Business Times Interviews - Starting Young

Hi, am fairly new here. Came acrossed this when I was browsing for starting young business times column. I don't invest in stocks but just property. With regards to jeanpaul interview, I think she did very well for a young person to be owning a property. And am sure the property is financed through a loan, an investor usually leverages to get the best result. it would not make sense to buy one 500k property in cash when you only need 20%. With 500k, you can buy 5!

Secondly, it doesn't matter where she bought it and how much she bought it for, afterall this forum (starting young) serves as a platform for young investors to speak out.

Lastly, there is no right and wrong time to buy property, we can never time the market accurately, most importantly is to keep both eyes open all the time and buy the right property than to buy at the right time.

(14-06-2011, 03:49 PM)Chess_gal Wrote: Secondly, it doesn't matter where she bought it and how much she bought it for, afterall this forum (starting young) serves as a platform for young investors to speak out.

Lastly, there is no right and wrong time to buy property, we can never time the market accurately, most importantly is to keep both eyes open all the time and buy the right property than to buy at the right time.

I have a different view. Timing is in fact a very important factor when it comes to buying property, as the property cycle tends to be much longer and stretched out compared to stock market cycles. While I do agree timing the market is impossible, one could take various cues such as price/median income, gap between HDB and private housing and general median debt servicing ratios as rough guidelines. The availability of cheap credit through low interest rates should also factor in.

Buying the right property in the right location is as important as buying at the right price. This is the same logic for companies as well - you may encounter an excellent company, but at the wrong price it becomes a poor investment.

(14-06-2011, 03:49 PM)Chess_gal Wrote: Secondly, it doesn't matter where she bought it and how much she bought it for

Why not?

(14-06-2011, 04:10 PM)Musicwhiz Wrote: I have a different view. Timing is in fact a very important factor when it comes to buying property, as the property cycle tends to be much longer and stretched out compared to stock market cycles.

I fully agree with MW in that timing for property investment is extremely important. In your whole life you get to have 3-4 such opportunities. All you have to do is time 1-2 times correctly and you will have a nice nest egg to retire on. I have seen average Joe with not very high earning power doing this. The beauty of timing property cycles is that it is not as volatile and you don't have to be precise to catch the trough. however if you got the timing wrong, statiscally from peak to peak or bottom to bottom, you make the average 3-4% per annum...enough to protect against inflation and not much more. asked those who bought during the '96 peak and see how much they make now.

(14-06-2011, 05:29 PM)Jacmar Wrote: The beauty of timing property cycles is that it is not as volatile and you don't have to be precise to catch the trough. however if you got the timing wrong, statiscally from peak to peak or bottom to bottom, you make the average 3-4% per annum...enough to protect against inflation and not much more. asked those who bought during the '96 peak and see how much they make now.

The Japs have been timing their purchases since 1990. I am quite sure no matter how they time it for the last 20 years and also any kind of property, it's going to be negative returns.

http://www.imes.boj.or.jp/english/public...3-E-15.pdf

At least, those who bought properties in '96 in Singapore still have a chance to see daylight.
The poor japanese had been waiting for the last 20 years to break even.

But, I know, this time will be different. Singapore will be different.

(14-06-2011, 04:10 PM)Musicwhiz Wrote:

(14-06-2011, 03:49 PM)Chess_gal Wrote: Secondly, it doesn't matter where she bought it and how much she bought it for, afterall this forum (starting young) serves as a platform for young investors to speak out.

Lastly, there is no right and wrong time to buy property, we can never time the market accurately, most importantly is to keep both eyes open all the time and buy the right property than to buy at the right time.

I have a different view. Timing is in fact a very important factor when it comes to buying property, as the property cycle tends to be much longer and stretched out compared to stock market cycles. While I do agree timing the market is impossible, one could take various cues such as price/median income, gap between HDB and private housing and general median debt servicing ratios as rough guidelines. The availability of cheap credit through low interest rates should also factor in.

Buying the right property in the right location is as important as buying at the right price. This is the same logic for companies as well - you may encounter an excellent company, but at the wrong price it becomes a poor investment.

I tend to agree with this. I think buying a property (much like buying shares) has much to do with timing, timing, timing. (It's not all location, location, location)

When we say timing, we are essentially referring to price. The 'right' timing, so to speak, is when nobody else wants to buy anything and you're pretty much the only buyer in town.

There are some great companies on the SGX that I would like to own, but not at the current price (time). Likewise, I would like to own a property too, just not now.

Timing isnt the only factor in property investment, it has to also include location & branding of the development. At the moment, the property market is pretty hot, but one cannot quickly judge whether Jeanpaul, the girl has bought the property at a fair price or below market. she could have secured a fairly good deal, and am sure she has done her due dilligence before parting with her hard earned money.

Instead of commending her achievement, I sense forumers are questioning her investment strategy. I laud young people who invest in property, it takes a lot of guts and courage to sign on the dotted line rather than to click BUY on the trading platform.

I hope this platform would encourage and motivate forumers to share their investment strategy than to scrutinise each and every of their achivements.

(17-06-2011, 10:39 PM)Chess_gal Wrote: Instead of commending her achievement, I sense forumers are questioning her investment strategy. I laud young people who invest in property, it takes a lot of guts and courage to sign on the dotted line rather than to click BUY on the trading platform.

To be fair to her, I do commend her for her savviness in investing at a time when most people her age would be spending money and having fun.

But the idea of posting such interviews is to study and scrutinize; not for the sake of criticising but also for learning and to understand how these young minds work.

