Mr. Minh Duc from Hanoi shared that in early 2019, he invested 3 billion VND in purchasing an apartment for investment and rental income purposes. After spending an additional 200-220 million VND on interior furnishings and electronics, he was able to rent out the apartment for an average of 16-18 million VND per month.
“At that time, the rental yield compared to the property price was around 6% per year, excluding the cost of furnishings. Although this was lower than bank interest rates, I believed it to be a stable way to preserve my assets,” said Mr. Duc.
However, things have changed. While apartment prices in Hanoi have soared, with Mr. Duc’s apartment now valued at 6 billion VND, double its price from six years ago, rental prices have taken the opposite trajectory. The furniture has depreciated, and there has been a decrease in foreign and local tenants, causing the rent to drop to around 16 million VND per month. When calculated based on the current value of the apartment, the rental yield is only around 3% per year, which is significantly lower than bank savings rates.
“Every time a tenant moves out, I have to spend money on repainting and replacing worn-out items. So, I’m really wondering if I should sell and take the profit now or continue renting to hold on to the asset?” Mr. Duc pondered.
Mr. Duc is not alone in facing this dilemma. Many other investors are confronted with a similar decision due to the rapid increase in apartment prices in Hanoi and Ho Chi Minh City over the past 3-5 years, especially during 2022-2024. Meanwhile, rental yields have stagnated or even decreased, and rental demand has shown signs of slowing down.
According to experts, the decision to sell or hold on to the apartment depends on each investor’s risk appetite and financial goals. If a steady cash flow is a priority, continuing to rent out the property can provide a consistent income while preserving the asset’s long-term value. On the other hand, if maximizing profits is the main objective, given the current peak prices, realizing gains and reinvesting in other assets may be a viable option.
The question of whether to “take profits or hold on to the asset” is a common dilemma faced by many apartment investors in the current market.
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