How best to prudently invest $2m in properties.

**Amber Woods** · 02-12-11, 09:10

Hi Everyone,

Would like to get ideas to invest prudently in Singapore real estates to generate passive income of about $4000 per month. Of the $2m, about half will be used to buy a PC for own stay. Should I buy 2 more PC to generate rental incomes or just one? Should I fully pay for the properties or take an asset backed loan to buy more? I am a retiree.

Appreciate very much if anyone here care to share your experiences and wisdom.

**devilplate** · 02-12-11, 09:21

just buy one for own stay now...

**ysyap** · 02-12-11, 09:21

Get 2 units, one for own stay another MM for rental income. All fully paid. Use rental for monthly expenditure. Maybe can only have $2.4k rental yield... enough. More importantly must have spare cash on hand for emergencies. Not wise to take loan coz low tenure for retiree unless u r very young...

**ikan bilis** · 02-12-11, 09:34

wow... can help to guide me steps to have 2mil cash on hand first??... me very ikan bilis...

**ysyap** · 02-12-11, 09:38

Originally Posted by ikan bilis

wow... can help to guide me steps to have 2mil cash on hand first??... me very ikan bilis...

He retired already mah.. spent the last 40 yrs of his life earning... r u even 40 years old now? Maybe when you retire, you'd have $5mil???

**Amber Woods** · 02-12-11, 10:12

Originally Posted by devilplate

just buy one for own stay now...

Do you mean not to buy the second now cause prices is too high?

**TKT** · 02-12-11, 10:12

Was discussing with a friend just the other day about S$2m in Spore...

Assuming an average Sporean office worker earns $4-5k, how many can even earn S$2m in work life, not to even mention save $2m???

That's why, reality is 20-30% will stay in private, 70-80% will continue to stay in HDB...

**Amber Woods** · 02-12-11, 10:14

Originally Posted by ysyap

Get 2 units, one for own stay another MM for rental income. All fully paid. Use rental for monthly expenditure. Maybe can only have $2.4k rental yield... enough. More importantly must have spare cash on hand for emergencies. Not wise to take loan coz low tenure for retiree unless u r very young...

I am not in favour of MM for investment for reasons being already discussed in this forum. Target is to maintain a passive income of $4000 pm. No issue with emergencies as I am well covered.

**kane** · 02-12-11, 10:18

$1m on investment properties hard to generate nett $4k passive income because of maintenance, property tax, income tax etc. You can talk to your banker or adviser whether they would suggest a very modest gearing of 20-30% to get you up to that 4k mark.

**august** · 02-12-11, 10:26

Originally Posted by Amber Woods

Hi Everyone,

Would like to get ideas to invest prudently in Singapore real estates to generate passive income of about $4000 per month. Of the $2m, about half will be used to buy a PC for own stay. Should I buy 2 more PC to generate rental incomes or just one? Should I fully pay for the properties or take an asset backed loan to buy more? I am a retiree.

Appreciate very much if anyone here care to share your experiences and wisdom.

retiree? bank's loan tenure a bit tricky right?

in the mean time where are u staying? dont tell me renting also...

**august** · 02-12-11, 10:28

just park $1m in bonds can get $48k a year already.

**devilplate** · 02-12-11, 10:38

Originally Posted by Amber Woods

Do you mean not to buy the second now cause prices is too high?

bcoz i aso waiting to buy....LOL

**Amber Woods** · 02-12-11, 10:43

Originally Posted by august

retiree? bank's loan tenure a bit tricky right?

in the mean time where are u staying? dont tell me renting also...

Can still get 15 yrs loan tenure. Currently staying with my extended family so is free lodging.

**Amber Woods** · 02-12-11, 10:45

Originally Posted by august

just park $1m in bonds can get $48k a year already.

Bonds usually 5 to 10 years and is too long. Not sure is best to tie up $1m with bonds and miss opportunity in real estate.

**DC33_2008** · 02-12-11, 10:48

Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.

**Regulators** · 02-12-11, 10:50

Hi Amber, if you are already living in a pty with two million cash in the bank, it should not be difficult to generate $4k passive income a month but you need to spend more than one million to generate that. If you not into mm, the only bigger ptys you can buy below one mil are 99yr older suburban ptys like northvale, woodsvale, regent grove, regent heights, lilydale, all can yield 4%+ rental yield and bring you at least $3000+ a month in rental income. If you buy two of these at 1.6x mil, you can effectively generate $6k plus in rental income with $4xxk plus of emergency cash in the bank. Being a retiree, I don't think you care if the pty has 85yr left on the pty. 80 odd years on these ptys imo is still a decent remaining tenure coz 15 odd years of rental is all that is needed to cover back the cost of the two condos

**royconago** · 02-12-11, 10:57

Originally Posted by DC33_2008

Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.

Hi DC33_2008

0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?

**ysyap** · 02-12-11, 11:05

Originally Posted by Amber Woods

I am not in favour of MM for investment for reasons being already discussed in this forum. Target is to maintain a passive income of $4000 pm. No issue with emergencies as I am well covered.

If you have no concerns for emergencies, then no problem... pump $1mil into a 2 bedder for own stay and another $1mil into another 2 bedder at good location for rental yield. Not sure if that can fetch $4k/mth but certainly $3k is within reach. Maybe $3.5k/mth even.

