Category: rEstateSEA

BGC rental yield projection: local^foreign tenants

Posted on by tiger40490

Hi Raymond,

Today I want to focus on local tenants vs foreign tenants.

For our 33-square-meter studios, the reported 40k monthly rental was really foreign tenants market rate.  There’s a hidden rental market — the local tenants market. This market was invisible to us because our units are brand-new and high-end, so local tenants are unlikely to afford them. When the rental market is down, then we need to rely on the local tenant market. Rental yield is much lower.

As a rule of thumb, it’s dangerous to rely on foreign tenants, whether we are a landlord in Singapore or BGC.

There are other “haircuts” to hurt our rental yield. So in the end, we won’t get SGD 12k annual rental income as promised. I think SGD 6k would be lucky. After the pandemic, I hope to earn SGD 8k/Y net income.

This is a hard lesson for me.

— haircut: vacant months — many owners accept it and leave their units vacant for more than a month.

Sense of urgency is needed.

— haircut: condo fees — Whether we have tenants or a vacant unit, we must pay this fee 🙁

— haircut: commission — at least one month per year. If we were local owners then we would be able to pay the rental agent once only and manage the lease by ourselves.

— haircut: utilities

— haircut: currency movement

Cambodia 20Y trend: OBOR

Posted on by tiger40490

Even in 2016, China was already the leading infrastructure investor in the country. Long history of bigBrother/smallBrother brotherhood. Chinese companies have too much capacity and need to expand to SEAsia. These companies include exporters, real estate, casino, manufacturing, and retail shops targetting expat Chinese. They probably see Cambodia like a poor cousin of Guizhou. That was my impression of Cambodia even before OBOR.

After reading a a bit of political analysis of OBOR, I feel Cambodia has probably stronger dependency on China than other Asian countries.

* Cambodia government has probably the longest political alliance with China, which was tested repeatedly after the US-Vietnam war, and during international sanctions. Among the ASEAN countries, China often views Cambodia as its natural confidant and uses Cambodia to sway regional policy decisions.
* Cambodia is one of the least developed SEAsian nations and need infrastructure (OBOR) more than other nations.

As long as Chinese investments (OBOR etc) keep flowing, I think the Cambodia economy would grow at the current fast pace. Real estate sector is esp. sensitive to Chinese hot money. In a way, I am long OBOR -and- long Sino-Cambodia brotherhood. You can say I have placed big bets.

https://www.orfonline.org/research/china-relationship-asean-explainer/ says

One of the ASEAN countries closest to China is Cambodia, often accused of kowtowing to China. Its economic, military, educational and cultural relations with China are robust. It has deep penetration of BRI projects. It downplays the South China Sea issue within ASEAN forums. In many ways, Cambodia represents the dilemmas of a small insecure nation with an authoritarian regime in need of the backing of a great power to survive.

All politics is local, including Cambodia’s.

 

BGC^SG condo #briefly

Posted on by tiger40490

I would rather hold the BGC condo than buy-n-hold a SG condo. Holding BGC condo provides 1) higher rental yield 2) more upside. Sg condo’s advantage is stability in a world Tier 1 property market, better currency risk.

Rental yield is the biggest factor, esp. given the high quantum and high commitment.

I feel BGC condo has rental demand among locals in addition to expats. SG condo mostly target expats.

 

MIH deal: too good2b true@@

Posted on by tiger40490

Q: Does the MIH GRR and put option sound too good to be true?
%%A: I visited the site and stayed with my father in their flagship serviced apartment .
%%A: MIH doesn’t hide the fact that these guarantees are only as good as the MIH credibility. As such they are not really out to cheat investors.

https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf lists a few Common Red Flags of Fraud:

— High investment returns with little or no risk… Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. “Guaranteed” investment returns or promises of high returns for little risk should be viewed skeptically.

