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.




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.





Thursday, 13 October 2016

Watching the Singapore Market Closely

The recession is looming, time to upgrade due to personal circumstances. What can I get? I'm looking at district 9, 10, 21 for the psf price of a new condo in the suburbs. No questions asked. King Albert Park looks good, so does Garden Vista. This price is comparable to the newly launched price at Hillview Peak... Why not look at district 21? 10, 9.... update soon.

Wednesday, 15 June 2016

Finally a chance at Landed

I had been looking for a chance to get a landed property to complete my collection. Why landed? Landed provides you with higher CG due to limited growth. There is now a chance to own a landed property for 20% rebate and 80% loan which effectively means no money down deal. 

UEM sunrise is releasing the very popular horizon hills estate at Valley West Bumi Lots (converted to  international lots) for 20% discount. The product is completed and ready to move it. 

This is my chance of ownership. I reckon one can rent the property for RM 2500 at today's market which is SLOW and "hoping" to reap capital gains after 5 years. All in at cost of around RM 50k per year. Thats RM 250k for 5 years of holding. Which is possible to leave it in neglect or at very low rental rates.

Valley West in Horizon Hill is still very much DEEP in. This is not something Singaporeans are used to. 

There are of course other options. 

1. Verve suites @ KL south with 15% rebates and the cost of ownership is 5% (RM 53k) and rental could reach RM 2500 for a 2 bedder. nett outgoings would be around RM 2k per month. Total cost for holding for 5 years is 53K + 250K (303K) or 53k + 150k (203K)

Nearing completed.

2. Colony @ KLCC - near KLCC and with 13% rebates. The rental could be around 3k her month and nett outgoings would be 7% - RM 70K + holding cost is 150k (220k). 

Completions 2020.

Colony is more definite in rental with the KLCC working population.

Decisions time to really expand my portfolio. 

 


Friday, 13 May 2016

Sell out now or Wait

The ability to raise funds is a important skill of the property investor. If you can at any one time raise hundred or thousands or get a bank to back you with one call, you are probably there. It allows you to swoop in for the best deal and be on top in every negotiation situation.

Maths Questions time readers.

I have the HDB, which is a potential cash cow, having purchase it for just over $300k 6 years back and still owe $80k nett. I could finish paying in 2-3 years if I go all out and pay with cash, which I don't wish to. As far as I'm concern, I would like use CPF to take care of the house mortgage.

I would want to sell the property to raise funds and leverage on another 2  private properties. Which I think even with ABSD and TDSR policy in place, I could still do so. In 3 years, I could refinance and take out further dough. I do feel HDB's policy is a bit limiting. If I could reverse time, I could go back in time and go private straight away.

I'm keeping the hdb for pure safety buffer. It had superior cashflow, low cost, low maintenance and at 30+years of age... ZERO growth left. I wonder... if it would be be better off cut the hdb and go for private today.

The risk is present in the private market, loads of over supply and condos fetching less than 2% yield for some. I do not want to be caught out in a low cashflow situation.

Between cashflow and capital growth, which would you choose?

I want to go back to basic again. I raise my game through cashflow and not on capital gains. I know if the game plan is adhered to, I would be retired comfortably in 6 years. My target.

ie, 1 fully paid HDB, - rented out for further cashflow, a few properties overseas which would be reaping some equity growth, able to retire with 3-4k nett rental per month

On the other hand, if the private sector path is successful, I would also be achieving the same rental per month and would have an asset under care that would grow in equity and value.

I do need to be more educated and bold to go forward and take the plunge. Check this blog out in 6 months. cheers!




Saturday, 6 February 2016

Buying EC, Condos or otherwise... depends on your situation.

2016, the progress of the investments are pretty slow CG wise. Cashflow wise, was doing well til the hotels hit a snag with bad management. Oh well, lets ride this through.

Coming nearer home, selling HDB for me becomes a real necessity to move forward, this means safety net will be compromised. But I can deliberate further. My other 2 friends would have a real need to move and its time to re-evaluate their options.

Discussing with E and L who are in the same position. E have to sell off her Pinnacle HDB to set up a new family with her daughter. This means she will have several options; with her salary at $4200 gross per month, there is not much that she can do, lets review the options here. 

BTO HDB
This is the cheapest Option, 3 years of build and 5 years of MOP plus all the other restrictions. Typical 4 bedder would be around 300k. She will need to pay resale levy - $20k and renovations $30-$40k.

This means a out of pocket $70 easily. Her loan will be within her 30% (just covered by CPF)

In addition, she have to rent for 3 years before moving in.. additional ~$70k.

Resale HDB
Resale HDB is a good Option as well. Better than BTO in my opinion.

HDBs price in the next few years will be stagnant and it might not be a good idea to invest in one. 

EC
Buying a EC will be full of restrictions like the BTO Flat as well. With her affordability level she can get a 1+1 room. Hardly enough room. The advantage would be after 5 years. She saves on renovations. She may have to pay resale levy. Out of pocket $20k and factor in rental and maintenance charges. This one she will be stretched.

Normal Condo
She can get a normal condo after evaluating her for TDSR she can afford something in the range of $798k. This is great. she can easily get a renovated 2 bedder near a mrt and keep enough cash buffer to last min 5 years. If things goes awry after 5 years, she can still extract equity to tide through the challenges.

A normal condo would be my recommendation to her.

L on the other hand just sold her private, she is staying with her MIL and there is no huge issue on renting. She don't qualify for BTOs and ECs, and this narrows her options to resale HDB and normal condos. Given her situation, they are not doing too well in their business, no cars, 2 kids, average income 3k plus minus plus a bit of buffer from their sale of the condo. In my heart, I think a resale HDB would suit her best. Til she build up her cashflow, she had wanted to buy 2 Condos and rent one out or buy a bigger condo to remake into a dual key. That was textbook solution but it would be hard to do in real world. 

Both of them, schools are important, hence, it would be important to buy something near schools and near amenities to make living easier.