Singapore 3-bed at S$1.508m and S$7,622 rent — is the reserve enough?

One month without rent may not leave much room for a tenant change. I am reviewing a Singapore 3-bedroom apartment at S$1,508,000, with projected rent of S$7,622 a month and a headline gross yield of about 6.1%.

My calculation uses eleven paid months per year and allows for management, normal upkeep and a significant repair. What worries me is that a vacancy could coincide with cleaning, reletting costs and minor work, while insurance, property tax and building charges still continue. I also need to establish whether S$7,622 is supported by a lease or only an estimate.

Which assumption would you stress first: a longer vacancy, higher turnover costs, insurance or building maintenance? I am less interested in preserving the gross figure than in finding a net return that still works under a realistic bad year.

I’d focus first on tenant turnover rather than one dramatic repair. A vacant period can also bring cleaning, minor works and another round of leasing expenses, so eleven months’ rent may not be as conservative as it looks.

Separate property tax, insurance and any building management charges instead of burying them in “maintenance.” Then test the result with ten months of rent and a higher annual repair allowance. If the deal becomes unattractive under that case, 6.1% gross is doing too much of the sales work.

Is S$7,622 supported by an existing lease or merely an asking-rent estimate? That is the missing fact for me. Also, is this a cash purchase or financed? Interest sensitivity can matter more to net cash flow than fine-tuning the repair reserve.

I partly disagree with treating ten months as the main stress case. It is useful, but a recurring weakness in achievable rent would be worse than an occasional vacancy. I’d compare the S$7,622 assumption with genuinely comparable 3-bed units, including condition and furnishing, then run the model at a lower rent as well as higher turnover.

After that, list every annual cost separately and calculate net yield before financing and cash flow after financing. Those are different decisions, and combining them can make a marginal property look stronger than it is.