Quora Answer: Why Do Rich People Not Just Buy 10 to 20 Houses & Live off the Rental Income?

The following is my answer to a Quora question: “Why do rich people not just buy 10 to 20 houses, and live off the rental income?”

This is a dumb idea.  It ignores the cost of maintaining these properties and assumes yields stay constant.  Neither assumption survives contact with reality, least of all in Singapore.  Unless you are specifically in the real estate or property management business, this is not the most efficient way to generate revenue and accumulate wealth.  Houses are not liquid investments, and non-diversification carries substantial risk.

Private condominiums in Singapore deliver gross rental yields of roughly 3.0 to 4.0 per cent.  Net yield, what reaches your bank account after property tax, maintenance, agent fees, and vacancy, is closer to 2.0 to 2.5 per cent.  A condominium rental yield at 4.0 per cent gross routinely provides near 2.0 per cent net, once the standard deductions are applied.  Median private residential rent is around S$5.13 per square foot.  Even the strongest-performing neighbourhoods – Tanjong Pagar, Outram, Queenstown – are in the 2.8 to 2.9 per cent net range on a two-bedroom unit.

Then comes the tax structure.  Here is where Singapore turns the “just buy more houses” idea from merely inefficient into actively punitive.  A Singapore citizen buying a second residential property pays 20 per cent Additional Buyer’s Stamp Duty on top of the base Buyer’s Stamp Duty — a third property or beyond costs 30 per cent ABSD.  A foreigner buying any residential property here pays 60 per cent ABSD from the very first purchase, on top of the base duty, adding well over half the property’s price in upfront tax alone.  A foreign buyer acquiring a S$1.8 million condo pays roughly S$1.17 million in duties before a single tenant moves in.  Twenty houses under this regime is not a strategy.  It is a self-inflicted tax event, repeated twenty times, against a net yield of barely 2 per cent.

Jakarta, Bangkok, and Kuala Lumpur Look More Tempting: They are Not

Jakarta advertises rental yields of 7 to 12 per cent for apartments, the highest headline figure of the four markets.  That number comes with a structural catch Singapore does not have: foreigners cannot hold freehold title in Indonesia at all.  The best available option is a 70-year leasehold, meaning the property you bought has a countdown clock attached to it from day one, regardless of how good the yield looks on a spreadsheet.

Bangkok delivers roughly 6.5 per cent gross yield.  Thai law restricts foreign condominium ownership to 49 per cent of the total unit quota in any single building, and land ownership by foreigners is prohibited outright outside narrow exceptions.  Kuala Lumpur averages 5.27 per cent nationally, ranging from 2.9 to 7 per cent depending on the unit, with Malaysia’s own currency carrying more volatility against the Singapore dollar than Singapore’s own property market carries against itself.

Every one of these three markets offers a higher headline yield than Singapore.  Every one of them also trades that yield against currency risk, ownership restrictions, or legal enforcement that is considerably weaker than what Singapore’s own courts and property registry provide.  A higher yield on a leasehold you do not fully own, in a currency that can move 10 per cent against you in a bad year, is not the better trade once both sides of the ledger are considered carefully.

This Remains a Dumb Idea Regardless of Which Market You Pick

Property is subject to tax, and maintenance costs consume a real share of revenue throughout the region, not merely in Singapore.  The houses are also subject to the rental market itself.  There is no guarantee you get tenants, let alone good tenants, and every vacant month is a month of mortgage, tax, and insurance paid entirely out of pocket.  This creates real, structural risk.  When the rental or property market turns, the entire portfolio turns with it because every asset sits in the same market, and frequently in the same currency, at the same time.

Dylan Suitor, Ryan Molony, Aruba Butt, and Robert “Robbie” Clark built a portfolio of hundreds of rental properties across Ontario, run through eleven linked corporations, with investors pouring in over CA$144 million.  By early 2024, every one of those eleven corporations was under bankruptcy protection, facing more than 30 creditor lawsuits, with a court-appointed monitor reporting the group had diverted borrowed funds toward a Hawaii vacation rental, a Miami strip club bill, and private jet travel while the underlying business was already failing. Scale did not protect them. It multiplied the exposure.

For that kind of money, diversifying into funds and instruments carries lower risk, greater liquidity, and lower entry costs than a stack of physical houses, whether those houses sit in Singapore, Jakarta, Bangkok, or Kuala Lumpur.  A fund spreads exposure across dozens of properties and markets simultaneously, rather than betting an entire fortune on twenty addresses that rise and fall together, taxed at escalating rates for the privilege of owning them.  Rich people do not skip this strategy out of ignorance.  They skip it because the people who run the numbers – ABSD, maintenance, vacancy, currency risk, and concentration risk – arrive at the identical conclusion every time, regardless of which regional market they start the calculation in.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code