Which investment method yields higher?

[East Lover]

Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

I did a simple maths calculation for the amount of $445K upfront capital.

Condo:
Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

Rental: 3500/mth
Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
gross cash: 3500 – 2110 = $1390
***must deduct mgmt fee, property tax and income tax

REIT: 455K
Dividend: 455K x 6% = 27.3K per year = 2.275K per mth

From cash flow point of view: REIT is better as $2275 >> $1390, and it’s tax free!

From capital appreciation point of view: Condo may be better, as property price may inch up year by year. And after 20 years, you will have a fully paid house. :p

So which one is better investment method at today’s situation? which one will you choose?

[phantom_opera]

Both are risky ;)
but
No risk no gain
Leaving all $$ in banks = inflation risk
So
it is the right amount of risk tailored made to your situation and continuous risk mgmt that matters

[stl67]

Both are risky ;)
but
No risk no gain
Leaving all $$ in banks = inflation risk
So
it is the right amount of risk tailored made to your situation and continuous risk mgmt that matters

very true indeed... all investment voice down to holiding power when mkt turns.
like TS, i also constanly ask if my $ is not in property, would it be better invested on some financial products? Guess is timing and risk apettite.

Still prefer property for now as once you buy dont need to do anything, dont need to check the mkt up or down, dont need rebalance the portfolio.. this is for lazy people like me.

[mcmlxxvi]

plus property in lousy times u can still LIVE in it and use it

try LIVE in a REIT

[ikan bilis]

plus property in lousy times u can still LIVE in it and use it

try LIVE in a REIT

:tsk-tsk: ... reit don't bankrupt you when lousy times...

[phantom_opera]

Singapore's City Developments, Wachovia Group Team Up To Buy Residential Project

The 60 percent stake by Wachovia was worth S$259.4 million.

Source : AFX News Limited, Nov 5, 2007

==============

Wachovia sold its 60 percent stake in the towers at the Cliveden at Grange development for S$204.5 million ($167 million) to the country’s second-largest property developer, City Developments said.

===============

[cnud]

REITS looks better.

If project 6% into 20 years, you get 120% of pure dividends. Means you get more than double the initial outlay. Plus the potential upward value of REIT.

Capital appreciation for own stay is the best.

Resi rental play has low yield, high risk in today's SG context.

[roly8]

Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

I did a simple maths calculation for the amount of $445K upfront capital.

Condo:
Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

Rental: 3500/mth
Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
gross cash: 3500 – 2110 = $1390
***must deduct mgmt fee, property tax and income tax

wa! left only $1390/mo?!

WAH KAO.

i rather hoot shares and collect dividend.. $$250k can collect $800/mo divdend at least (from somewhere i saw on internet lah)


btw, thanks east_lover zeh zeh for doing the math.
because $1million is all i can afford to to go for if really want to buy a property..
but that dream is gone..:(

[East Lover]

wa! left only $1390/mo?!

WAH KAO.

i rather hoot shares and collect dividend.. $$250k can collect $800/mo divdend at least (from somewhere i saw on internet lah)


btw, thanks east_lover zeh zeh for doing the math.
because $1million is all i can afford to to go for if really want to buy a property..
but that dream is gone..:(
Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

But another side, after 20 years you will get fully paid house haha

[East Lover]

btw, thanks east_lover zeh zeh for doing the math.
because $1million is all i can afford to to go for if really want to buy a property..
but that dream is gone..:(
I saw several posts from respective forumer did ask similar question - how to invest with 400k spare cash, so i initiated this thread, for open discussion :D

[roly8]

Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

But another side, after 20 years you will get fully paid house haha
let say we have fully paid the condo and minus off all the mgtm fee & tax..

is $2500/mo realistic number?


note: property tax might get higher in 20 yr time..



also:
one big loophole in the question is:
how can interest rate stick at $1.xx % for next 20 years ? is it possible??
:o

but based on what i search on google:


Yes, there is typically an inverse relationship, high interest rates equals low inflation, low interest rates = high inflation.

Why? Money, if there is more money in an economy, people tend to spend more, thus (as a whole) driving up the cost of goods and services. If there is less money in an economy, there is less to spend and low demand equals lower prices.

If interest rates are low, money is easier and cheaper to borrow, hence more money in an economy. If rates are high, it is more expensive to borrow, hence less money in an economy.

There is also a conept know as stagflation, when interest rates and inflation both increase, such was the case in the Carter Administration. External market factors or market manipulation may cause stagflation.

stagflation is what i am expecting in near future, man!
:o

[phantom_opera]

Haven't deducted the mgmt fee and property tax and income tax. Maybe 500-600 per mth roughly?

But another side, after 20 years you will get fully paid house haha

Cannot calculate based on 1.09% .... more likely to be 2-2.5% even in the next 10y

[indomie]

In my opinion your 1st major investment should always be a property. This is so because of loan restriction on age and inflation effect on time. Then you can move on to minor investment such as shares, bonds, reits, etc. You don't want your investment in shares, bonds and reits to become your major investment because of the speculative nature unless you are a professional in the field.