**DC33_2008** · 02-12-11, 11:08

No tenure period. Your banker should be able to advice you.

Originally Posted by royconago

Hi DC33_2008

0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?

**Amber Woods** · 02-12-11, 11:10

Originally Posted by Regulators

Hi Amber, if you are already living in a pty with two million cash in the bank, it should not be difficult to generate $4k passive income a month but you need to spend more than one million to generate that. If you not into mm, the only bigger ptys you can buy below one mil are 99yr older suburban ptys like northvale, woodsvale, regent grove, regent heights, lilydale, all can yield 4%+ rental yield and bring you at least $3000+ a month in rental income. If you buy two of these at 1.6x mil, you can effectively generate $6k plus in rental income with $4xxk plus of emergency cash in the bank. Being a retiree, I don't think you care if the pty has 85yr left on the pty. 80 odd years on these ptys imo is still a decent remaining tenure coz 15 odd years of rental is all that is needed to cover back the cost of the two condos

I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.

**Regulators** · 02-12-11, 11:10

This is the product http://www.prudential.com.sg/corp/pr...come_Plan.html

Originally Posted by royconago

Hi DC33_2008

0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?

**DC33_2008** · 02-12-11, 11:12

Waiting for it to go below 0.92.

**devilplate** · 02-12-11, 11:15

Originally Posted by Amber Woods

I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.

there is a diff between buy a ppty for passive income vs capital appreciation?

**august** · 02-12-11, 11:30

Originally Posted by DC33_2008

Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.

this one?
https://www.prufunds.com.sg/FundsDet...ore&MipClass=M

imo the Initial Sales Charge of 5% and Annual Management Fee of 1.25% is too high, besides "its dividends or coupons (if any) may rise or fall". so far they show 1H10 results which works out to 5.2% annual yield based on par price of $1 and before subtracting annual mgmt fee of 1.25%. After subtracting is 3.95% yield.
latest price is $0.953, if based on 1H10 payouts the yield is 4.1%. After subtracting initial sales charge of 5% it will be even lower haha. Lastly what they invest in is not transparent to me.

heh

p.s. to shoulder this kind of risk i personally would just buy blue chip shares where dividends yield 5 to 7%.

**devilplate** · 02-12-11, 11:31

just wait patiently for GSS lor

basic pls chant more!!!

**Amber Woods** · 02-12-11, 11:33

Originally Posted by devilplate

there is a diff between buy a ppty for passive income vs capital appreciation?

If that is the case, shouldn't we buy newer LH properties as investment so that when you finally sell them off, the properties is still fairly new; thus reducing the risk of negative investment return. Looks like older LH properties are not good for longer term investment.

**DC33_2008** · 02-12-11, 11:35

Ask your private banker. Can get better deal.

Originally Posted by august

this one?
https://www.prufunds.com.sg/FundsDet...ore&MipClass=M

imo the Initial Sales Charge of 5% and Annual Management Fee of 1.25% is too high, besides "its dividends or coupons (if any) may rise or fall". so far they show 1H10 results which works out to 5.2% annual yield based on par price of $1 and before subtracting annual mgmt fee of 1.25%. After subtracting is 3.95% yield.
latest price is $0.953, if based on 1H10 payouts the yield is 4.1%. After subtracting initial sales charge of 5% it will be even lower haha. Lastly what they invest in is not transparent to me.

heh

p.s. to shoulder this kind of risk i personally would just buy blue chip shares where dividends yield 5 to 7%.

**devilplate** · 02-12-11, 11:36

Originally Posted by Amber Woods

If that is the case, shouldn't we buy newer LH properties as investment so that when you finally sell them off, the properties is still fairly new; thus reducing the risk negative investment. Looks like older LH properties are not good for longer term investment.

just hunt a condo for self stay or continue to stay at ur current plc for free and den join me here for TCSS session while waiting for GSS

or u can buy a 1mil ppty and rent it out first which can be subsequently use it as own stay?

**Regulators** · 02-12-11, 11:50

why is it negative investment if you are renting out? I have explained at length in another thread some time ago. If you fully pay off a condo with 85yr left in the tenure, at $3500 rental a month, it takes about two decades of rent to break even with whatever price you sell later as pure profit. More importantly in that time, you have lost no money and if you sell at $600k (let's say the price drops by $200k), you still pocket $600k in profit

Originally Posted by Amber Woods

I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.

**Amber Woods** · 02-12-11, 12:19

Originally Posted by Regulators

why is it negative investment if you are renting out? I have explained at length in another thread some time ago. If you fully pay off a condo with 85yr left in the tenure, at $3500 rental a month, it takes about two decades of rent to break even with whatever price you sell later as pure profit. More importantly in that time, you have lost no money and if you sell at $600k (let's say the price drops by $200k), you still pocket $600k in profit

Base on your scenario, If I buy a older LH property for $1m and lease out for 20 years for $2500 pm (assuming 3% return) and Ignoring time value of money, I would earn rental income of $600K over the 20 year period. If I sell it off 20 years later at say $600K, I will recover a total of $1.2m vs $1m of my initial investment. Thus, I gain $200K over 20 years.

If I put the money in the bank to earn say just 1% interest pa over 20 years, I will earn $200K interest over 20 years with my capital of $1m in tact.

Given the scenario, I am not any better buying a older LH property comparing a safer option of putting the money in the bank for pure interest.

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