My take on this is - if you paid too high a price and did not do your proper due diligence, "investing" can easily degenerate into speculation. This is the same with equities as well.

So to be clear, I am not saying she should not invest in property, but to do so requires a lot of planning as well as deep pockets. I certainly hope she has both!

1. Timing is the #1 factor in buying a property in a small city like Singapore where development is more or less even; the market is sufficiently transparent that it's going to be pretty rare to find an under-appreciated jewel. If you look at the residential price index over the last 10 years, the difference between buying Central & Non-Central properties is less than 2% (over 10 years) despite the worsening traffic, crowded trains and growing income gap. Whereas if one bought property in one year rather than the next the difference in returns is going to be much larger than 0.2%.

The mantra location, location, location is quite important in a big country like the US where different regions & neighbourhoods have vastly different economic characteristics & development and local governments.

2. The (young) people to laud are not those who invest in property or in stocks or in passive financial assets; the people to laud are the people of any age who start new businesses (whether themselves or maybe as part of a larger organization), design new fantastic products - these are people who create jobs and value for everyone else. Financial investments are a zero-sum game - if you're beating the index it's because someone is trailing it.

3. Reading the article closely (looking at when she bought her UOB shares and transferred from shares to properties), and assuming everything she said is true, she probably bought the property either last year or this year. Time will tell if it's a good investment.

Just one question - where does she get the money to invest in her bubble tea business and buy 3 properties? I guess she must be a really good saver since she's only 26! I really admire her entrepreneurial spirit!

Business Times - 20 Jun 2011

STARTING YOUNG
A passion for real estate

Accountant Melissa Low tells LESTER HIO she eyes mainly properties with positive cash flow

MELISSA Low's firm belief in investment lies not in monetary terms, but in investing in herself.

To this end, the 26-year-old accountant takes the time and effort to attend investment seminars and to pore over books and research before deciding what to invest in.

Her passion for investment lies in real estate and to date, she has three properties in Malaysia to her name, with one rented out at a 7 per cent yield while the other two are still under construction.

Besides her main passion for real estate, Ms Low has also diversified into an online and book distribution business, where she sells books concerning real estate.

Q: How did you handle money when growing up?

A: I was very prudent with money. Since young, I had been financially independent. My venture into business started when I was as young as six years old, when my neighbours and I would organise house parties and charge an entrance fee to other neighbourhood friends. In school, I would organise games and events where again I would charge a fee for participation.

Q: What sort of financial planning have you embarked on?

A: I've placed 60 per cent of my assets in real estate. I also have a few insurance policies in Singapore and Malaysia. I also invest regularly in unit trusts, which so far have been giving me a 30 per cent return because I invested in commodity-linked unit trusts during the financial crisis.

Q: Do you spend more or save more?

A: It depends on certain months. When I buy property, I will certainly spend more, but I consider that as an investment rather than pure liability spending. I only shop when necessary or when there are bargains.

Q: Do you use credit cards?

A: Yes. Having credit cards can be good for loan application if you pay your bills on time. The Central Credit Reference Information System or Credit Bureau Singapore keeps track of your credit record, which can be helpful when you apply for a loan, as a clean record can help you secure one much more easily.

Q: What got you interested in investing?

A: I was influenced by my dad, who is an entrepreneur himself. I was taught to be independent and work hard for what I want in life. When I joined the corporate world, I realised I was living paycheque to paycheque, and having an investment plan assures me of a side income as well as a way out of the rat race, as I have control of my finances.

Q: When and how did you get started investing?

A: I first invested in a bubble tea business when I was 23, which folded after six months. I then decided to earn passive income instead, and hence I started to actively search for real estate properties in Malaysia.

Q: What do you currently invest in?

A: Real estate is my main investment. I also invest in my own business, Alpha Marketing, which sells and distributes real estate books and research articles online.

Q: What is your investment strategy?

A: My objective is to buy properties with positive cash flow. At the moment, I only have one property in KL with a yield of 7 per cent and two under construction, one of which will be ready next year, and the third one due four years later.

Due to the new cap of 70 per cent margin of financing for third properties onwards, my investment activities has slowed down tremendously.

Secondly, I buy properties in prime locations and target the middle to higher income tenants, as I do not want the hassle of dealing with problematic tenants due to the distance as I am currently working in Singapore.

Q: How would you describe your risk appetite?

A: Prudent. I do my homework before putting my money down. I buy properties for yields and am not much of a speculator.

Q: What has your best investment been so far?

A: An office lot in the city centre of KL. I bought it for RM700 (S$284) psf, the project beside the office was launching at RM1.2k, that is already a gross RM500 psf gain.

Q: What has your worst investment been so far?

A: Most probably my bubble tea business at Wisma Causeway, KL. It was mismanaged and not quite optimised despite it being located strategically. It was also a hassle to manage as I was in Singapore. Long distance management is not suitable for a retail business.

Q: Any tips to share from experience in investing?

A: Do a lot of research and mingle with the right crowd. Networking is important.

Invest in financial education, attend seminars and set an objective when you invest.

Before you start parting with your hard earned money, set aside a few hundred dollars to be educated, be it through books or seminars. Take action only after you think you are ready.

In terms of real estate, look for undervalued, distressed and fire sale properties.

Q: What are your long-term investment goals?

A: To have five properties giving me positive cash flow before I turn 30.

Q: If you were a millionaire, where would you put your money?

A: I would invest in real estate and would like to set up hotels. It will be killing two birds with one stone, as I like businesses and real estate. Owning a hotel would be good.