Investment Moats

Rent out HDB in Singapore and lease a house in Johor for lower cost of living

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The cost of living is high in Singapore as attest by most Singaporeans. So what does some enterprising Singaporeans do?

  1. They rent out their HDB flats in Singapore for SGD $2000 – $3000. This amount equates to RM $5000 – $6000
  2. They then rent a 2-3 room condo or apartment in Johor for RM $1000-$1300
  3. The cost of living is lower in Malaysia and thus this arrangement may result in them having less stress at work or going into semi retirement mode

There are certain considerations as well

  1. Everyone is waiting for MRT to Iskandar and Johor to be ready. By then this can be even more advantageous
    1. If you are retired, it is easy for you or your relatives to visit each other
    2. For workers near the North side and East West, they can commute to work easier
  2. I wonder for those complaining about taking 1.5 hour to go home would they be able to adjust to this kind of life
  3. Some Johor folks themselves feel unsafe in their own country. Although I have not heard stories yet, I feel crime will move to areas where there are bountiful opportunities
  4. You need to live in your HDB flat for at lease 5 years to do that
  5. Some people might prefer a simpler way of living with not so much hustling daily
  6. Some might not adjusted to that

Thanks to CK Loh in my Facebook for highlighting this to me.

What do you guys think? Would you favor an arrangement like that? Do you have friends doing that? What would make you transit to this kind of arrangement?

Buying is cheaper than Renting

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It looks like we may see a real bottoming of housing in the US. Marc Faber and Warren Buffett is looking at US housing as inflation hedges.

This article in Slate could be a tell tale sign

As an illustrative example, consider the following from the complex where I live. In the rental portion of the facility, you can grab a 754-square-foot apartment for a minimum of $2,269 per month. In the condo portion, one door down, in a building also completed in 2008, an 868-square-foot apartment is selling for $419,900. That suggests that if you happened to have about $420,000 on hand, you could buy the condo and earn over $27,000 a year renting it out. That’s a yield of more than 6 percent on your investment purely out of rental income. You don’t need to worry about whether the unit will appreciate in price or not over time, just assume that thanks to inflation and population growth, you won’t see a sustained nominal decline in rents. That’s not a risk-free investment, but in the scheme of things it’s a great return on a pretty safe bet. For perspective, consider that Spanish government bonds yields getting up to 6 percent is considered cause for total panic. If you want to invest your $420,000 in U.S. government debt you’ll earn yourself yields that range from 3.13 percent on a 30-year bond to a mind-blowingly low 0.19 percent on a 1-year bond.

[Buy a house today! @Slate]