Me & My Money Series (Sunday Times)

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#81
Jan 2, 2011
me & my money
Focusing on what he knows best

Entrepreneur puts his cash into improving hisbusiness or buying property
By Lorna Tan, Senior Correspondent

Mr Ken Lim, a salesman-turned-entrepreneur, has witnessed many ups and downs in his life. But nothing prepared the chairman of property firm RE/MAX Singapore for the overwhelming response of real estate agents who came knocking on his door to be his franchisees in recent months.

In 2002, he had bought a one-office franchisee licence from United States-based RE/MAX for $25,000. The latter provides administrative support to real estate firms.

In January 2009, he bought the master franchisor licence for $300,000. The timing was right. In an effort to raise the standards of the real estate industry, property agencies are now required by the Government to have proper operating systems.

As a result, RE/MAX saw a jump in its number of franchisee/associate firms to 23 now, from just four before June last year.

'Many small agencies here do not have a proper operating system. I have a business centre in Toa Payoh that handles software, administrative and compliance matters for my franchisee/ associate companies. All this will relieve them of their administrative work,' he said.

Mr Lim, 59, started out as a successful door-to-door salesman selling Electrolux vacuum cleaners after his national service. When he left Swedish firm Electrolux, he was its regional sales director for South-east Asia.

He set up his trading firm Fait International in 1986 which, however, closed down in 1998 during the financial crisis. He attributed the failure to an overexpansion of the business into the region.

Nursing a huge financial loss of more than $1 million, he ventured into real estate. He set up Maxi

Real Estate with about $20,000 in 1999 and was making about $300,000 from his sales commissions a year later.

In 2001, the firm was renamed The Real Centre.

It was a year later that he bought the one-office RE/MAX franchisee licence.

Mr Lim is married to Ms Aileen Ang, 58, who is the financial controller at The Real Centre, and they have two daughters, Eunice, 37 and Hoonie, 34, and six grandchildren. His elder daughter heads the training arm Real Centre Network while her husband Thomas Tan, 37, heads RE/MAX The Real Centre Property. The former is one of two course providers for the new Real Estate Salesperson course administered by regulatory body, the Council for Estate Agencies.

Q: Are you a spender or saver?

I'm more of a spender but my expenditure is mostly on my family on dinners and holidays. Money is not yours until you use it. Since I tend to be a spender, whenever I have extra cash, I will either invest in improving my business or in a small industrial/commercial property. When I need more cash for my business or for other investment opportunities, I work harder and close more deals.

Q: How much do you charge to your credit cards every month?

I hardly use my two credit cards as Aileen, my wife, handles most of my finances. I probably spend $2,000 or less a month.

Q: What financial planning have you done for yourself?

After the ups and downs in my career, I am now very cautious in my investments. Besides having cash set aside for emergency and investment opportunities, I have less than $100,000 invested in blue chips like OCBC. My insurance life cover is about $1 million.

The bulk of my investments is in my business The Real Centre as I prefer to focus on investing in what I know best. So far, I have invested over $1 million in my RE/MAX master franchisor business. And I plan to build a legacy, to create a unique business model that will outlast me. The master regional franchisor licence is for 40 years. The royalty fees from the franchisees and my existing property investments should give me reasonable passive income.

Q: Moneywise, what were your growing up years like?

I am the eldest child in a family of five. My father was very authoritarian and was the disciplinarian in the family. He was a school principal from Fujian while my mother was a school teacher. My father used to say: 'You don't work, you don't eat.'

He laid down the rule that when I started working, half of my income had to go to the family, that is, to the parents who raised me. Until 15 years ago when my father died from a stroke, I used to give my parents half of my pay every month, even after I got married.

When I was growing up, we lived in an attap house in a school compound in Jalan Hock Chye near Tampines.

Q: How did you get interested in investing?

I'm in the property line so it is only natural that I believe in the benefits of property investments, especially in industrial properties for their high rental yields.

Every now and then when I have spare cash of, say, $100,000, I will use it as down payment for a unit.

Q: What property do you own?

I previously owned and rented out two three-bedroom condos in the Upper Serangoon area. They were bought in 2004 and 2005 for $503,000 and $560,000, and sold for $680,000 and $700,000, respectively, in 2008 and 2009. Now I own a four-room HDB flat in Lorong Lew Lian and seven industrial properties.

I bought the HDB flat in 2004 for about $200,000 and am renting it out at $2,000 a month. The current value of the flat is about $440,000. From 2004 till last year, I bought seven industrial properties at Wintech Centre at Upper Paya Lebar. They range from about 800 sq ft to 2,000 sq ft. My average purchase price was around $220 psf and the estimated current psf is $330. The average annual rental yield is 9 per cent.

Q: What is the most extravagant thing you have bought?

I guess it was our family holiday three years ago. Twelve of us, including my two daughters, sons-in-law, and six grandchildren, went on a trip to the United States. It cost me almost $40,000. It was really worthwhile considering the fun and joy we had.

Q: What is your retirement plan?

I am sure I will not retire as doing business is my hobby. I think retirement will be very boring and I may end up feeling unwanted and unproductive.

I aspire to be like Minister Mentor Lee Kuan Yew, who is still very active and so passionate in what he does even though he is in his late 80s.

Q: Home is now...

A rented two-storey 2,200 sq ft semi-detached house at Yio Chu Kang for $3,300 a month. The land size is 3,000 sq ft.

Q: I drive ...

