“新加坡国土面积小，通勤压力也比较小，如果有资格购买组屋，大概300万人民币可以买一套适合居住的三室一厅，买房压力并不算大。而同样的价格，在国内一线城市可能只能买在偏远郊区” — excerpt from a 2022 China publication
RMB 3M = SGD 600k is a reasonable estimate.
Tier1 cities refer to 北上广深.
Category: rEstate
NRY+appreciation for various locations
Reminder — to me, what’s more meaningful is current_income not appreciation far-out, though I need reassurance over long-term capital preservation.
| long-term appreciation above inflation | Net RY | Gross RY | |
| SG condo | better than HDB | below 2% | 2% |
| SG HDB | better than most U.S. locations | 3.5% | 4%? |
| SEAsia | I am betting on long-term | depends… | better than SG condo |
| China Tier-1 city | was spectacular | below 1.5% | 1.5% |
| US hot locations | Comparable to SG condo | beats SG condo despite tax, legwork,, | 7 – 14% |
| US regular locations | unspectacular | lower tax | questionable demand |
##MAPIC VACs
— Some trainers might be too long-winded. I need to bring enough “work” to cover the time. This is a problem I need to focus on.
Bring laptop..
— I need to spread out my attendance.
It eats into my workout and academic coaching (also movies)
It can affect my office timing, but I have plenty of leaves.
If too frequent, I won’t have enough breathing space to discuss, blog and absorb.
-> I can attend refreshers.
Target? once a month?
==== VACs of interest
— Unlock Cash Mastery??? Ask GEX by mail
— Legal aspects of SG rEstate investing… close to heart
Is there a course on overseas? Ask GEX by email.
— mortgage, financing and cashflow analysis
I can ask many questions
— multiplying your property portfolio?
I am skeptical and can ask questions
## filter conditions4overseas rEstate #unchanged since 2015
— my filter conditions for overseas
- small quantum. Hard limit? 250k?
- rental yield .. this depends on the local economy and rental demand
- prime location
- — minor conditions
- FX risk .. I discussed GBP/SGD (3..) and AUD/SGD (1.3..) with MAPIC advisor and my sister.
- legal risks
So for many years I have prioritized quantum and primeLocation. That’s why I always pick up tiny units and never bought in developed countries. Other people usually aim at windfall profit, which is a wrong priority for me. I stay away from the exclub temptation. Windfall profit doesn’t enrich my life as additional NNIA does.
— economic maturity .. a tricky “filter”
Developing countries offer more upside (at least in theory), but there is real risk of getting stuck in “protracted_adolescence”.
Perhaps we could switch from super-macro to less macro like municipal level. Some hotspots in a developing country could avoid protracted_adolescence.
— Wallan case study on 26 Feb 2022 .. See also MAPIC: j4$1100. Based on my filter conditions, most of the early indicators that presenter shared are inferior to the early indicators in BGC or Cambodia locations.
The actual surprises included FX risk, developer integrity. However, it’s possible that Megaworld is below-par but not as unethical as I thought.
I still feel my Cambodia deal is much better overall, based on my priorities.
FX loss (in SGD terms) can wipe out all your capital gain + rental income.
infatuated rEstate investor #leveraged
- I have invested most of wife’s usd 70k
- I have invested about sgd 40k + usd 16k of grandpa’s money
- luckily I have not invested any fund from grandma
I probably need more buffer and more contingency reserve now that my reserve is almost depleted. See Need to rebuild OPM reserve#NOT another shop
Many people seem to invest with over-sized optimism, and possibly over-zealousness and over-commitment:
- Many Bridge/Peak investors choose to buy $X when they only have half that amount on that day, planning to tap into future income… Me too if buying a 4th shop unit.
- Most property investors take loans, including Youwei. I know a few buyers who avoided loans and I admire them — Yinghui, XiaRong
- Raymond bought 2 units, more than he could afford
- Genn took such a huge loan
- Genn tends to borrow from me
- some invest the year-end bonus, even in advance
The Overzealous behavior is largely driven by hot money herd instinct, fear of getting left behind, irrational and emotional, very likely to /crash and burn/ (i.e. burn your finger).
— decisive .. rEstate investing involves checklists, and lots of boring, painstaking homework to do, but many buyers have no time for due diligence. They feel they need to be decisive when buying a hot unit. They are pressured by sales pitch like “last 2 units” or “price rising soon”.