[East Lover]

Cannot calculate based on 1.09% .... more likely to be 2-2.5% even in the next 10y
you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

so anyone still dear to invest property at this sky high price timing? :p

[phantom_opera]

you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

so anyone still dear to invest property at this sky high price timing? :p

there are always carrot heads

D5:

2012-12-07 #XX-XX 1,399 1,358psf 2009-01-23 680psf $948,522 1,414 19.5

[mcmlxxvi]

S'pore REIT market on the rise, but risks remain

By Linette Lim | Posted: 29 October 2012 2150 hrs

SINGAPORE: The Singapore real estate investment trust (REIT) market is up about 40 per cent this year -- double the returns in major REIT markets like the US and Japan.
While returns and yield spreads on Singapore REITs may be the best in the world, some analysts said the market could become over-invested
In 2002, CapitaMall Trust became the first Singapore-listed REIT. A decade on, there are over 20 REITs across the commercial, industrial, hotel and healthcare property sectors.
Low interest rates on bank deposits have helped to keep investor interest high in REITs and other stapled securities.
Industrial REITs for example pay dividends of up to eight per cent -- more than the five to six per cent offered by blue chip stocks.
Gabriel Yap, executive chairman of GCP Global, said: "The REITs are trading at about 20 times the PE (price to earnings ratio) as compared to the real estate developers at only 12 times. Because it's a REIT structure that pays stable dividends, the valuations are much higher."
Some analysts said REITs may be an over-invested asset class.
Excluding other stapled securities and business trusts, such as Hutchison Port Holdings Trust, the REIT market in Singapore has a market capitalisation of around US$38 billion. That is up more than three times from its post-Lehman crisis bottom in 2008.
Terence Wong, executive director at DMG

[mcmlxxvi]

contd...

and Partners Research, said: "There is a risk of the sector being over-owned, since everybody wants a piece of the pie right now. We've seen that in 2006 and 2007, where REITs were seen very much as a growth stock. And I think that's the danger.
"Right now, we're seeing the same thing, with the REITs rising about 40 per cent so far this year. When complacency sets in, if the party ends, I think a lot of people will get hurt."
From 2004 to 2007, many REITs enjoyed high valuations due to the stock market boom. REIT managers borrowed money to acquire new properties, increasing their gearing.
But the financial crisis struck in 2008, and many REIT managers with over-geared balance sheets were forced to raise cash by issuing more equity, thereby diluting the value of the stock.
In a little more than six months, from May to December 2008, the market capitalisation of REITs had fallen 2.6 times.
-CNA/ac

[roly8]

you are right. if based on 2-2.5% interest, meaning even less actual cash flow before fully paid.

so anyone still dear to invest property at this sky high price timing? :p

people who have too much $$$ to spend or those who kena the 'fear' of losing/missing out etc..

[phantom_opera]

people who have too much $$$ to spend or those who kena the 'fear' of losing/missing out etc..

2012-11-27 SKIES MILTONIA 27 YISHUN 99 YRS FROM 2012 CONDOMINIUM 527sqft 1,221psf $644,000

Yes, if people are willing to pay 1221psf for Yishun far from MRT ... what's more?
Our OCR approaching Hong Kong NT pricing liao ...

[DKSG]

I think your focus on the yield is seriously flawed.

It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

I always think once the property reaches a maximum potential, you should let the next person have it.

What is max potential ? You will have to figure it out yourself lor!

Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

DKSG

[indomie]

there are always carrot heads

D5:

2012-12-07 #XX-XX 1,399 1,358psf 2009-01-23 680psf $948,522 1,414 19.5
Property is highly individualized, thus allows for freak price increase. Development of mrt, building of major shopping center or business hubs resulting in such abnormal increase. Reits on the other hand only allow for uniform increase.

[indomie]

I think your focus on the yield is seriously flawed.

It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

I always think once the property reaches a maximum potential, you should let the next person have it.

What is max potential ? You will have to figure it out yourself lor!

Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

DKSG
U and me looking at it so eye to eye

[East Lover]

i agree with you - must know how and when to exit before music stop.

but the question is where to park your extra earned 0.8 million after exit? :rolleyes:
also, must be patient to wait for next new song...;)

I think your focus on the yield is seriously flawed.

It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

I always think once the property reaches a maximum potential, you should let the next person have it.

What is max potential ? You will have to figure it out yourself lor!

Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

DKSG

[mcmlxxvi]

http://dividendsrichwarrior.blogspot.sg/2011/01/guide-to-picking-singapore-reits.html?m=0

[East Lover]

http://dividendsrichwarrior.blogspot.sg/2011/01/guide-to-picking-singapore-reits.html?m=0

Thanks! is this warrior you? :D so young~

Financial Independence at 30 years old
I really hope to celebrate my 30th birthday in 2013 by achieving S$1k per month (S$12k per annum) in dividends. Based on my current portfolio (http://dividendsrichwarrior.blogspot.sg/2012/12/dw-december-2012-singapore-dividend.html), I will be receiving an estimated S$11.3k in 2013. That is still a little way off my target.


