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Last updated: 09 Aug 2001
|Case study for associates of asiahomes
supported by Asiahomes Internet.
For $500 more.
2-bedroom, 710 sq. ft Trellis Towers. Brand new. Less than 10-min walk to the Toa Payoh subway and 3 stops to downtown. Full condo facilities and other attractions like Karaoke room. Marketing for 8 weeks from April to June, 2000 including:
Open house on Saturday & Sunday 2-5 p.m., twice a week Straits Times Advertisements*, 24-hour per day internet classifieds at http://www.asiahomes.com and other sites, full agency commission payable to brokers, viewing any time of the day, flyers in every unit in the Trellis Towers Condo.
Result: 21 viewing from expats and agents.
May 4, 2000. One offer from an agent at $1,800 rent with no living set, dining set, beds and fridge. Taiwanese family. No closing as Landlord's wife wanted $2,000. The agent reported that the Taiwanese family rented a higher floor at $1,500.
Jun 2, 2000. Internet surfer phoned asiahomes.com from Hong Kong looking for a studio for 6 months. I convinced him the above mentioned Trellis Towers unit at $2,300 with furnishing allowance. The Landlord and his wife were present at 8.30 p.m. to discuss further.
The prospect said there was a $1,800 offer from an Owner of a Trellis Towers studio and this 2-bedroom was not much bigger in size. He wanted a furnishing allowance of $5,000 for the beds, living and dining sets while the Landlord offered $2,800. He wanted utilities to be paid by the Landlord. I suggested a cap of $100 instead of $200 per month. The Landlord wanted him to pay the television licence fees pro-rated.
The Landlady was unhappy about the demands. Long discussions with me trying to convince them that a bird in the hand is worth two in the bush. I suggested $4,000 but she was willing to give $3,500.
"I'll think about it," said the Australian. That means "no deal".
Jun 3, 2000. Brought the Australian couple to view a United Engineers' Square Condo. 710 sq. ft asking $3,000 fully furnished. It also has a 2nd room to be used as a study. The kitchen is open making the unit look bigger. The washing machine cum dryer was sited in the kitchen. The Landlord was silver haired and therefore had seen the world of frightening ups and downs in the investment property market. The Trellis Towers Owners were first-time Landlords.
Pastel-coloured day and night curtains. King-sized divan beds with 2 cane chairs and 2 bedside table. The master bedroom of this UE Square condo could accommodate all these, unlike the Trellis Towers Unit which would be cramped with one bed and one bedside table. The UE Square's master bathroom does not have a shower stall and looks bigger. The master bedroom has a wooden folding door to provide privacy from visitors outside and it looks bigger when the folding door is folded.
The living cum dining area is equally small. The Landlord bought a 2-seater fabric sofa, 2 bar stools, a white laminated dining table which can be folded for 2 dinners or opened to accommodate 4 people. The selling point was Ikea furniture which appealed to this Australian couple. He was not agreeable to a 6-month lease but did not mind a one-year lease. He would pay the television licence fees.
"Just go to Ikea and send me the bill," he said cheerfully when the prospects asked for another 2 cane chairs and a futon or sofa bed for the study room. The Trellis Towers had said that Ikea's furniture is more expensive than what is available on the market.
The prospects felt good. There was no objection to the $2,900 rent but the Employer would have to be consulted as regards a company lease. There was no closing too. I would have to show more apartments but there was a hope of closing and this is what kept the rental realtors going.
Conclusion: $500 more was what was needed for the Landlord of the Trellis Towers to get a Tenant and get paid at least $2,100 per month commencing the next day. For 6 months' rent, the income will be $12,600, more than sufficient to cover the purchase of the furniture. He knew that the market was not good for suburban condos, but there is the wife's feelings to be considered and the wife was willing to up the furnishing allowance from $2,800 to $3,500 but not a dollar more.
We have to wait for another prospect. Obviously the internet surfer was good, real good at using the information provided by the Internet. He was really good at getting the best deal in a market where there are more suburban condos than there are tenants. There are more of such expats. Sentimental feelings continue to plaque more first-time Landlords who have comfortable incomes as they don't get what they target.
The first rule of a property investment. Get the unit rented from day 1 if possible and get the other people to pay your mortgage. Be investment-minded. Nobody teaches you that in the University or College. You are competent in your profession and will have no time to monitor the latest financial situation of the real estate world. Nobody can teach you the real world of the economics and to tell you that the banker is the ultimate winner in this property investment game.
Associates to note:
* Advertisements paid by the Landlord. As at June 4, 2001, generally it is not worth the time and money to represent the Landlord of condos in the suburban areas and renting around $2,000 owing to very poor response and the longer time to get the units rented out at the higher price the Landlord usually expects.
For more Information on FREE house-hunting for expats relocating to Singapore, email Judy Quek, tel: +65 9668 6468.
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