— case: MIH .. I resisted the pressure of “last unit at this price level“. I visited showroom on-site and took a few days. I think I returned to Singapore to send the deposit check. Even though I missed a smaller unit, my decision-making was prudent.
MAPIC: j4$1100 #
GEX knows the developer and can help reduce Megaworld type of problem.
Below are some of the potential benefits/ROI for the $1100 fee [membership fee + training fee]
t$Cost is $1100 + tcost. There’s refund guarantee — doesn’t feel like a marketing gimmick.
[!u=Not a unique benefit of this program. Without this program, I can also achieve the same]
— [u] benefit: micro_view.. Due to my experience trading stocks, mufu etc I have never focused on selecting specific units or locations that are underpriced, undervalued, or under pressure to sell.
Apparently, personal network is the “key”.
— [u] benefit: Risk /mitigation/..” Risk comes from not knowing what you are doing.” I have learned something from my ventures. The learning is crucial. I think P.Liew takes lots of bold actions because he is experienced. GS takes many risky bets than other ibanks thanks to risk mgmt system. The risk is still present and these players can fail, but their risk profile is very different form a foolhardy (傻大胆) or inexperienced investor.
So in the beginning it’s important to get your feet wet following a veteran.
Overseas rEstate (or SG commercial) is high risk hig return. I hope MAPIC has safety features built-in, to protect the small retail investors. If a small investor is too risk averse (like my wife), then perhaps they should stay away after paying for the training. This is Scenario K below/above.
— [u] benefit: guided expedition (to Everest) .. Except in U.S. stocks, I always believe paid guidance [consultation, advice] beats free guidance. In this case, the guidance covers due diligence [legal matters, rental projection, political risk assessment], negotiations, contract modifications .. very complex to a beginner.
My sister has some experience. To an experienced business person like her, it may not be so complex.
Compared to the assistance I received on Brazil project or Cambodia projects, I hope GEX team is more involved, more committed. Hopefully Comparable to NCT’s guidance, but I doubt it.
However, NCT is one-person, with limited bandwidth. What I offend him or he shifts his focus elsewhere?
— [u] benefit (IFF I take up a bulk deal): access to a SG commercial space .. SG location offers many real advantages over U.S., SEAsia, China… Advantages like familiarity and legal framework. So in SG the commercial space is very attractive.
This program brings me closer (if not “access”) to this and other alluring markets.
In a sense, the $1100 is a club membership to access this market + UK/Au markets.
— [u] benefit (IFF I take up a bulk deal): access to UK/Au markets, unrealistic without guidance.
I always have a secret fantasy to own a non-HDB property, but I have always stayed away, based on assumptions… Unproven Assumptions about risk. This risk comes from not knowing what you are doing, as discussed above/below.
— Q2: would I take on an A$500k home and sell my BGC unit? No. BDYK [BetterTheDevilYouKnow]
As explained in forward hazard rate, My BGC unit is now a much safer asset than it was in 2015. This improvement in “hazard rate” is realized, concrete and bigger than the promised improvement due to the GEX’s risk mitigation expertise.
- Concentration risk and size of exposure is much better (smaller) at BGC.
- No mortgage needed.
- Tenants are probably easier to find in BGC than in a typical suburb, unless the suburb is special but we won’t know it until we try (see FHR)
- .. NGRY could be better or worse.
- See blogpost on DCC
So why would I dispose of a safer, more proven cash cow for something riskier?
Q2b: would I take on an SG commercial and sell my BGC unit? Plausible
- currency risk
- legal system
- easier to find local agents
- easier to manage when I’m in the U.S.
— a few minor benefits
- [u] benefit: (IFF I take up a bulk deal) reduce concentration_risk of Cambodia while maintaining my allocation to rEstate sector
- [u] benefit: (IFF I take up a bulk deal) good use of my spare cash. As I said before, I would have a growing pile of spare cash before I leave MLP.
- [!u] benefit: (IFF I take up a bulk deal) reduce dependency on WSC_harbor and support stay-home mom, as explained in [21]to sis:G3specific goals@invest` #Shiller. See Q3 below.
- [!u] benefit: learn something about sReit
- benefit: possibly a comprehensive course for an investor overweight on rEstate (for decades), but self-taught.
— Q9: how could I regret this decision?
Scenario K: I don’t find anything meaningful in the 2D course. I don’t find any suitable deal.