Starhub (10 lots) = S$2, 000
Singtel (7 lots) = S$1, 106
AIMS AMP (18 lots) = S$1, 800
SPH (5 lots) = S$1, 200
CMT (7 lots) = S$672
M1 (5 lots) = S$725
CACHE (10 lots) = S$857
FCT (7 lots) = S$758
PLife REIT (4 lots) = S$412
Suntec REIT (6 lots) = S$564
First REIT (10 lots) = S$672
Sabana REIT (6 lots) = S$561

[dtrax]

i agree with you - must know how and when to exit before music stop.

but the question is where to park your extra earned 0.8 million after exit? :rolleyes:
also, must be patient to wait for next new song...;)

property shens like DKSG will also be on the look out and chao char no day no night spotting for the next gem :) :) One of the 2 exit strategies is when the max potential is already there n you have found the next gem to diversify

[mcmlxxvi]

el not me but some blog i googled

which i think gd read for reit n00b like me

[roly8]

I think your focus on the yield is seriously flawed.

It is known that Sg property yields are subpar. The reason being there is huge potential for capital gains.

Thats why Office Boy never subscribe to the buy property but dont ever sell theory.

I always think once the property reaches a maximum potential, you should let the next person have it.

What is max potential ? You will have to figure it out yourself lor!

Once your $1 million property becomes $1.8 mil ... and you dont forsee it going to $2 mil in the next 3 years, what do you do ?

DKSG
+3 :cheers5::cheers5::cheers5:

respected post!


http://dividendsrichwarrior.blogspot.sg/2011/01/guide-to-picking-singapore-reits.html?m=0

this is the dude that i mention who get $800/mo from dividend..not that bad from stock trading..

[phantom_opera]

u have not seen bloodbath in REITs post Lehman

diversify means your investment must not react the same way to the same event

holding 50% REIT and 50% property is not diversify :scared-2:

[East Lover]

u have not seen bloodbath in REITs post Lehman

diversify means your investment must not react the same way to the same event

holding 50% REIT and 50% property is not diversify :scared-2:
this warrior's profile quick balance leh, some blue chip some REIT.

Would you like to share some also? :p

[roly8]

u have not seen bloodbath in REITs post Lehman

diversify means your investment must not react the same way to the same event

holding 50% REIT and 50% property is not diversify :scared-2:
yea... this dividend warrior hoot too much on particular sector eg. REITS..
hope he know when to exit and diversify :o

[ikan bilis]

... i was holding ~$200K+ of reit before lehmen crisis... dividends about S$1.5K/month (8-9%)...
... when worst time in Mar 2009, the 200K+ became 80K+.... :ashamed1: :( :scared-3:

[phantom_opera]

... i was holding ~$200K+ of reit before lehmen crisis... dividends about S$1.5K/month (8-9%)...
... when worst time in Mar 2009, the 200K+ became 80K+.... :ashamed1: :( :scared-3:

you should kowtow to Bernanke if you meet him one day

one pic to sum it all

http://bloomfieldmichael.files.wordpress.com/2010/09/fish-eat-fish-richard-cook-artville-com1.jpg

[chiaberry]

... i was holding ~$200K+ of reit before lehmen crisis... dividends about S$1.5K/month (8-9%)...
... when worst time in Mar 2009, the 200K+ became 80K+.... :ashamed1: :( :scared-3:

You should have continued to buy when the px went down. They have recovered from their lows.

[cnud]

But must remember: if $1m property goes up by 20% in 4 years, $200K is 50% gain if you plonked in $400+K.

So still very nice mah.

[ikan bilis]

You should have continued to buy when the px went down. They have recovered from their lows.

that time very poor lah, only had that 200K+, so i borrowed more $$ and bought more reit in jun/jul 2009. break even and got out by dec 2009 (including dividends collected, means some 10-15% loss covered by dividends)

but i kept everything in cash for 1 year after that,... 2 mistakes made.... :(
a) i was looking at condo, but held back (europe was very unstable) and was waiting for new CM of downpayment 30%. That CM took darn long and came out in Aug2010. Somemore sellers & market boh-chap with that CM and i got to bite bullet jump in then lor...
b) i should had bought commercial/industrial during end2009, i'm always more familiar/ready with commercial/industrial and can enter anytime. Most got doubled or more in price for next 2-3yrs.

now i keep any new savings in cash liow...
- every year shrinks by 3-4% is insurance for capital protection.... :beats-me-man:
- also got increased huge mortage loans of total 1mil+
- if fingers darn itchy then play reit small small to soothe itch lor,... i got ~150K in reit now... :cheers5:

[DKSG]

I think Office Boy needs to consult you on commercial property ...

DKSG

[ikan bilis]

look for jwong71, he like got everything under radar.... shops, retail space, office, stalls.... ccr or ocr,... ;)

[Lovelle]

another better option :

put $$ in foreign currency :

interest rate :
RM - 3%
Oz - 5%
RMB - 3%

[indomie]

another better option :

put $$ in foreign currency :

interest rate :
RM - 3%
Oz - 5%
RMB - 3%
The risk out weight the return. Sgd streght is almost guaranteed due to inflation fighting nature of the currency. Foreign investors are investing in sg not without reason.

