are simple : anticipate and prevent problems, make easy money, and maintain a harmonious relationship with tenants.
The first question that I was curious about – what is the lease start date, and therefore how old is the HDB flat? This HDB link would let me check by simply entering the address. Turns out there was more than 70+ years remaining. The apartment should be in decent condition under the hood and I do not anticipate any skeletons in the closet.
Getting The Place Ready
To get a better price and make sure that the room will be rented out easily, it was re-painted (actually, the paint job was for the whole house for our own benefit haha). The apartment was on the third floor (less natural light) so a lighter pastel colour was chosen to make the place look brighter and more welcoming. Plus, the air-conditioners were serviced.
We provided furniture which were actually old pieces used by my brother and myself – a wardrobe, full-height cupboard, huge study table plus a queen-sized bed.
Because the en-suite bathroom is a key selling point that helps to secure a higher rental, the attached bathroom accessories were updated/repaired to ensure no rusting/leaking etc.
Keys were prepared and checked. Made sure that all rooms could be locked.
Purchased a Mi Home Security Camera 360° that has a wide-angle lens with rotatable camera. Able to record on low-light and only when motion is detected. It IS good – a fly flew around for a bit in the dark past midnight and it managed to capture the video clip in an otherwise peaceful night. What I did was that I placed the camera at the TV console where it had unobstructed view on the main door, kitchen entrance and all rooms’ entrances – this will monitor all movements in the living area but not intrude into anyone’s privacy.
Most importantly, my mobile app can tap into the camera and check on my parents when necessary. While the tenants (young Malaysian couple) gave off a good vibe, one can never be too careful and having a security camera would certainly serve as an obvious reminder and deterrence.
My mum decided to let a property agent do all the tough work for her, which was a great choice. I had neither the time nor expertise to assist much with the process. He helped to source for potential/applicable tenants, arranged with my mum the dates for visits and liaised with tenants to settle the necessary documentation plus prepare the contract.
The prep work we did in order to rent out the newly refurbished room paid off. The first tenants (a couple) who physically viewed the place agreed with the rental price we’re asking for, and confirmed on the spot, during the visit itself. The deposit was paid via bank-transfer on the same day.
Agent’s Fee : Half-Month Rental
For his hard work, the agent will pocket half a month of rental for a 12-month contract. If you Google around, it would appear to be the ‘market rate’.
One month rental to be paid to secure the place, before moving in. For us, this was about two weeks prior to the start of the tenancy.
Recurring Rental Payments
One month rental to be paid on the date of moving in. Subsequent payment dates can be negotiated between the landlord and tenant. The contract will also be signed on this date – one copy each for the tenant and landlord.
We requested for payments to be strictly via bank transfers. It is very helpful that electronic bank transfers can be easily executed these days. Transactions can be screen-captured and sent via WhatsApp. This serves as proof of payments and we can avoid any disputes. No cash equals lower risk.
Not a must, but it seems to be common practice to list down the major items that were agreed upon to prevent any disputes. This include the use of water + washer, electricity + fridge (tenants are free to use a section of it), air-con (12-hours per day 9pm-9am), kitchen for basic cooking (instant noodles), WIFI etc. Other terms that could be discussed include whether or not to allow stuff to be attached to walls (nail/glue) and cleanliness of the room.
Specific requirements that we requested were no smoking, no cooking in the room, no pets and no bringing of guests except one-off situations with relatives.
Other standard terms include 1-month notice for both parties if the landlord/tenant arrangement is to be terminated (yes, despite it being a one-year contract). This is because a variety of foreseen situations can possibly happen e.g. sale of apartment etc. There are no penalties involved.
With the increasing number of fires being reported due to the use of PMDs, it might be a prudent move to ask specifically about the use of it and/or how and when it can be charged.
The agent informed us to log on to HDB website using SingPass and submit a request to rent out the room. A $10 fee was paid online and the process was completed in minutes. The process completed easily with his guidance. I’m practically IT-support for my parents nowadays, so I helped with these procedures.
It is human nature to dwell on the negative aspects of having tenants. I’ll be honest in saying that I’m obviously concerned with regards to safety, security and privacy etc.
The flip side of things is that if all goes well, I’m actually happy to have someone else living in the same apartment. My parents aren’t young anymore. While they are more than capable of taking care of themselves and fairly healthy/mobile at this point in time, it is nice to have help nearby should an incident happen.
I guess everything I have written pretty much covered the basics of being a landlord in Singapore. I can foresee renting out of HDB room(s) being a viable means of securing some retirement income for the elderly, especially when there is an entire generation of Singaporeans who have heeded the government’s call for home ownership but ended up in a cash-poor situation.
Combining (1) allowances from children, (2) rental income as well as (3) CPF payouts – they are now in a comfortable position of positive cash-flow and still being able to leave the final option available but untapped : that is the (4) HDB Lease Buyback Scheme (see start of blog post regarding the age of apartment).
For me, it is important for them to feel assured with a sense of security that monetarily, they are taken care of with minimal worries.
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Hello! I’m Kevin, Turtle Investor
At the age of 30, I am the personal finance blogger who laid claim to a negative net worth of minus $25,755.
Seven years later in 2019, I hit CPF Full Retirement Sum (FRS) of $176,000 without making a single cent of CPF top-up. More tidbits about myself here if you’re curious. My blueprint for financial independence can help give you a headstart in your own FIRE journey.
I am married to a lovely wife and that means dual income with no kids. In my free time, I chase miles so that we can fly in business class. My hobby is making pocket change off this blog and sharing everything I know with you!
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