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... 

Australia Properties Settling Woes - OTP

Murphy is ever present and when Murphy strikes twice, the pocket bleed. Recently, the valuations for 2 properties which are about to settle came in really bad - like 12% off!!! 

What the? 

Update 17/10/2015 - 

Cornerstone got 80% loan with ANZ and is on its way to be settled. 
Carnegie got to $375 after pressing the valuer. 

Lesson learnt is do not despair, there will be a valuer who will value the property at the right price. The only issue is a lot of such lenders do not operate for foreigners.



Update 25/10/2015 -

Cornerstone settled. Well I have to call Netbanking ANZ for link up on monday.

Will be expecting approval for Carnegie on 26th October.

Cheers!


Update 15/11/2015 -

Cornerstone settled and rented for 5% yield with 2 weeks of vacancies, albeit for 6 months term. Professional photography was done and the developers love them so much, they paid for the photos and I get free photos for publicity. The other unit competing units rented out 2-3 weeks after mine. Similar properties could be had at the next stage, don't miss it!

Continuing the OTP woes, ANZ changed its policy of not granting loans to units smaller than 50sqm and hence, I have to fork out extra $20k for NAB's offer. Carnegie was rented out for 4.3% yield for 24 months before settlement.

All is good. Pending settlement from developer. Fridcorp takes care of their buyers.

Both developers were highly recommended, Consolidated Properties and Fridcorp.

Next Step - Developer

There are just so many branches in property business. As a investor, there are already tonnes of information to digest, the ultimate aim of property business is to develop raw land and add value to it and finally able to market this to other people. 

May I suggest the following levels of investing which I have taken.

a. Principal place of residence - subsidised housing

b. Single bedroom Apartment in City Centre - done

c. Hotel Suites in holiday destination - done

d. Single bedroom Apartment in sought after suburb - done

e. 4 Bedroom Townhouse in growing suburb - done

f. What's next?

As you can see, I set a path of stability for myself. Investments are measured with income generation as the key considerations and rentability as the end result. Apartment in city centre would be high sought after by working professionals needing a place to stay during their attachment. It will not have high capital growth - for sure, unless the city grows in tandem. In fact, it will have oversupply issue. Again, its managed risk. If you are able to ride it out with lower rent, you will manage well. Hotel suites are a huge cashflow for operators, why would it do different for owner occupiers. If the price is right, you are able to rent out lower. Again, capital growth is limited. I'm happy with 2-3% gross anaemic growth for very little down payment. They kept me grounded with cashflow til my next purchases. 

Single bedroom in a sought after suburb is bit risky but as the price is out of reach of many, a well designed layout could do better than a 2 bedroom. Again, if I have a choice, a 2 bedroom apartment would be better for a suburb location. 

4 Bedroom Townhouse in growing suburb is the highest risk in my limited exposure to property. Its the most expensive of all and its tenancy depends on growing family. I'm a grand old age of 5.5 years old in property business. This, I'm going for capital growth. This might appeal to owners occupiers market. 

I've always maintained that I would not sell any properties and allow them to grow and support further investment. I've also shared over 3 years, the single bedroom city centre apartment has grown but policy changes in that country does not allow for withdrawal yet due to the changes in LVR. I'm happy it has achieved enough capital growth to cover my initial outgoings. Should I be able to take money out next year, I would have nett zero down with just monthly outgoing fees. Consider it as long term loan at favourable rate. 

Hotel suites have just completed. It did not do so well. I expect it to do better in the next few months as it gain traction. Should it bombed.... I might as well do Air BnB in that sought after location for tourist. 

Patiently awaiting results from australia for the other 2.

Next up... the ultimate dream - to develop my own apartments; but firstly, I have to learn to do duplex or triplex. If there are any resources out there, please point out to me.

thanks!

Australia properties Settling Jitters

Come next month, 2 project would be settling soon. 2 Morton Avenue and Cornerstone Living (valuation 24th Sept).

Cornerstone living is part of the massive 600million regeneration project @ Coopers Plains. The concept for this investment is to buy in early at the early stages of a multi-stage - 10 years regeneration programme, the idea is later stages will definitely cost more and hence it is a sure guaranteed way of capital appreciation (IF market condition holds). Still with the macro environment changing and APRA changing the loan landscape, it still sends me some jitters as I await the valuation report next week. I've also asked to see the next few stages from the agents and he has assured that valuation is no problem for the project. 

2 Morton has also come back with good results (albeit from the agents as well) this means a jittery 1 more month to go and I've got all my 2nd tranche of deposit ready. Morton Avenue project is a strategy to buy within amenities and next to railway station and near Campuses, it should do well with rental. 

I am on an expansionary phase and would not take any chances at all. 

Waiting is horrible. 

Price of Stocks Rise and Price of Stocks Falls

The recent slump of stocks have me rolling on the floor laughing. The fifth person have an article written on this. It was also quite fun seeing friends' post, that they have gone sick from the falling stock prices. Today, stocks have almost recovered from their earlier week fall. So what really happened? Absolutely nothing! 

Here, in Apexproperty, we believe in assets where you have full control and at least, you have control over its price to sell, its cash dividend you want, only then... its an investment, only then its a business. When you buy into a stock, say Starhub, yes, its a fantastic cashflow company with its own economic moats and all but when it comes to controlling the business when it goes down, say you have a brilliant idea to improve revenue, can you? Also, when the management wants to do something, i.e., issue rights, can you?

If you look at great blue chip companies such as telcos, and you say, hey, the NAV, the Valuation and the cashflow is such and such, therefore the investors are willing to trade security with lower yield and lower growth, which is fine. If you look at property as a business, you will find similar valuations and similar yield points. So, I would rate such 'small business' of a buy to let property to a huge business such as telcos with the exception, I have full control. I have no fear of stocks rise and stocks fall. (experienced investors, sorry, I don't mean you, you would continue to accumulate and while I can't)

Without subjecting myself to the market whims and fancy, I definitely sleep better and was having so much fun reading "predictions" from economists. 

Hey, fear sells... and stock market is a casino. Cheers!

Where is Greece?

Market watch published an article on the 13th Aug which showed the world map by market capitalisation. 

Imagine how we used to be spooked by some place called Greece? Lets see if you can find Greece in the map. I can't. I also won't be bothered. When Greece disappears from the financial world map, nobody would even notice Greece has gone. I am certainly not bothered by the Greece Contagion. In fact, when Greece contagion came on, I was happy to see the stock price fall. This means the price is undervalued. Happy investing. 

When Iceland went bankrupt, no one actually cares. So today when China devalues the currency, what do you think will happen compared to when Malaysia devalues the currency? 

Understand the world market, which are the countries that will dent the world economy? when market misjudge, go in hard and make a killing.

By Steve Goldstein

Published: Aug 13, 2015 8:47 a.m. ET