[indomie]

you should kowtow to Bernanke if you meet him one day

one pic to sum it all

http://bloomfieldmichael.files.wordpress.com/2010/09/fish-eat-fish-richard-cook-artville-com1.jpg
We are a small fish in the sea full of predators. To guarantee our safety we must stay close with the biggest fish of all (the gov). Because they got the deepest pocket of the all and they are not interested to eat the smallest fish.

[DC33_2008]

Do you think so? Thought we are being eaten slowly without us knowing. :(
We are a small fish in the sea full of predators. To guarantee our safety we must stay close with the biggest fish of all (the gov). Because they got the deepest pocket of the all and they are not interested to eat the smallest fish.

[phantom_opera]

Do you think so? Thought we are being eaten slowly without us knowing. :(

lol ... COE ... ERP ... maid levy ... CPF min sum ... CPF lowering employer contribution rate ... property tax ... income tax ...

:scared-1:

[chestnut]

Sis, let's assume everything is constant ... If not damn difficult to calculate...

So after 20 years

Reits - Principal sum + interest over 20 years = _______

Property - Value of property after 20 years + (rental - all expenses)per year X 20 = _____________

Please work out the amount... I quite bad at maths...

Let's assume price of condo remains constant @ 1mil which is a joke... Hahahaha

:cheers4::cheers4::cheers4::cheers4::cheers4::cheers4::cheers4:


Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

I did a simple maths calculation for the amount of $445K upfront capital.

Condo:
Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

Rental: 3500/mth
Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
gross cash: 3500 – 2110 = $1390
***must deduct mgmt fee, property tax and income tax

REIT: 455K
Dividend: 455K x 6% = 27.3K per year = 2.275K per mth

From cash flow point of view: REIT is better as $2275 >> $1390, and it’s tax free!

From capital appreciation point of view: Condo may be better, as property price may inch up year by year. And after 20 years, you will have a fully paid house. :p

So which one is better investment method at today’s situation? which one will you choose?

[indomie]

lol ... COE ... ERP ... maid levy ... CPF min sum ... CPF lowering employer contribution rate ... property tax ... income tax ...

:scared-1:
So u would rather live in a place where u can get away with tax but spend 4 hours in the traffic jam, pay for personal body guard, no faith in the local banking system, no clear title deed to your property and ambiguous legal system. I can show u where.

[East Lover]

bro, welcome back!

Let me do the maths sum :D
Reits - Principal sum + interest over 20 years = _______

REITS: 455K + 27.3K x 20 = 1001K --> 1 mil after 20 years!

Property - Value of property after 20 years + (rental - all expenses)per year X 20 = _____________

PC: if inch up 5% per year, after 20 years, 1mil PC will be 2 mil!

1390-490 = 900 (net cash flow after deduct all the fees). if consider interest rate raise, lets say $500 net cash only

$500x12x20 =120K in 20 years.

So use $450K to invest PC, we will get 120K cash, and 2 million fully paid PC! hahaha !


I like your simple calculation!
:cheers4: :cheers4: :cheers4:


Sis, let's assume everything is constant ... If not damn difficult to calculate...

So after 20 years

Reits - Principal sum + interest over 20 years = _______

Property - Value of property after 20 years + (rental - all expenses)per year X 20 = _____________

Please work out the amount... I quite bad at maths...

Let's assume price of condo remains constant @ 1mil which is a joke... Hahahaha

:cheers4::cheers4::cheers4::cheers4::cheers4::cheers4::cheers4:

[maisonjai]

Not fair leh sista, PC inch up but REIT constant? Suntec REIT after 20yrs still same price?

[chestnut]

Not fair leh sista, PC inch up but REIT constant? Suntec REIT after 20yrs still same price?

Hahahaha.. Good one...

So reits constant and pc constant...

After 20 years :

Reits total = _______

PC total = ________

If reits up 20% and condo up 20%

Reits total = ________

PC total = _________

:cheers4: :cheers4: :cheers4: :cheers4:

[toiletsiao]

The thing about reits is that they can do rights issue in which u must coough out cash else u face dilution ... The reit can also do placements to dilute your holdings too...nobody can dilute your property

[DKSG]

Not fair leh sista, PC inch up but REIT constant? Suntec REIT after 20yrs still same price?

Dont know why people want to compared commercial properties with residential ? How to compare ?

Residential investment has a looooong history of people investing (I mean hordes of people), while commercial properties have only recently started to attract investors.

In the past, commercial properties are usually bought by people who really need the property, but now people are starting to realise that owning a comemrcial property is about the same as owning a residential, you rent it out and collect rental !

DKSG

[teddybear]

Your assumption is not realistic - Because REIT will never be able to return you 6% consistently for 20 years! :doh:


Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

I did a simple maths calculation for the amount of $445K upfront capital.

Condo:
Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

Rental: 3500/mth
Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
gross cash: 3500 – 2110 = $1390
***must deduct mgmt fee, property tax and income tax

REIT: 455K
Dividend: 455K x 6% = 27.3K per year = 2.275K per mth

From cash flow point of view: REIT is better as $2275 >> $1390, and it’s tax free!

