Is Renting Out A Condo Worth It (Compared)

In 2023, I rented out my 3-bedroom executive condo for $5,000 to a family tenant for 1 year.

A tip is to be very selective on the tenants and ensure the tenant agreement covers the minimum damage covered by the tenant, before cost-sharing damaged items.

Whether renting out a condo is worth it depends on various factors, including your financial goals, local real estate market conditions, and personal circumstances. Here are some considerations to help you make an informed decision:

1. Upfront Cost to Make it Rentable: One question was whether you should spend money to even furnish your place as tenants might not want your bed (We had a tenant request us to remove the new bed). Nevertheless, my real estate agent was very assuring and even showed simple renovation at his place, which led us to decide to furnish the place. It would also find "ready" tenants who need it fast and reduce time spent entertaining people just viewing. We thought in the shoes of a foreigner who tends to rent a unit near the International School and it was apparent that few fully furnished units looked "new". We did some maths and added the furniture (beds, sofa, dining table) as it could also help in the selling price when we wish to sell after the Seller Stamp Duty (in Singapore) is over.

2. Rental Market Conditions: The worst thing to happen is to rent out your condo below price. We had to stay firm in rejecting offers below our expected rental price. The only way is to see competition and ensure your property remains at a good value (remember it need not be the cheapest as there are many condos).

3. Property Management: Consider whether you have the time and ability to manage the property effectively. If you live far away or have a busy schedule, hiring a property management company might be necessary, which will impact your overall profit. I did not use it since there weren't any property management services suitable for us. With many horror stories of other condo landlords, we were very selective about the tenants.

4. Financial Considerations: Calculate the potential rental income against your mortgage, property taxes, insurance, maintenance costs, and homeowner fees. Ensure the rental income covers these expenses and leaves you with a positive cash flow.

5. Market Appreciation: Consider the potential for property value appreciation in your area. While renting out the condo, you may also benefit from the property appreciating over time.

6. Legal and Tax Implications: Be aware of local landlord-tenant laws and tax implications. Some areas have strict regulations governing rental properties like the number of tenants and checking the tenant profiles. You must comply with them to avoid legal issues. Additionally, rental income is generally taxable, so factor in the tax implications.

7. Risk Tolerance: Real estate investments come with risks, including property damage, market fluctuations, and tenant issues. Assess your risk tolerance and ability to handle unexpected expenses or vacancies.

8. Long-Term vs. Short-Term Goals: Consider whether you are looking for a long-term investment or a short-term income stream. Your decision may vary based on your financial goals and investment strategy.

9. Opportunity Cost: Evaluate whether renting out your condo is the best use of your resources compared to other investment options. Consider the potential returns and risks of alternative investments.

As someone who rented a unit, I would only rent out a condo when you planned to sell it away eventually to avoid heart pain on damages to your beloved home. as many things can be spoiled during rental, like a leaking shower hose, leaking air con, spoiled stove, tile damaged, and paint peeling or damaged. 

If you're intrigued by the prospect of property ownership, especially in Singapore, and want to explore potential pitfalls to avoid when buying subsale condos, delve into this insightful article on our experience in buying a subsale condo in Singapore.