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Saturday, 15 January 2011

To Rent or Buy Property?

First of all, I will not talk about the rule of thumb used by economist: if the home price is 15 times higher than the annual rent for a similar property, it is better to rent.

Nor will I talk about financial worksheets of formulas and ratios used by accountants to determine whether it’s better to lease or buy a property.

No, I won’t mention them. (Smile)

What I will do is to share the emotional struggles and questions I’ve gone through to determine whether it’s better to rent or buy. 

(Here I am not talking about hardship cases where renting is the only option.  I’m talking about choices – when we can afford both rent and buy options.)


Renting is like “living-in-sin” or co-habiting with a partner. 

It makes sense when psychologically, we fear committing to a banking relation by committing to a 20 to 30 years loan.  No hand-cuffs for us!  

And at the back of our minds, we fear this song may come true: “Yes it’s sad to belong to someone when the right one comes along”. 

Yup, how many times have we bought a “tock gong” (gangbuster) product – only to be frustrated that a better and newer model is available 6 months down the road?

Yes, renting makes a whole lot of sense when after each lease agreement; you want to switch to a fresh and young place all the time.  Yes, we all like to have condo mambo no. 5! 

We rejoice in the unbearable lightness of being (now that’s a contradiction!).

As for the downside, renters have to bear with lots of well-meaning advice from relatives and friends – especially during the festive seasons when we only see them once a year.  “Ah Boy, you must buy a place and commit.  Cannot like that, you not getting younger you know!?  Renting has no security.”

Also, there could be regrets when the rental property you like very much is sold to a new buyer.  When you plead with the previous owner to sell it to you instead, the slap in the face reply is: “If you liked it, you should’ve put a ring on it.”


Ah!  Buying your own place for the first time is full of anticipation and trepidation….. Lots of self-doubts and cold-feet moments before we muster up the courage to sign on the dotted line.  Yes, this is the property! (We hope…)

Buying is like a marriage.

For some, it’s love at first sight.  You see, you like, you buy!  For some, it’s multiple rounds of property searching (you are the client from hell to property agents!).  And some were formerly renters – having gone through a soul searching and heart wrenching transformation to converts of commitment.

To us, it’s more than bricks and mortars.  It’s home.  No matter what slings and arrows we suffer outside, when we return home, it’s where we find solace and comfort.  And it does not matter whether it’s a palatial bungalow, a shoe-box studio or a HDB (subsidized housing); it’s still our “castle”.

And having a place we can call our own sends a powerful message to potential partners we would like to share our homes with.  This signal of “marriage potential” is one of the most powerful pheromones we send to the opposite sex.  No?

Renters tend to use flashy cars as pheromones to attract sleepovers at their place.  Different strokes for different folks!

Buying a property is the first step to growing roots, then developing strong branches where you bear the most beautiful flowers and bountiful fruits for the next generation to enjoy.  “I, me, and myself” fades into my family.

However, it’s not always a bed of roses.  The biggest downside to buying a place of your own is when you fight with your partner over it - when it’s time to go our separate ways.  You wonder why has it gone this far; and where has the love gone.  Now you spend your time with vultures in suits over settlements on who gets what….. A place of pride and comfort has become a weapon and symbol of hurt…… To get even……

This is the time you envy your renter friends who have a much easier exit clause: “Just leave the keys on the table when you leave.”  Ouch!

Decision time

“What should I do?” you asked.  Eh…. You are asking a single person who has bought a 3 room HDB.  I’ve told you in my previous “Term or Whole-life?” posting that I am a confused guy….. I should be asking you instead!


  1. It's best to buy the property. When you rent it's like you are putting your money in a coin bank with an open bottom, your money does not get you anything.

  2. True. All things being equal, owning something that appreciates with inflation makes a lot of sense.

    But renting has it's place too. Especially if we are not ready to "grow roots" yet.

    Thanks for visiting from New York! Wow! Hamptons is really upmarket and nice!

  3. Hmmm, interest rates so low.
    Buy if its for own stay.
    The money u use to pay rent maybe more than the money u use to pay for the mortgage loan.
    Will I ever rent? No lah, unless I want to keep a mistress or I have a better reason to rent.

  4. Hi financialray,

    I would rent if the monthly rent is lower than the monthly mortgage payment of a 30 years loan ;)

    In the early 80s, bank interest rates did go to double-digits.

    But you are right, it makes more sense to buy with low interst rates - that's what everyone thinks - hence the high and toppish Singapore property prices!

  5. This is an interesting article. Im not sure how I came across a real estate article, but interesting read.

  6. Thanks and a great Singapore New Year greetings back at you Chris!

    Interesting to see a Hedge Fund Titan all the way from the States :)

  7. Houses to rent in Headingley

    I would lease if the per month lease is reduced than the per month transaction of a 30 years loan .In the beginning 80s, financial institution costs did go to double-digits.
    But you are right, it should you choose to buy with low interst costs - that's what everyone believes - hence the high and toppish Singapore real estate asset prices.

    1. Jack,

      Thanks for dropping by!

      I got lucky as when I bought my flat, it was 2004 (after Iraq war and SARS) before the run up of our property prices.

      The monthly cash flow out is $500. Today $500 is enough to rent a room only ;)

  8. the sad truth is there is no such thing as buying for most singaporeans. you are renting it for 99 years. that is why you get a lease agreement from hdb and not a title deed. no legacy for your descendants beyond 3 generations.

    1. Hello Anon 2:31

      We have 999 year leases and freehold properties - we just have to pay for it if you want to provide a legacy ;)

      I think we need to make a distinction between public and private properties.

      I am glad and contented we have a good public housing program in Singapore :)

      In some countries, average citizens can only afford to rent or live in slums...

      P.S. If I have descendants that depend on my legacy and can't create their own, I'll probably roll in my grave...


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