From capital appreciation point of view: Condo may be better, as property price may inch up year by year. And after 20 years, you will have a fully paid house. :p

So which one is better investment method at today’s situation? which one will you choose?

[East Lover]

Your assumption is not realistic - Because REIT will never be able to return you 6% consistently for 20 years! :doh:
Ai yoh, just a simple calculation for easy comparison mah. Can be REIT, can be anything but not physical property investment.

So far bro BJ hasn't given advice on how to invest with $400k for junior investor ;)

Maybe u would like to share something with us? :D

[teddybear]

Think I can only add insights into REITs:
1) REITs high yields are only temporary
2) REITs uses leverage to obtain current high yield, which is unstainable
3) You can perform even better or just as well as REITs with the leverage in terms of yields by just owning the properties on your own rather than through REITs
4) Owning REITs doesn't mean you really own the properties, you only own a paper share of the properties owned by REITs which are obtained through very high leverage, and not sustainable in the long run. The properties really belong to the banks!
5) Capital gain in REITs are very limited NOW!
6) The biggest winner of REITs are the REITs managers! They get their cut of management fees regardless of whether REITs make money or not, and when REITs make money, they get even bigger cut! (They are just like "Fund Managers" for stocks!).

My Conclusion: NEVER EVER INVEST IN REITS (just like NEVER EVER INVEST in Unit Trusts!), especially not now!!! :tsk-tsk:



Ai yoh, just a simple calculation for easy comparison mah. Can be REIT, can be anything but not physical property investment.

So far bro BJ hasn't given advice on how to invest with $400k for junior investor ;)

Maybe u would like to share something with us? :D

[stl67]

Think I can only add insights into REITs:
1) REITs high yields are only temporary
2) REITs uses leverage to obtain current high yield, which is unstainable
3) You can perform even better or just as well as REITs with the leverage in terms of yields by just owning the properties on your own rather than through REITs
4) Owning REITs doesn't mean you really own the properties, you only own a paper share of the properties owned by REITs which are obtained through very high leverage, and not sustainable in the long run. The properties really belong to the banks!
5) Capital gain in REITs are very limited NOW!
6) The biggest winner of REITs are the REITs managers! They get their cut of management fees regardless of whether REITs make money or not, and when REITs make money, they get even bigger cut! (They are just like "Fund Managers" for stocks!).

My Conclusion: NEVER EVER INVEST IN REITS (just like NEVER EVER INVEST in Unit Trusts!), especially not now!!! :tsk-tsk:
+1 :cheers4:

[Rosy]

i feel it is not a good time to invest in property or reit now.

I am bullish on equities for capital gain in 2013.

[chestnut]

i feel it is not a good time to invest in property or reit now.

I am bullish on equities for capital gain in 2013.

1. It depends on how much money one has...
2. Do you think stocks has reached its peak???? Are we at Euphoria stage in stock????

I am actually interested to know why u think it is not a good time to buy properties????

[indomie]

1. It depends on how much money one has...
2. Do you think stocks has reached its peak???? Are we at Euphoria stage in stock????

I am actually interested to know why u think it is not a good time to buy properties????
I still like property with high yield like singapore and australia, because it indicates a high level of utilisation. If any of these market show weakness, but yield remain strong. I am very interested to buy more.

[chestnut]

I still like property with high yield like singapore and australia, because it indicates a high level of utilisation. If any of these market show weakness, but yield remain strong. I am very interested to buy more.

Bro, what is your target unit???
U young, so must invest for the future...

I have 1 more cycle left. Hahahaha almost complete the purchase for this cycle... But hor, the world damn dynamic, cannot stick to same tactic all the time. Sometime need to have 'hasty deployment'. Hahahaha

Cheers and merry Christmas. Going Jakarta again on Sat. Btw, last Saturday afternoon got stuck at pondok Laguna because of flood... Knee high... Hahahaha

[indomie]

Bro, what is your target unit???
U young, so must invest for the future...

I have 1 more cycle left. Hahahaha almost complete the purchase for this cycle... But hor, the world damn dynamic, cannot stick to same tactic all the time. Sometime need to have 'hasty deployment'. Hahahaha

Cheers and merry Christmas. Going Jakarta again on Sat. Btw, last Saturday afternoon got stuck at pondok Laguna because of flood... Knee high... Hahahaha
I have a feeling this global economy is now cornered into two choice. Outright recession or high level of inflation. But I think no matter what the leaders are saying about taming inflation, they will just go into survival mode and pump into growth. Recession is an obsolete word now in economic vocabulary.

Thanks for the christmas cheers bro chestnut. I spend 2 night at puncak. U should visit cibodas botanical garden. Its like a mini new zealand.
http://www.disparbud.jabarprov.go.id/wisata/imggalery/416.jpg

[roly8]

Thanks for the christmas cheers bro chestnut. I spend 2 night at puncak. U should visit cibodas botanical garden. Its like a mini new zealand.
http://www.disparbud.jabarprov.go.id/wisata/imggalery/416.jpg

wa!
thx for sharing. :o

[phantom_opera]

just when u think the whole world is destined for inflation ... there is such thing called Black Swan

just be prepared

[DKSG]

just when u think the whole world is destined for inflation ... there is such thing called Black Swan

just be prepared

Phantom knows something?

