Now, assuming that a buyer puts down 25% for this property and takes an 75% bank loan (current max Bank Loan),
-Purchase Price: $1,000,000
-Cash/CPF downpayment: $250,000
-Bank Loan: $750,000
-Buyer Stamp Duty: $24,600
-Legal Fees: $2,500
Total Outlay: $277,100 in Cash and/or CPF. (we will be using only cash for calculation this case study)
Based on 3.5% rental yield, owner would have collected $35,000 per annum in rent. (Purchase Price x 3.5% = Annual Rent Collected)
Rental collected over the 5 years will be used to pay for these expenses:
Average Loan Interest: $1,050/month (Base on 1.7% interest)
Maintenance fees: $250/month
Property Repair costs: $1,000/annum (A more than reasonable figure)
Brokerage Fees: $7,802 including GST (5 years of brokerage fees)
Total Rent Collected Over 5 years: $35,000 x 5 = $175,000
Less Interest Expenses: $59,630 (use a mortgage cal. to derive interest over 60 months)
Less Maintenance Fees: $15,000 ($250/mth x 60 months)
Less Annual Property Repairs: $5,000 ($1,000/year x 5 years)
Less Brokerage Fees: $7,802 (1/2 month fees per year + GST)
Nett Equity/Passive Income = $87,568
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