Friday 18 October 2019
2019 - a year of changes
A lot has happened in the past few months, I sold my HDB, pattaya property was sold too and getting into the private market...
To Upgrade from HDB or Not
To upgrade or not, that seems to be a question on everyone's mind. What are the guidelines that help to shape the decision making process?
I spoke to a few "near retired" people, "the ones with the most money amongst them are those that stayed in HDB and not buying any properties..."
That makes a lot of sense from the perspective of cashflow.
1. CPF gives you 2.5% compounded interest.
2. Property has VERY high transaction and maintenance cost.
3. The power of leverage works for flippers and a rapidly rising market.
4. Beyond a certain period of holding, there would be no advantage and the buyer would be worse off.
Control :
5. HDB vs Private. With the clarification from the Govt that most hdb would not enjoy SERS, HDB's values would not be able to rise as in the past anymore. It is no longer an investment.
I let go of my HDB yielding 6% in Oct 2019. HDB is approaching 38 years old. There would be little resale value left. I think even when the cash is put into CPF, compounding at 2.5% per annum, over 10 years, would beat the returns of a depreciating HDB.
I spoke to a few "near retired" people, "the ones with the most money amongst them are those that stayed in HDB and not buying any properties..."
That makes a lot of sense from the perspective of cashflow.
1. CPF gives you 2.5% compounded interest.
2. Property has VERY high transaction and maintenance cost.
3. The power of leverage works for flippers and a rapidly rising market.
4. Beyond a certain period of holding, there would be no advantage and the buyer would be worse off.
Control :
5. HDB vs Private. With the clarification from the Govt that most hdb would not enjoy SERS, HDB's values would not be able to rise as in the past anymore. It is no longer an investment.
I let go of my HDB yielding 6% in Oct 2019. HDB is approaching 38 years old. There would be little resale value left. I think even when the cash is put into CPF, compounding at 2.5% per annum, over 10 years, would beat the returns of a depreciating HDB.
Tuesday 18 September 2018
A Landed Property at last
As the year ended in 2018, the final buying was for the landed property in Sunway Iskandar.
It was a tough battle between a fukuoka apartment that cost $35k for a nett 6% return and a leveraged 85% landed property in neighbouring iskandar malaysia. Earlier I have written-off Iskandar Malaysia as an investment spot due to the large uncertainty and oversupply of high-rise in the development. Nearby, Prima Nusajaya faced some issues with developers not building and handing over the house in time, causing huge distress to the buyers.
Fast forward, Sunway has entered Iskandar with great concepts and completing Citrine Hub, the township seems to be on its way to becoming a hub for locals to come to shop. The hub is also accessible by causeway link to Singapore and Bukit Indah, making sure connectivity is not compromised, a sure recipe to success.
We stayed in Taman Sutera and the vibe was great with lots of young people, but the grab drivers that we hired hardly know about medini / iskandar, but they know Sunway.
This year I bought the Landed Superlink Terrace. A landed at last. This link house is the cheapest estate in medini. For the price of a 3 bedroom condo, you get a landed linked house that comes with Sunway Security. I think, this is a property which has limited downside.
This is for own stay, as well as it would appeal to students and family and faculty of Sunway International School.
It was a tough battle between a fukuoka apartment that cost $35k for a nett 6% return and a leveraged 85% landed property in neighbouring iskandar malaysia. Earlier I have written-off Iskandar Malaysia as an investment spot due to the large uncertainty and oversupply of high-rise in the development. Nearby, Prima Nusajaya faced some issues with developers not building and handing over the house in time, causing huge distress to the buyers.
Fast forward, Sunway has entered Iskandar with great concepts and completing Citrine Hub, the township seems to be on its way to becoming a hub for locals to come to shop. The hub is also accessible by causeway link to Singapore and Bukit Indah, making sure connectivity is not compromised, a sure recipe to success.
We stayed in Taman Sutera and the vibe was great with lots of young people, but the grab drivers that we hired hardly know about medini / iskandar, but they know Sunway.
This year I bought the Landed Superlink Terrace. A landed at last. This link house is the cheapest estate in medini. For the price of a 3 bedroom condo, you get a landed linked house that comes with Sunway Security. I think, this is a property which has limited downside.
This is for own stay, as well as it would appeal to students and family and faculty of Sunway International School.
Tuesday 13 March 2018
A review of the properties that I'm eyeing
This post documents the review of the
Cashew Heights :
Investment
Living Layout etc
Transport / Amenities
Overall
Cashew Heights is a 500+ condo unit with all big sizes ranging from 1200 - 1600+ sqft. The estate is huge with sheltered carparks etc.
Investment quality :
Rental : Cashew heights is much sought after by expats and locals due to its unique offering of huge space and compound. Rental price is weak, less than 2% yield and the units are old to hold up the price. Competing with Dairy Farm and other alternatives in the region is a challenge. The opening of German European School nearby could improve the market.