— Overly consistent returns… Investments tend to go up and down over time, especially those seeking high returns. Be suspect of an investment that generates consistent returns regardless of overall market conditions.

bank::Maybank KHM #ATM

Posted on by tiger40490
  • 👎I find the compliance very strict, and also lots of small fees …
  • 🙂 chat is 27/4 including holidays
  • BKK1 branch Sok Ly’s  Contact +855 23 210 448. Namy is nice +855 77777 457 on Whatsapp.
  • Acct 15-digit
  • Passport: E3980003K as of Feb 2025
  • Mobile number used: 81120014. To update it, need to visit branch. Otherwise, can try sending email. Better keep it until I give up on U.S.
  • webank password update requires passport, acct details and smsOtp!
  • Account was opened 26 Dec 2016.

USD TD pre-mature uplift: zero interest, but “You will not lose any principal here in maybank Cambodia, Mr. Tan.”

— TT transfer to any bank for $17 if under $4k.
👎 Receiving wire transfer from overseas has a 0.10% charge. I was changed USD 85 on 5 Aug 2021 (boy turning teenager) ! I think other banks may have similar charges but why my recipients never tell me?
* perhaps those recipients are preferential banking clients
* perhaps those recipients don’t have a valid reason to transfer this cost to investors.  It could be a small cost of doing business just like courier cost.

— online banking:
SMS 81120014/90013516 needed only for fund transfer and password change (also initial registration). Token not applicable.
— withdrawal:
I felt there’s no need to do outgoing TT, because we can always withdraw USD and carry (like 20k) through airport custom.
— overseas debit card usage:

  • wrong PIN 3 times -> locked -> I was able to chat/call the 24/7 hotline to unlock it.
  • overseas Maybank (only) ATM usage is free, but such usage is enabled for 12M only. Chat/call to enable again.
  • 👎 If misplaced, then must fly in to replace.

— charges and fees

  • 👎debit card has $8/year fee. Can’t cancel by phone. Can’t waive.
  • 👎dormant account has additional $10/year

— 🙁 Dormant: 6M inactivity makes the account dormant i.e. blocked and unusable. (Maybank staff is supposed to call me but I’m not so confident.) Not possible to reactivate the account remotely, so I must fly in again. When I’m out of Cambodia, there are 4 ways to prevent the account becoming blocked i.e. dormant:

  1. use debit card to make a quarterly withdrawal
  2. online fund transfer to a friend’s account
  3. last resort — TT inward transfer into the account.

khm shop units=excellent outlier@@ No!

Posted on by tiger40490

Now I think the 3 shop units together appears to be an outlier if “plotted” along return vs risk

  • ==== returns
  • guaranteed rental without vacant period.
  • potential windfall
  • — cost that erodes returns
  • 0 legwork — huge cost in the U.S. context and Singapore too
  • 0 taxes
  • 0 repairs
  • low currency exchange cost
  • ==== risks are mostly listed on REIT/dividend stock^shop unit but I will pick a few
  • uncertainty of dividend? perfect track record so far
  • perceived risk to principal? no sign of trouble but this is the biggest question mark over the outlier status.

Conclusion — too early to call it an outlier. Need to see some units changing hand at reasonable prices.

Because this data point appears to be so much ahead of the pack, I tend to develop emotional attachments.

I tend to feel too proud of them.

2BR^1BR rental properties #BGC++

Posted on by tiger40490

— rental:

Contrary to some claims, the same price two studios are faster to rent out than a 2BR. Now I feel it’s “much faster”.

  • Across many countries and cities, vast majority of tenants need privacy above all (such as location, price,,,). The more private units, the more GRY. Remember 43R.
  • More affordable to more tenants including students, solo professionals and young couples without kids.

Perhaps 2BR has better windfall potential but windfall takes a long time, and at this stage of my life I care more about current income, as long as NAV is not sacrificed.

The current income should come from “free cash flow”.

— resale: I have the same bias. See Cambodia residential properties for China investors #XR