If you’re looking to make a solid investment, then real estate is a good way to go as long as you temper your expectations and keep a few things in mind. Being a landlord in Singapore is easier than in other countries since the law tends to favor property owners, rather than tenants. However, there are many ways to run into problems if you don’t do your homework. Here are five essential things to keep in mind as you embark upon your role as a landlord.
- Don’t Expect to Get Rich Quick
Forecasts for the Singaporean real estate market in 2016 were looking somewhat grim as of the beginning of this year, according to Channel News Asia. The good news is that these trends don’t necessarily mean a looming recession, but rather a normalizing of interest rates as the property market levels out after a bubble that burst with the global recession. Recent property news in Singapore report that new projects are being undertaken and properties are still being sold. While there may be problems for the real estate sector, there’s also still plenty of prosperity to be seen.
The bottom line is that you can’t expect to get rich quick or overnight by investing in property.
- When Eviction Is Necessary
According to Singapore Legal Advice, there’s no single way for a landlord to evict a tenant, but you must ensure you do the following:
- Provide multiple attempts to work with the tenant to pay his or her rent within a reasonable amount of time. This not only looks better if you have to go to court, but working out a tenancy issue without getting the law involved will work out better for both landlord and renter in the long run.
- If you must initiate forfeiture, provide a formal demand for the tenant to leave. If this does not work and you are able to peaceably enter, you must apply for a writ of summons to repossess the residence.
- Serve a formal notice outlining the complaint brought against the tenant, compensation demanded, and actions expected from the tenant.
- Apply for a writ of distress under the Singaporean Distress Act, which helps landlords claim arrears of up to 12 months. However, do not delay if you choose to pursue this option.
- Verify the Eligibility of Your Tenants
LivinginSingapore.org advises expats that they need to be legal residents of Singapore, noting that landlords are encouraged and generally verify a tenant’s residency status using online means. This advice is not only useful for potential renters, but also for landlords. It’s easy to find yourself as a landlord in a situation where you seem to have found the perfect tenant, able to pay and ready to sign a lease, but then to find out that legally they’re not allowed to own or even rent in the country because of residency problems.
Another thing to watch for is expired residency issues. While it can be difficult to enter the country as an expat without paperwork, what more common is when people stay on without having permission to maintain residency. Many expats come from all different countries around the world for temporary work assignments, usually lasting from one to several years. While they’re working, obtaining residency isn’t difficult, but becoming a permanent resident is a completely different story. Be careful that you’re renting to tenants who are legally allowed to be Singapore during the duration of the lease.
- Beware Tenants to Try to Sublease
One of the worst things you can run into when you’re a landlord is your tenants trying to sublease the property out that you own. This can happen for a variety of reasons, whether the tenant wants to get out of the lease without penalty and doesn’t want to risk having to go to court if you don’t agree, or simply to make fast cash if the place they’re living suddenly drops in value. In other words, if you lock a tenant into a particular amount of rent per month and then the area the property is in becomes less desirable for some reason, they will want an out. If they can afford it, many tenants are not only looking to pay for a home, but also for locale. Location is important to many people, whether because they want access to entertainment, or simply to be closer to where they work. If for some reason there’s a problem with transportation, such as a highway shutting down due to construction, or a dip in commerce in the area, your tenant may become unhappy and try to rent out the property to someone else. Subleasing is very common, and usually not allowed. As a landlord, it’s up to you to find reliable tenants with good recommendations and a clean track record of previous rental agreements. Otherwise, you don’t know who you’re renting your property to, which is how you run into problems down the line that will only cause headaches. Ensure you also make clear subleasing is not allowed.
Being a landlord is just like any other type of job that requires work and vigilance. You’ll be expected to tend to a property and answer issues that may arise for your tenants, as well as collecting rent and dealing with potential legal issues. However, the more preparation and care you put into place when you agree to take new tenants, the smoother life will be as a landlord. Do your research at every turn, and you’ll be able to reap the benefits of a second income from owned property.