Scenario: I find out that elsewhere I could access the same deal at equivalent or better prices (more likely for wealthy investors). Unlikely since I don’t even look at the non-HDB market.
The investment “opportunities” could be irresistible and derail my carefree bubble.
— The #1 biggest problem .. big mortgage is a potential derailer, and was one of the biggest show-stoppers in the past, whenever I considered overseas properties. Most retail investors are too greedy and aggressive.
Case in point — refinance to buy a second property. This strategy is sure to derail your ezlife bubble. You may break part of your bubble and roll it to cashflow low ground, not due to a storm, nor a swan event but a misstep, a manmade disaster. https://www.credible.com/blog/mortgages/cash-out-refinance-to-buy-second-home/ has a numeric example. Imagine your current home value is $400,000 and your current mortgage balance is $100,000. Now, say you want to make an $80,000 down payment on a second home. You’ll take out a cash-out refinance loan (mtg2) worth $180,000 (sized for you). Out of that, $100,000 will pay off your existing mtg1, and you’ll pocket the remaining $80,000 for the down payment. Your 2nd home will be on a brand new mortgage, but your 1st home will carry the 180k mtg2.
Right now, am actively planning the max-leverage (thing/scheme) with minimum cpfOA balance, no IRAS prepayment, no mtg PRP. The longer I /hold up/ this max-leverage, the heavier my burden weighs
- high burn rate due to IRAS and big mtg
- exposure to LIR hazard
- loss of opportunity to earn interest on cpfOA
So as soon as I lose interest/patience/hope in grabbing another property, I would abandon this max-leverage
— The #2 biggest (and neglected) item is U.S. relocation. (U.S. housing plan…) … Not If but When!
- Div stocks are much easier to liquidate. Selective cash-out. Low transaction cost.
- Aus, BGC property would all tie me down .
- SG commercial rEstate is better in terms of NRY, currency, legal risks, but quantum too big.
==== Q3: div stock ^ overseas (or SgCP) rEstate.. Shall I invest 200-300k into div stocks including Reits?
Paradox: I feel it’s unlikely I would invest so much into stocks. If I have 300k free cash (including wife’s) I would leave it as is rather than buying div stocks. But if there’s a rEstate deal, I would jump in head first (risky)
jolt: With div stocks the quantum advantage is also its /handicap/, as I can’t persuade myself to commit 500k on an ETF or 10 stock (diversification). So I end up on a very slow incremental top-up. See also [21] speed up: riskCapital4U.S.eq
jolt: I think the idea of buy-n-forget is 3x more effective with rEstate than div stocks. With rEstate there’s not much monitoring to do.
Jolt: shifting allocation between asset classes is costly and slow with rEstate.
sReits can be a proxy for SgCP, and can be better than usReits due to local knowledge, but this plan requires lots of due diligence.
Paradox: I have a strict discipline to never borrow money to buy stocks, but I do borrow money to invest in rEstate !
Paradox: consistent payout trec .. the dividend superstars are more proven than most rEstate markets.
See also
buy new rEstate: NGRY enough2compensate4..
- CC: ccy
- LL: legwork .. local agent engagement, bill management (BGC xp), repairs
- leverage .. any kind of loan
- quantum .. Even the smallest quantum, like SGD 100k, can threaten my /bubble/.
- ZZ: policy change
- PP: pre-built
Any rEstate investment in any country (even in SG) would disrupt my current ezlife. That’s a downside to balance the upside of .. <whatever>
Given my current cashflow high ground, given my carefree bubble [1], and given the current 4 ppa risk-free rate in Singapore, I really don’t need to take on any of these /hazards/ associated with overseas rEstate.
For a SGD 200k quantum, I would need to earn enough “excess return” to compensate for CC, LL, ZZ and PP. “Excess return” is NRY minus risk_free rate. I think NRY need to hit 6%. GRY need to hit 9%.
— PP.. So far, I have always bought pre-built. I think a wealthy investor would do the same as Patrick, who never buys pre-built overseas condos, probably due to ForwardHazardRate
— [1] derailer of my carefree bubble
- renovation
- LL
- worry about ccy
- worry about price stagnation
Overseas rEstate is always headache. In contrast, I think stock picking is less of a derailer.
## famous people from”(half)broken”families
- eg: my dad .. lost his father at 14, before he joined the army. His mom also left.
- eg: LKY grew distant from his dad, according to a [[Times]] obituary
— eg: Steve jobs, soon after birth, was given up (for adoption) by his parents.
