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... 

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.