Capital growth : Cashew heights was built in 1986 and as its a 999 leasehold, there was no issue of depreciated assets. Cashew MRT opened nearby and there are new developments in the school, a potential town centre at Dairy Farm / Petir Road. Things are looking good. The estate's plot ratio is 2.1 and is looking towards URA revising the plot ratio.
Living Layout :
Conversion quality :Some of the owners converted the split level living room to a office and the rooms and rent other areas out. The maid's room can be rented as a studio. The conversion quality to improve yield is not great. The giantic living / dining area are sufficient.
Living : With the abundance of windows, laying out furnishing is a challenge. The living layout sucks.
Transport and Amenities :
The location is 500m from Cashew MRT and a 1 stop to Bukit Panjang MRT. Transport is not great. Food and other amenities are ok. Schools around here are Bukit Panjang Pri, CHIJ. If you have a baby girl, there is no need to get this address for entry to CHIJ. For Bukit Panjang, its a gamble as its a popular school.
Overall :
Price is running too far from yield. Buy for own stay only if Rent < Interest and Maintenance. Use the money to invest in other higher growth / yielding assets.
Cashew Heights :
Investment
Living Layout etc
Transport / Amenities
Overall
Cashew Heights is a 500+ condo unit with all big sizes ranging from 1200 - 1600+ sqft. The estate is huge with sheltered carparks etc.
Investment quality :
Rental : Cashew heights is much sought after by expats and locals due to its unique offering of huge space and compound. Rental price is weak, less than 2% yield and the units are old to hold up the price. Competing with Dairy Farm and other alternatives in the region is a challenge. The opening of German European School nearby could improve the market.
Capital growth : Cashew heights was built in 1986 and as its a 999 leasehold, there was no issue of depreciated assets. Cashew MRT opened nearby and there are new developments in the school, a potential town centre at Dairy Farm / Petir Road. Things are looking good. The estate's plot ratio is 2.1 and is looking towards URA revising the plot ratio.
Living Layout :
Conversion quality :Some of the owners converted the split level living room to a office and the rooms and rent other areas out. The maid's room can be rented as a studio. The conversion quality to improve yield is not great. The giantic living / dining area are sufficient.
Living : With the abundance of windows, laying out furnishing is a challenge. The living layout sucks.
Transport and Amenities :
The location is 500m from Cashew MRT and a 1 stop to Bukit Panjang MRT. Transport is not great. Food and other amenities are ok. Schools around here are Bukit Panjang Pri, CHIJ. If you have a baby girl, there is no need to get this address for entry to CHIJ. For Bukit Panjang, its a gamble as its a popular school.
Overall :
Price is running too far from yield. Buy for own stay only if Rent < Interest and Maintenance. Use the money to invest in other higher growth / yielding assets.
Wednesday 14 February 2018
2018 - Financial position
The year 2017 ended with no property purchase again due to lack of funds and lack of good buys. I started investing in a few startups ran by good friends from KL. I have absolutely no idea what is going on with the company except that the guys running it are good businessman. I invested in the CEO and not the business.
The year 2018 started well. I decided to move to a Condo and urge E to move in as well. Renting out my HDB immediately upon moving out save me some headache, albeit to a family of bengalis. I decided to do so as the estate is upgrading toilets and its a huge mess. I better stay out during this period. I rented the place out for 1.6k
I rented a Condo at Cashew Heights for 2.3k per month. A good deal maybe... after moving in most of the stuffs, the place is kinda difficult to fit. The layout is weird and not meant to be designed for modern TV centric usage, otherwise, the space is quite good. Bought some high-end fridge and TV for the missus. I urge her to rent out her place as well. Fully furnished, should fetch her good 2k per month.
All in, 1.6 + 2 = 3.6k and deducting the rental of 2.3k, nett - 1.3k, gives us a comfortable cashflow to stay at the condo with full facilities and childcare, utilities and food.
The next purchase gotta wait... at least 2 years while mustering enough bullets to bite at the Singapore market for the "required" own place. Haiz... whats wrong with renting when the landlord gives you all the freedom to make changes / renovations. I just felt heartpain paying for the upgrades.
The year 2018 started well. I decided to move to a Condo and urge E to move in as well. Renting out my HDB immediately upon moving out save me some headache, albeit to a family of bengalis. I decided to do so as the estate is upgrading toilets and its a huge mess. I better stay out during this period. I rented the place out for 1.6k
I rented a Condo at Cashew Heights for 2.3k per month. A good deal maybe... after moving in most of the stuffs, the place is kinda difficult to fit. The layout is weird and not meant to be designed for modern TV centric usage, otherwise, the space is quite good. Bought some high-end fridge and TV for the missus. I urge her to rent out her place as well. Fully furnished, should fetch her good 2k per month.