Share leh ...

I thought most people assume that the Black Swan has been slaughterd by Yong Keh in HK. Haha!

DKSG

[newbie11]

U mean yong Kee? ;)

[DKSG]

U mean yong Kee? ;)

Yea! Looks like N11 is indeed more of a foodie than property guy! Haha!

DKSG

[princess_morbucks]

I read an article on reits which I find informative.

http://www.milliondollarjourney.com/owning-rental-property-vs-owning-reits.htm

One part of the article states:
"Even if the REIT is strong, a weak market can irrationally decimate share prices (see crash of 2008) thus potentially reducing portfolio value."

Some questions:
If the reit is strong, will the dividend be lower?
Who decides on the dividend and usually how much is it?

Has any strong reit become worthless before?

[samuelk]

watching this movie makes me think when the market is flooded, everyone going to start to speak this way

http://www.youtube.com/watch?v=vBeLtlqE1tI

[princess_morbucks]

watching this movie makes me think when the market is flooded, everyone going to start to speak this way

http://www.youtube.com/watch?v=vBeLtlqE1tI

Wow. Thanks.
Will watch it when I get home.
From the reviews, it sounds good.

[roly8]

watching this movie makes me think when the market is flooded, everyone going to start to speak this way

http://www.youtube.com/watch?v=vBeLtlqE1tI

thx for sharing! look like an excellent movie to watch!:cool:

[Santro]

Sis one more factor to include here.. property agent commission for renting out and property maintenance/repairs every few years.

Assume 1 mil property’ rental is around 3.5K (either OCR 2 bedder or CCR MM) and a particular REIT returns 6%. Which one will return higher?

I did a simple maths calculation for the amount of $445K upfront capital.

Condo:
Upfront $$$: 1mil x 40% (down payment) + 6% stamp duty = 455K

Rental: 3500/mth
Installment: 2110 ( from property guru with interest rate 1.09%, term of loan: 20 Years)
gross cash: 3500 – 2110 = $1390
***must deduct mgmt fee, property tax and income tax

REIT: 455K
Dividend: 455K x 6% = 27.3K per year = 2.275K per mth

From cash flow point of view: REIT is better as $2275 >> $1390, and it’s tax free!

From capital appreciation point of view: Condo may be better, as property price may inch up year by year. And after 20 years, you will have a fully paid house. :p

So which one is better investment method at today’s situation? which one will you choose?

[henryhk]

Buy property is for capital gains, and tis cannot be underestimated.....just buy wen u know wat and where to buy.....holding power is key!

[edwinleeap]

Sis one more factor to include here.. property agent commission for renting out and property maintenance/repairs every few years.
Don't we need to consider 2110 out of 3500 rental income actually goes into paying the loan principal of the condo. Assuming property prices do not depreciate over the long term, this amount is considered forced savings.

[Rosy]

One clear advantage is that residential mortgage loan is lower compared to other types of loan.

[Rosy]

Don't we need to consider 2110 out of 3500 rental income actually goes into paying the loan principal of the condo. Assuming property prices do not depreciate over the long term, this amount is considered forced savings.
Yes.

Using 250k to buy a property. At the end of the loan tenure, the 1mil property is fully paid up and assuming the property price remains the same, you effectively have 1mil cash when you decide to sell it. Chances are the property price will be higher.

Whereas using 250k to buy REIT, what are the chances of it appreciating by 4 times?

[edwinleeap]

Yes.

Using 250k to buy a property. At the end of the loan tenure, the 1mil property is fully paid up and assuming the property price remains the same, you effectively have 1mil cash when you decide to sell it. Chances are the property price will be higher.

Whereas using 250k to buy REIT, what are the chances of it appreciating by 4 times?

Power of leveraging. Unfortunately 40% downpayment is very restrictive. :mad:

[Rosy]

Power of leveraging. Unfortunately 40% downpayment is very restrictive. :mad:
60% or shorter loan tenure is the end for me.

[Allthepies]

I read an article on reits which I find informative.

http://www.milliondollarjourney.com/owning-rental-property-vs-owning-reits.htm

One part of the article states:
"Even if the REIT is strong, a weak market can irrationally decimate share prices (see crash of 2008) thus potentially reducing portfolio value."

Some questions:
If the reit is strong, will the dividend be lower?
Who decides on the dividend and usually how much is it?

Has any strong reit become worthless before?

If u die die must buy REIT, go for REIT with all Singapore properties. But these have one of the lowest yield. REIT need to pay out at least 90% of earning to
maintain it's tax free status. I'm recalling from memory pls verify the information.

[stiook]

Power of leveraging. Unfortunately 40% downpayment is very restrictive. :mad:

comes with the risk as well. Nobody seems to think about that... kinda worrying.

[Shanhz]

all this yield calculation, very cheem. my maths very poor.
can i ask a simple question:

if we put ppty play into the context of gold play:

REIT = paper gold
ppty = physical gold

is solid asset better or paper asset better?

