He Bought a $2M Condo to Rent Out — and 'Lost' $2,000 a Month. Most of It Was Savings.

Daniel is a composite — a stand-in we built from the questions investors actually ask us, with stated assumptions and the maths computed, not a real client. But his question is the most common one we get from buyers eyeing freehold condos in the East: "At today's low rates, can the rent cover the loan?" He's looking at a $2 million freehold unit, planning to put down the minimum and rent it out. On paper the answer looks brutal — the property appears to lose about $2,000 every month. Look closer and the number is mostly an illusion. The real story is thinner, more fragile, and far more dependent on where rates go next.

This is a worked example, so every figure below is computed, not estimated. The point isn't whether Daniel should buy. It's to show what "the rent covers the mortgage" actually means once you separate the parts.

The setup

Daniel buys at $2,000,000, freehold, and borrows the maximum 75% — a $1,500,000 loan over 30 years, leaving a $500,000 cash-and-CPF down payment. He already owns his home, so this is a second property. That triggers the part most first-time investors underestimate:

• Buyer's Stamp Duty on $2m works out to $69,600.
• Additional Buyer's Stamp Duty for a Singapore citizen's second residential property is 20% — a flat $400,000.

Add it up and Daniel needs $969,600 in cash and CPF before he collects a single month's rent. Nearly half of that — the $400,000 ABSD — buys him nothing but the right to own a second home. That upfront wall, not the monthly carry, is the real gate on investment property in 2026, and it's worth sitting with before any of the cash-flow maths matters.

The monthly picture that scares people

Daniel finances the $1.5m loan at roughly 1.6%, about where the cheapest floating packages sit in June 2026 with three-month compounded SORA near 1.1%. Over 30 years that's a monthly repayment of $5,249.

He rents the unit out at a 2.6% gross yield — the going rate for freehold East Coast stock, and exactly what the Resale Project Scorecard flags as the region's weak spot in our Marine Parade & Katong review. On $2m that's $52,000 a year, or $4,333 a month. Then the running costs a landlord can't avoid:

• Maintenance (MCST): about $400 a month for a unit of this size.
• Property tax: rented out, the unit is taxed at the steeper non-owner-occupier rates on its annual value. With an AV around $52,000, that's $8,560 a year — about $713 a month.

Put it together and the monthly outgoings are $5,249 + $400 + $713 = $6,362, against $4,333 of rent. The unit appears to bleed $2,029 every month. That's the number that ends most of these conversations. It shouldn't.

Why the "loss" is mostly savings

The mortgage payment is not a cost. Part of it is interest — money that leaves and never comes back — and part of it is principal, which pays down Daniel's own loan and turns into equity. In the first month of a $1.5m loan at 1.6%, the split is:

• Interest: $2,000.
• Principal: $3,249.

That $3,249 isn't gone. It's Daniel paying himself, building ownership in the asset. So the honest way to read the carry is to strip the principal out and compare rent against the money that actually disappears — interest, maintenance and tax:

Rent $4,333 − interest $2,000 − maintenance $400 − property tax $713 = +$1,220 a month.

On a true economic basis, the property is cash-flow positive by about $1,220 a month, not negative by $2,000. The headline loss was almost entirely forced savings. Daniel still has to fund the $2,029 gap each month out of pocket — the bank wants its full $5,249 whether or not it's "really" a cost — but most of what he's topping up is going into his own equity, not down the drain.

The catch: this only works at the bottom of the rate cycle

Here's where the thin part bites. That $1,220 cushion exists only because the mortgage rate is near its floor. Interest is the variable that moves, and it moves against the landlord. Run the same unit at a slightly higher rate:

• At 1.6%, interest is $2,000/month → real carry +$1,220.
• At 1.9% — roughly the year-end SORA path some forecasts pencil in — interest is $2,375/month → real carry +$845.

Keep pushing and the cushion vanishes entirely. The rent, after maintenance and tax, covers interest only up to a mortgage rate of about 2.58%. Above that, the property is genuinely cash-flow negative — every month costs Daniel real money on top of the principal he's already funding. For context, the HDB concessionary rate is 2.60% and bank fixed rates spent most of 2023–24 well above 3%. A 2.6% mortgage is not a remote scenario; it's roughly where this cycle started. With MAS reviewing policy at its July meeting and SORA widely expected to drift up from here, Daniel is buying at the most flattering possible moment for the carry — and it's still only just positive.

What the worked example actually says

Strip it back and three things are true at once, and they don't contradict each other:

The upfront cost is the real barrier — $969,600, with $400,000 of it pure ABSD. That's the number that decides whether this purchase is even on the table.

The monthly "loss" is mostly an accounting artefact — $3,249 of the $5,249 payment is principal, so the genuine carry today is a modest positive $1,220, not a $2,000 hole. Anyone who tells you a 2.6%-yield condo "loses $2,000 a month" is counting your own savings as a loss.

And the margin is wafer-thin and rate-dependent. Pre-financing, the net yield after maintenance and tax is just 1.93%. The whole case rests on borrowing cheaply; a move toward a 2.6% mortgage — ordinary by recent standards — flips the carry negative. A freehold East Coast condo at a 2.6% gross yield is a capital-preservation and lifestyle asset that happens to rent, not an income engine. If you buy one to let, fund it expecting to top up the principal every month, and stress-test the interest line at 3%, not 1.6%.

See where every resale project lands on the fundamentals — yield included — at tribesg.com/rps.

Daniel is an illustrative composite, not a real client. Assumptions: $2,000,000 freehold resale condo, 75% LTV ($1,500,000 loan) over 30 years at 1.6% p.a., 2.6% gross rental yield, $400/month maintenance, non-owner-occupier property tax on an annual value of ~$52,000, and 20% ABSD for a citizen's second property. All figures computed for this example and current as at June 2026; they are illustrative, not advice. Stamp-duty and property-tax rates per IRAS and the IRAS property tax schedule.

Silas Tan is a District Director at Huttons Asia and co-founder of TRIBE. He built the Resale Project Scorecard (RPS) using 126,000+ URA REALIS transactions. This article is for informational purposes and does not constitute financial or investment advice. CEA Registration R000303I.