(Note Jobs’s “broken family” story is well-covered, easy to blog!)
Job’s biographer Isaacson makes it clear that even though Jobs always knew he was adopted, he considered his adoptive parents to be his real parents. Because they’d chosen to give him a home while his birth parents gave him away, Jobs grew up feeling both abandoned and special.
Studies have revealed that children heal from the separation better when their parents tell the story of their adoption. While Steve Jobs’s adoption was closed — each couple would never know one another, so the child had no contact with or information about his biological parents—Isaacson says that Paul and Clara Jobs emphasized to him that they chose to be his parents.
Jobs declined an invitation to meet his biological father but warmly embraced the opportunity to meet his biological mother.
me^SgFolks hav`DCC rEstate #debt
See also %%riskTolerance: which countries feel OK
DCC[developed commonwealth countries] refers to UK/Aus/NZ/SG
I often feel inferior and second-class about my overseas rEstate portfolio, but it is vague and possibly irrational. Let’s pit my portfolio against theirs.
Paradoxically, in a closer look, mktRisk/NRY/appreciationPotential are not the key yardstick, in the presence of currency hazard .. legwork .. credit risk… economic derailers
Legal cost is much lower than rich countries, though legal process is often less efficient.
— same initial cash outlay: SGD 900<-1000k
Perhaps 2<-3 condos vs mine [Bj + SEAsia]
— 🙂 🙂 currency hazard .. See %%riskTolerance: which countries feel OK
— 🙂 🙂 debt burden. https://tanbinvest.dreamhosters.com/26043/sg-home-buyers-max-out-mtg-quantum/ shows that majority of Singapore home buyers take on the maximum debt burden, to maximize “investment”
— 🙂 cross-currency LIR[ Loan IR] hazard .. See %%riskTolerance: which countries feel OK
— 🙂 prime locations .. see Eynesbury by Resimax as an example
— 🙂 commercial not residentail
— 🙂 taxes are lower
— 🙂 local agency remuneration is lower.
— 🙂 Legal cost (lawyer fees++) is much lower than rich countries, though legal process is often less efficient.
— 🙂 If I have to travel there for sight seeing or problem resolution, total trip cost is lower.
— 👎👎 country-risk::economic .. more mature developed economies
— 👎 country-risk::legislation .. developing countries tend to impose capital control, foreign ownership restriction
≈≈ liquidity ..
👎 presumably less developed market and probably harder to sell than in UK/Aus without a loss
🙂 lower tx costs [fees] require a smaller price gain to break even
🙂 My low-quantum units presumably are affordable to more buyers, therefore easier to sell without loss
≈≈ NRY .. no clear winner..
Before covid, I can only guess UK/Aus NRY (post-tax) is about 2-5% excluding LIR, considering vacancy rate…
🙂 My Cambodia NRY is superior
==== minor factors
— 👎 country-risk::legal .. but after the initial years, FHR improves
— 🙂 geo-diversification .. no clear winner. They might be concentrated in one country, at most two
[17]sReit as proxy+parking@@ NO
I feel up to 10k investment is fine if I have surplus USD. Target dividend = 6% of the initial investment amount.
Li Qi has more experience with sREITs and felt the supply/demand dynamics are more like stocks than properties. But I guess long-term trend and DYOC are the things to focus on, and sReits may resemble rEstate.
There are many online articles comparing REITs vs real properties. It may be too time consuming to read all of them.
— if a SGX REIT offers consistent 5.5% yield without the legwork, then i think it’s comparable to PeakRetail in rental yield.
— Compared to real properties — reliable dividend on the back of a real estate asset with capital appreciation potential.
- 🙂 much smaller quantum
- 🙂 much better credit risk
- 🙂 much more liquid .. lower transaction cost, faster completion
- 👎higher volatility
- 👎capital appreciation much lower, if any. Probably similar to the capital appreciation of stocks.
Q: if you hold 10Y, is there a good chance of appreciation? I feel yes for real estate in parts of Asia, tristate but but not in many U.S. states and not for REITs
https://www.99.co/blog/singapore/reits-properties-investment/ lists many risks, complications and active management required of landlords. With these “risks”, the return is presumably much higher than REITs. However, the Singapore data in this web page proved me wrong.
— Compared to a high-dividend stock
I don’t want to take further risk than REIT. I feel a dividend stock would have much higher risk, too uncomfortable for me.