I drive a black six-seater R350 Mercedes. It's convenient to pick up my grandchildren.

lorna@sph.com.sg

Filial piety

My father used to say: 'You don't work, you don't eat.' He laid down the rule that when I started working, half of my income had to go to the family, that is, to the parents who raised me. Until 15 years ago when my father died from a stroke, I used to give my parents half of my pay every month, even after I got married.

MR KEN LIM, salesman-turned-entrepreneur

--------------------------------------------------------------------------------

WORST AND BEST BETS

Q: What has been your worst investment to date?


I lost $300,000 in Malaysian Clob shares when Malaysia unexpectedly banned trading of its shares on Singapore's Clob International in 1998.

Q: And your best investment?

My best investment is definitely buying and investing in the RE/MAX master franchisor business.

The investment began to pay off recently.

From a humble set-up of just four franchisee/associate companies, it has grown to include 23 franchisee/associate companies throughout Singapore which are handling many aspects of real estate business, from residential, commercial to industrial.

I see exponential growth in this business. We expect to grow to 50 franchisee/associate companies by this year.

Our target is to achieve $50 million in revenue this year from the current $15 million.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#82
""Q: What property do you own?
I previously owned and rented out two three-bedroom condos in the Upper Serangoon area. They were bought in 2004 and 2005 for $503,000 and $560,000, and sold for $680,000 and $700,000, respectively, in 2008 and 2009. Now I own a four-room HDB flat in Lorong Lew Lian and seven industrial properties.
I bought the HDB flat in 2004 for about $200,000 and am renting it out at $2,000 a month. The current value of the flat is about $440,000. From 2004 till last year, I bought seven industrial properties at Wintech Centre at Upper Paya Lebar. They range from about 800 sq ft to 2,000 sq ft. My average purchase price was around $220 psf and the estimated current psf is $330. The average annual rental yield is 9 per cent.""

He got his HDB flat in 2004 - a basic necessity for many poor residents. Since 2004 & 2005 he also had 2 private condominum units plus those industrial units. Personally, I feel such guys should be asked by HDB to let go of their hdb flat.
Reply
#83
agreed.

As long as one has got other properties on top of hdb flat, they should return their HDB flat or HDB should force-sell it and get it back.

Why is MBT not doing this? yet, forcing the younger generations to pay more and more for their HDB flats instead??! :O
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
4) In BULL, SELL-SELL-SELL! 
Reply
#84
Haha.. many of you here may be in the shoe of the Mr Ken Lim in 10-20 years time.
Or maybe to a lesser extent, you own one condo and one HDB. You choose to stay in condo and rent out the HDB.

What will you do then?

The next younger generation will accuse you holding an asset that are meant for poor Singaporeans.
Reply
#85
It's interesting to note that he has not purchased any more residential properties since 2005, and has chosen to rent a semi-d to stay in, even though he still holds a hdb flat.

Surely Mr Ken Lim must know what he is doing, as he has been in property business for years as a business owner.

I can only conclude from his actions the following-

1. Residential non-landed properties are over valued now.
2. Residential landed and industrial properties offer relatively better value.
3. It's "relatively" cheap to rent a landed property to stay in, compared with apartments/condos. Big Grin i.e. poorer yield
Reply
#86
(02-01-2011, 04:57 PM)ichiran Wrote: It's interesting to note that he has not purchased any more residential properties since 2005, and has chosen to rent a semi-d to stay in, even though he still holds a hdb flat.

Surely Mr Ken Lim must know what he is doing, as he has been in property business for years as a business owner.

I can only conclude from his actions the following-

1. Residential non-landed properties are over valued now.
2. Residential landed and industrial properties offer relatively better value.
3. It's "relatively" cheap to rent a landed property to stay in, compared with apartments/condos. Big Grin i.e. poorer yield

He uses the higher HDB yield to subsidise renting of the landed property and obtains a better quality of life.
Overall he gets "nett happiness", made possible due to poor yield of landed. Big Grin
Reply
#87
(02-01-2011, 04:57 PM)ichiran Wrote: I can only conclude from his actions the following-

1. Residential non-landed properties are over valued now.
2. Residential landed and industrial properties offer relatively better value.
3. It's "relatively" cheap to rent a landed property to stay in, compared with apartments/condos. Big Grin i.e. poorer yield

Industrial properties is obvious, but how you deduce on residential landed is of better value? The reason for him to rent a landed could be his own preference and may not be related to monetary value term. Afterall, he need a roof over his head, can't be staying in his industrial properties.
Reply
#88
True it may be his personal preference to stay in landed property. But he could also have gone for a condo though that would cost a lot more for a similar sized apartment in a similar location.

If one were to look at caveats lodged in 2010, there are increasing numbers of hdb upgraders in the landed transactions, which implies that people are realizing the relative value of landed vs. non-landed.
Reply
#89
(02-01-2011, 04:57 PM)ichiran Wrote: 2. Residential landed and industrial properties offer relatively better value.
3. It's "relatively" cheap to rent a landed property to stay in, compared with apartments/condos. Big Grin i.e. poorer yield

If landed properties are of better value now, wouldn't it be better to buy the property instead of renting. Of course, he might have other reasons for renting, but looking at the number of investment properties he has, he can certainly afford to buy.

On a separate note, what are the good industrial properties to invest in?
Reply
#90
In this case, the semi-detached house may belong to someone he know and was given a special price. Somehow, I thought the rental price of $3300 is quite cheap for his semi detached.
But, I am not agent and so my guessing is probably not right Tongue
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