[princess_morbucks]

all this yield calculation, very cheem. my maths very poor.
can i ask a simple question:

if we put ppty play into the context of gold play:

REIT = paper gold
ppty = physical gold

is solid asset better or paper asset better?

REIT - no headache, paper gold is light - drop on your foot, will not hurt it, at most not careful, gets torn only. then if you need the money, you just sell the reit easily.

PPty - must have substantial amount to put as downpayment. must pay stamp duty, absd, etc, pay agent to find tenant, cope with tenant, maintenance of ppty, property tax.

So I think, it is best to diversify.
If you have to beg, borrow for the additional property to invest, I think you will be better off with REIT.

[East Lover]

REIT - no headache, paper gold is light - drop on your foot, will not hurt it, at most not careful, gets torn only. then if you need the money, you just sell the reit easily.

PPty - must have substantial amount to put as downpayment. must pay stamp duty, absd, etc, pay agent to find tenant, cope with tenant, maintenance of ppty, property tax.

So I think, it is best to diversify.
If you have to beg, borrow for the additional property to invest, I think you will be better off with REIT.
Are you saying -If big amt of cash with hand, buy property, Otherwise buy REIT first?

[Laguna]

I was reading this thread and so compelled to write something. I hope this piece of work can help some of you.

1. REIT and property are the same asset class. Ie PROPERTY. REIT is liquid and can be traded in small quantum but not property.

2. REIT – pays out 90% of income vs those pay only20-30% of income as dividend, as such cash call is needed for major acquisitions. Dilution of control is irrelevant to small investors. And in fact, before the cash calls, the underwriters have most of the time, gotten the consent from the major shareholders.

3. Property market is subject to heavy “manipulation”. Not just the six rounds of cooling measures you know, but back to 2007, withdrawal of deferred payment, interest absorption, payment of stamp duty 14 days after S&P instead of TOP etc. And of course, the famous GLS.

4. There is hardly any government intervention tothe equity market, they cannot and will not. Govt most of the time intervenethe FX market and of course, the property market.

5. REIT is trouble free, income is tax free. Maintenance of physical property is not as easy.

6. REIT has outperformed market STI this year andthe gain is much higher than the PPI. Some up 50% this year.

7. You can have leverage on your REIT investment ofabout 60%, and on top, REIT themselves have a gearing ratio of in average30-35%. Ie, you have double leverage on REIT properties

8. You will not attract attention from IRAS for share trading, but not for property trading

9. Overhead cost for property is high, stamp duty, agent fee, for share is only 0.18% commission per trade.

10. If you are smart, you still can find undervalued REIT with good dividend. Some REITs are still doing under their NAV. P to NAV below 1.

11. You can achieve better diversification in REIT.Eg, $400,000, you buy one property, and same amount you buy into REIT, which cover industrial, commercial, hotels, local and overseas. Next, if you buy BUC, you have no income for 4 years but not for REIT.

12. During bad time, there is no way you can sell your property but you can sell your REIT within seconds.

13. If you are good in timing the market, you can trade REIT, but you can’t trade properties that easily

14. REIT pays the manager like ARA fee to managing the assets. It is like engaging agents to manage your property. All these are operating cost. Ie, You need someone to manage the property.

15. REIT is indirect investment in property, ie paper. It is like all other equity investment in the capital market.

[phantom_opera]

welcome back Laguna ... really miss your willingness to share and no-nonsense style

let me repeat, buying both properties and REITs expose you to the same risk .... when a black swan event happens ... you will be burnt for both

I keep seeing the word diversify ... I can tell u today most asset classes are all highly correlated due to yield compression ... it is really really hard to diversify

[hyenergix]

Saying u own Reit n saying u own property is different. Chinese love physical property n it is in their blood. Let me guess u prefer physical property too ;)

[zeamybro]

Laguna, welcome back and thanks for your valuable sharings!

[phantom_opera]

沧海一声笑 滔滔两岸潮
浮沉随浪只记今朝
苍天笑 纷纷世上潮
谁负谁胜出 天知晓


Be preparad for Blackswan

[august]

13. If you are good in timing the market, you can trade REIT, but you can’t trade properties that easily


trade pty? the minute u do, or IRAS thinks u are trading even if u are not, u will be taxed.

[East Lover]

Dear laguna, welcome back! We miss u so much!

Thanks a lot for you solid sharing! Really appreciated :)

I was reading this thread and so compelled to write something. I hope this piece of work can help some of you.

1. REIT and property are the same asset class. Ie PROPERTY. REIT is liquid and can be traded in small quantum but not property.

2. REIT – pays out 90% of income vs those pay only20-30% of income as dividend, as such cash call is needed for major acquisitions. Dilution of control is irrelevant to small investors. And in fact, before the cash calls, the underwriters have most of the time, gotten the consent from the major shareholders.

3. Property market is subject to heavy “manipulation”. Not just the six rounds of cooling measures you know, but back to 2007, withdrawal of deferred payment, interest absorption, payment of stamp duty 14 days after S&P instead of TOP etc. And of course, the famous GLS.

4. There is hardly any government intervention tothe equity market, they cannot and will not. Govt most of the time intervenethe FX market and of course, the property market.

