I got into a discussion recently when someone highlighted that an Yishun flat is still rented out for 7.8% yield and have helped another landlord secured an 18% rental yield. That looks amazing until you realize that the yield is based on historical purchase price.
He highlights:
My landlord only want to see how much return they get based on the amount they spent, not on how much others spent. Just like buying stock, we don’t track how much others bought the stock but how much we bought our stock and how much profit we made after selling.
Fair enough. But I felt that the more we are stuck in this mind set in our evaluation, the more handicap we become. Our problem have always been we look very much at our cost of purchase, and get blindsided by the astronomical good yield we are getting.
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