Rental Yield & Portfolio Building

Working out real rental yield

Gross yield is simple: annual rent divided by purchase price. A $1.5M unit renting for $4,500 a month works out to roughly 3.6% gross. Net yield is the number that actually matters, and it's usually a percentage point or so lower once you deduct:

• Non-owner-occupier property tax — charged at higher rates than a home you live in yourself.
• MCST maintenance fees — a fixed monthly cost regardless of whether the unit is tenanted.
• Agent commission — typically around half a month's rent per year of tenancy.
• Income tax on rental income — rental is taxable income, at your marginal rate.

These are illustrative figures for explaining the calculation, not a quote for any specific unit — your actual net yield depends on the property tax bracket, MCST fee, and financing you're working with.

Building a portfolio: what changes at each property

The math shifts meaningfully after your first purchase. From the second property onward, Additional Buyer's Stamp Duty (ABSD) applies on top of the usual buyer's stamp duty, and it scales up with each additional property and depends on your citizenship status.

ABSD rates shown have been in effect since 27 April 2023. They're subject to change in future Budget or cooling measure announcements — verify current rates with IRAS before relying on them.

Separately, the Total Debt Servicing Ratio (TDSR) caps all your loan repayments — including existing mortgages — at 55% of gross monthly income. Each additional mortgage you're carrying eats into that ceiling, so financing capacity, not just ABSD appetite, tends to be the real limit on how many properties you can stack.

Dual-key & multi-generation units

A dual-key unit has two separate living spaces with their own entrances under a single title — useful for renting out one half while living in (or housing parents in) the other, or renting both out separately for a combined higher yield than a single equivalent-sized unit. Multi-generation units work on a similar principle, typically at a larger scale for extended families.

If you're doing this with an HDB flat instead of a private dual-key, note that renting out individual rooms carries its own eligibility and MOP rules distinct from private property — worth checking your specific flat type's conditions before assuming the private dual-key logic applies.

Which situation fits you?

• First investment property: focus on net yield and financing headroom — the ABSD math is simplest here since you're not stacking against an existing mortgage.
• Adding to an existing portfolio: run the TDSR math before the ABSD math — financing capacity usually bites first.
• Weighing a dual-key or multi-gen unit: compare the combined yield of renting both halves against a single larger unit of similar total cost.

Tenure — freehold vs 99-year leasehold — also affects long-term capital appreciation and how a unit holds its value over a longer investment horizon. That's covered separately; happy to walk you through it when we talk.