5. REIT is trouble free, income is tax free. Maintenance of physical property is not as easy.

6. REIT has outperformed market STI this year andthe gain is much higher than the PPI. Some up 50% this year.

7. You can have leverage on your REIT investment ofabout 60%, and on top, REIT themselves have a gearing ratio of in average30-35%. Ie, you have double leverage on REIT properties

8. You will not attract attention from IRAS for share trading, but not for property trading

9. Overhead cost for property is high, stamp duty, agent fee, for share is only 0.18% commission per trade.

10. If you are smart, you still can find undervalued REIT with good dividend. Some REITs are still doing under their NAV. P to NAV below 1.

11. You can achieve better diversification in REIT.Eg, $400,000, you buy one property, and same amount you buy into REIT, which cover industrial, commercial, hotels, local and overseas. Next, if you buy BUC, you have no income for 4 years but not for REIT.

12. During bad time, there is no way you can sell your property but you can sell your REIT within seconds.

13. If you are good in timing the market, you can trade REIT, but you can’t trade properties that easily

14. REIT pays the manager like ARA fee to managing the assets. It is like engaging agents to manage your property. All these are operating cost. Ie, You need someone to manage the property.

15. REIT is indirect investment in property, ie paper. It is like all other equity investment in the capital market.

[Laguna]

沧海一声笑 滔滔两岸潮
浮沉随浪只记今朝
苍天笑 纷纷世上潮
谁负谁胜出 天知晓

Be preparad for Blackswan

我对苏子有独爱, 我回你

人生到处知何似，
应似飞鸿踏雪泥。
泥上偶然留指爪，
鸿飞那复计东西。

[mcmlxxvi]

cheem cheem

Laguna 闭关数日,功力大增

可喜可贺也!

[Khng8]

Welcome back.
Missed your insights.:cheers3:

[East Lover]

Dear Laguana, 没有你的江湖是如此寂寞。。。欢迎你在2012年结束之前终于回来l！ :cheers4:

[newbie11]

Welcome back Laguna. I enjoyed your valuable insights

[roly8]

沧海一声笑 滔滔两岸潮
浮沉随浪只记今朝
苍天笑 纷纷世上潮
谁负谁胜出 天知晓


Be preparad for Blackswan

% of it will happen?
and what kind of blackswan event will it be?

[princess_morbucks]

Are you saying -If big amt of cash with hand, buy property, Otherwise buy REIT first?

Yes, you are right sis.
If you can afford to comfortably own property or properties for investments, then go for it.

Otherwise REITS will be the alternative as it is more liquid, less capital needed and no hidden costs and problems associated with tenants and the need to pay taxes etc.

[Laguna]

Dear Laguana, 没有你的江湖是如此寂寞。。。欢迎你在2012年结束之前终于回来l！ :cheers4:

江湖寂寞心难忍
无奈心己似死水
高师明灯须另觅
我己乘风寻仙去

[princess_morbucks]

江湖寂寞心难忍
无奈心己似死水
高师明灯须另觅
我己乘风寻仙去

The last stanza..... means you follow the wind to look for the angels.
What does that imply?

[lifeline]

我对苏子有独爱, 我回你

人生到处知何似，
应似飞鸿踏雪泥。
泥上偶然留指爪，
鸿飞那复计东西。



Welcome back Laguna !!!
and wishing you Happy New Year 2013 !!!
and ALL the Best of Health always !!!


very cheem... good for my learning...
life is transient, who knows what the future beckons...

http://mypaper.pchome.com.tw/ytjiang/post/1321904221

[roly8]

江湖寂寞心难忍
无奈心己似死水
高师明灯须另觅
我己乘风寻仙去

:doh:

really chinese poem expert

[East Lover]

江湖寂寞心难忍
无奈心己似死水
高师明灯须另觅
我己乘风寻仙去
Oh no! :doh:

Pls stay !

[buttercarp]

Yes, you are right sis.
If you can afford to comfortably own property or properties for investments, then go for it.

Otherwise REITS will be the alternative as it is more liquid, less capital needed and no hidden costs and problems associated with tenants and the need to pay taxes etc.

I understand that reits levy a number of fees too - annual management fees, performance fees, property management, acquisition and divestment fees.

How much are these fees?
Are they just a small sum?

[East Lover]

I understand that reits levy a number of fees too - annual management fees, performance fees, property management, acquisition and divestment fees.

How much are these fees?
Are they just a small sum?
Really? Got so many fees? :eek:

My little heart can't stand to monitor stock up and down, same to REIT. I think buying a hard property more suitable for me... I just kengcheong for tenant every two years :p

[Shanhz]

I understand that reits levy a number of fees too - annual management fees, performance fees, property management, acquisition and divestment fees.

How much are these fees?
Are they just a small sum?

i think we need not be too concerned about REITS fees. to the end investor, all you need to calculate is the net dividend, buy and sell price, then u know the net yield leow. all the fees are already hidden in the P&L.

for ppty, it is less clear becoz most ppty owners are managing their own ppty, which means they need to know all the operating expenses to arrive at the final yield.