Progress Chart

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!

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. 

Full Speed Ahead - 2016

End Goal.

Journey

My quest for financial freedom starts in 2007-8 where unit trust investment takes a huge chunk of the investment portfolio. Unit trust was the darling of the investment world, it gives you exposure to a basket of goods, managed by a professional. Well, that professional’s pay is from a percentage of your investment. So far, unit trusts have proven to lose money. 

I just spoke to David, a very lousy salesman and got him to admit that unit trust can’t do the trick for me. Well, I concurred, but since at the beginning, he was so sure and cocky about trading unit trust. I smiled. Though I lost some money, it affirms my knowledge and this is something that no one can take away from me. I seem not to have any luck in stocks which is one of the world’s largest gambling den. With people like David selling these products, it is no wonder, the stock market will always collapse, it is a matter of when.

Since 2008 financial crisis, stocks have more or less recovered to their historical high, it is now time to take stock again (pun not intended). The Federal Reserve office WILL raise rates soon and it means a strategy realignment. 

Cash

Now I’ve invested in a few properties, Malaysia running at 5.25% and Australia running at 5.25% as well, Malaysia having a downward spiraling currency and Australia at an all time low. Comparing the 2 I’ve lost 20% based on exchange rates for the Malaysian properties and I’ve hit AUD at its lowest. I can imagine MYR continue to fall and AUD continue to rise. Now I’ve some spare cash, where would I put them. AUD.

Reason 1 – AUD loans are in Offset Account – I can extract money anytime

Reason 2 – AUID are at it lowest rates to SGD – A potential upside.

For MYR, it is attractive if I have a 200k MYR, that would allow me to gain a Premier Status worldwide for some of the international bank like HSBC.

I’m on a growth phase, the only thing on my mind is to gather more bullets and gain more cash producing income streams.

Co-Assets are quite interesting to look at now since I’m looking at 12 months horizon and the returns from such – crowdsourced investment typically are in the region of 10% upwards and only requiring $5000 to start. For Co-Assets, the degree of control is also almost zero. This is what happened to my Thailand and Cambodia investment. Thailand’s case will be heard in February and Cambodia’s case, haiz…. Well, just need to submit documentation again. 

The other options are to put them in AUD offset account to reduce cost of holding. I’m weighing on this as namely, it is only a gain on paper. I’ve prepared for the properties to be negatively geared over 5 years and this would allow me to tap on equity gains. Putting them in MYR is not an option at this stage of life as MYR continues to erode and money put there can’t be taken out easily.

Aging Parents

I have not been giving my parents much money as they do not seem to know the value of money. I’ve taken the liberty to “starve” them of cash and invest in income streams that could feed them for life. I’ve yet to achieve that elusive dream as Thailand hits a snag – the income stream broke and its now in litigation and Cambodia hits a snag as well. Both are quite unstable. I’ve a HDB that still produces good money and I think its time to use these streams to give them a little money for however they want to spend. There have another 20 years left?

I’ve discussed with the old parents, now all my brothers are well on their way to getting a HDB, it’s a milestone which I do not need to worry anymore. In truth, I did not contribute a cent, I did in giving some advice where its needed.

2016
Today is the first day of 2016, while there are a few hiccups along the way, the past 4.5 years was a good one, lets be grateful. 

I went all out in 2015 and in 2016, expect more. I'm negotiating a Malaysian property deal in Japan on the last day of 2015 whilst on holidays. It was here that I decided that Japan may not be the ideal place for me. Japan, to be exact, Tokyo had such low legislation standards in insulation, that houses need not be insulated at all... its bloody cold in the japanese house. This I conclude to have lower value to me. I saw a 20m2 parking lot going for 2.6 million yen though and it looks interesting.

Where should I go in 2016? 

1. I have leverage in Malaysia and should go for a Malaysian property with minimal out pay.

2. Continue to exchange for AUD while its low, economy is improving, regardless they say.

3. Look for development site in Aussie and build my own place.

4. Press for Pattaya property litigation results.

5. Press for Cassava Plot payment.

6. Press for payment for Zephydom

7. CoAssets?

Deals done without control is not wise. I'll look closely at CoAssets on what kind of deals it can bring me. 

Hmm, full year 2015 income? Nett income - Nil.

An advice from Investment moat

http://www.investmentmoats.com/wealth-building-2/my-advice-to-the-20-something-on-the-path-to-financial-independence/

Pls read this advice from Investment Moat, he is kinda technical even for me, but its sound advice. We share similar concepts in living and investment journey, my only concern is I'm a higher risk taker and I don't need emergency funds, the funds are in the bank and one have to maintain absolutely clean records.

Hiccups along the way

Recently just concluded the settling issues for 2 Australian properties. You can never imagine what happened. The bank officer sitting on the documents while knowing the settlement date is due. 

Alas, some penalties are paid. This is outrageous and I demand to have their ineptness reported to the authorities.

Meanwhile back to the 2 hotel rooms in Melaka. As I mentioned, I expected returns in excess of 10%. It is such a strategic location. It has a great team, now the returns has been astoundingly low. 200RM a room / month. Thats gross! pun intended! how could such a hotel be in such a good location attract only 30% occupancies and in July - no income. The hotel ran at a loss??!!! 

We are banding up ALL owners to counter propose how to run this. Even if we run as a Air BnB, I believe we could earn more. This is just terrible. We will feedback to the developers and they can kiss their future product sales goodbye!

Pattaya side got some news. The developer is expected to contest our court actions and we can see a good fight now. Every lawyer tells you they will win, we will see.

Meanwhile, this caps a year of 2015 with 4 properties handed over and running and one more property should have clarity soon.

What is really important in Life?

Too often, we have romantic dreams about going to the 3rd World to help people in need...

Too often, we dream of leaving it all and stay in a out of this world place...

Too often, we dream of vacationing...

Too often, we dream of sacking our bosses...

But what have we done to make to make it a reality? 

June was a ex-colleague who dreamt of early retirement. Interestingly, she can. 

She had joined name with her mother and bought a fully paid HDB in Tiong Bahru. Lucky her I say, yet she told me of the tortures of staying with her mother and wished she would be staying on her own soon. I explained that it would not be in the best interest at her current financial status to stay out and incur more costs. She says she understands all the principles of early retirement and to create additional passive income to fund her retirement. That is very good! She left her cushy job 3 years back to seek her ventures outside civil service, only to return back, a lower salary point. I wonder... 

Sha would want to save enough to buy a Singapore condo for her additional income. To that I say, she would be likely working til 65 to do it. She is ok with the concept of working to 65. I mean, to pay 7% ABSD for 2nd property in Singapore? She would not consider putting that tax money into another property elsewhere, equally safe and produces more income and insists she would pay that 7% to the Government to own a 2nd property in Singapore. Well, her theory won't work for me unless its for own stay. Say a $1 million property, you have to pay 7% tax amounting to SGD 70,000. If you top up a little, you probably can get a decent student housing in Australia, returning 8% per annum, a little shy of $500 per month passive income. 

Others, I've met insists on partying and enjoying a 'lifestyle', spending a holiday or two abroad, claiming they were stressed out and requires a rest. I told them straight in the face, I'm too poor to do that, I just have to harden the fuck up and go through life's challenges straight on. I have a mission and the mission is to terminate my mission asap. The faster I do it, the better, I shall eat cardboard, stay at home and not over spend a single cent til my mission is over. Thereafter, my tenants shall pay for all my vacations, employ my team of lawyers, brokers, agents, etc to manage my properties and then I shall go and do what I want to do...