All in, 1.6 + 2 = 3.6k and deducting the rental of 2.3k, nett - 1.3k, gives us a comfortable cashflow to stay at the condo with full facilities and childcare, utilities and food.
The next purchase gotta wait... at least 2 years while mustering enough bullets to bite at the Singapore market for the "required" own place. Haiz... whats wrong with renting when the landlord gives you all the freedom to make changes / renovations. I just felt heartpain paying for the upgrades.
Wednesday 11 January 2017
2017 - Financial Position
All too often we met with financial advisor who is only keen to sell you a dream / vision of retiring with a nest egg of a dreamy number, asking you to make the savings to the oft 30 years investment plan. I too was sold on this and even considered laddering the investment. After reading multiple books on financial education, I find this approach to be totally a waste of time. Case in point, my personal endowment programme enrolled in 1998, having paid monthly for the last 20 years netted me a yield of 0.5% per annum. Well, that is for protection, I argued, but does it really make sense to put your money into such a programme for 30 years?
My approach is to develop a passive income stream, with the tenants paying me my living expenses. I'm not concern about capital growth. Treat these investments like small business. No, annuity plans sound stupid! annuity is like paying someone a lump sum of money and having him pay you in batches, installments. You can do that with some financial discipline.
Based on the past 6 years or so of investment and planning, this graph shows my cashflow for the next eternity. The assumption is of course based on 100% occupancy rates, constant interest rates, constant expenses. By age 65, all mortgages are fully paid up (by tenancy). Working for the next 5 years, this is the achievable. (totally not withstanding any capital growth that might occur or not). Spreading the risks would be multiple properties spread over a few geographical areas and a war chest to be accumulated to tide over 6-12 months.
5 years to go is counting down now.
My approach is to develop a passive income stream, with the tenants paying me my living expenses. I'm not concern about capital growth. Treat these investments like small business. No, annuity plans sound stupid! annuity is like paying someone a lump sum of money and having him pay you in batches, installments. You can do that with some financial discipline.
Based on the past 6 years or so of investment and planning, this graph shows my cashflow for the next eternity. The assumption is of course based on 100% occupancy rates, constant interest rates, constant expenses. By age 65, all mortgages are fully paid up (by tenancy). Working for the next 5 years, this is the achievable. (totally not withstanding any capital growth that might occur or not). Spreading the risks would be multiple properties spread over a few geographical areas and a war chest to be accumulated to tide over 6-12 months.
5 years to go is counting down now.
Saturday 12 November 2016
Sell or Keep - aging HDB
The concept of retirement for me would be cashflow; passive cashflow covering expenses. Ideally, I would want to buy more properties in Singapore. Cooling measures in Singapore makes it difficult for me even if cashflow is wise, even with both properties, I can still keep my mortgage servicing under 60% in adherence to the restriction of the TDSR.
My HDB bought under my name is 32 years old... it is aging. The neighbourhood is under going Neighbourhood Renewal Programme, which means money is spent to upgrade the estate. Since money is spent on the estate, it would be unlikely that this estate would be en-blocing soon.
I am faced with a dilemma, since I need a bigger space, I need a new space. The current HDB can give me good yield (gross ~ 9%, Nett Cash on Cash ~ 17%), how impressive can this yield be.
My total returns from rental for the next 60 years could yield > $1mil. However, the hdb is unlikely to rise in value anymore.
Going for a new Condo, I have to take on risks and may not get to retire at 45, the returns could be greater than >$1mil...
Decision time...
Update : Jan 17
There was no decision made after all. 2016 proved to be difficult times and I ended up with no new purchase. While windows closed for lending in australia, malaysia is bubbly, singapore restricted. Suffered some setback with decisions in Pattaya against my favour, an appeal is underway. Cambodia finally revealed its intention. Some losses to be expected.
My HDB bought under my name is 32 years old... it is aging. The neighbourhood is under going Neighbourhood Renewal Programme, which means money is spent to upgrade the estate. Since money is spent on the estate, it would be unlikely that this estate would be en-blocing soon.
I am faced with a dilemma, since I need a bigger space, I need a new space. The current HDB can give me good yield (gross ~ 9%, Nett Cash on Cash ~ 17%), how impressive can this yield be.
My total returns from rental for the next 60 years could yield > $1mil. However, the hdb is unlikely to rise in value anymore.
Going for a new Condo, I have to take on risks and may not get to retire at 45, the returns could be greater than >$1mil...
Decision time...
Update : Jan 17
There was no decision made after all. 2016 proved to be difficult times and I ended up with no new purchase. While windows closed for lending in australia, malaysia is bubbly, singapore restricted. Suffered some setback with decisions in Pattaya against my favour, an appeal is underway. Cambodia finally revealed its intention. Some losses to be expected.
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