People often asked if I'm solely a property investor. They have got it very wrong. I'm an investor of stocks / bonds as well as property. It's true that my returns from real estate are probably between 25% - 50% IRR, far better than my 5 - 10% IRR return for unit trusts, stocks and bonds.
I can easily achieve 13% IRR for unit trusts, no sweat. All I need to do is to pick a stable fund, like the following:
1. AllianceBernstein Global High Yield, 6% dividends. 70% LTV. I leverage 1.5x at a borrowing cost of 1.5%. Achieve 12.75% IRR.
2. Allianz Income & Growth. 7% return but -0.5% capital gains growth. 70% LTV. I leverage 1.5x and achieve 12.75% IRR too. It is 1/3 into equities, 1/3 US high yield and 1/3 US convertible bonds so there will be more capital growth vs AB GHY.
3. JPMorgan Global Income. 5% dividends and a further 2% capital growth. 70% LTV. leverage 1.5x and achieve 14.75% IRR.
But none of these can match my real estate performance. I can buy below market, achieve 50 - 100% IRR. You can check on my investment performance in the earlier posts.
I've recently bought another three:
1. A townhouse in Tingalpa, Brisbane for AUD398k. Expected rental yield is 5.5% gross. Around 1500 sf internal and another 800 sf external. 3 bedrooms, 2 bath rooms, 1 internal garage and 1 external car park. It's 13km from CBD, and around 10km from Brisbane airport. There is no empty land nearby so there's scarcity. I'm expecting 6 - 7% capital appreciation annually.
http://tingalpagreen.com.au/
2. An apartment in St Kilda with sea view. On a high floor and it costs me AUD635k. The apartment is around 710 sf of internal and another 80 sf of balcony. 2 beds, 2 baths and 1 car park underground. St Kilda is 7 km from the CBD and is an absolute delight to live in. There are good restaurants and pubs around the area. Transport is fantastic! I avoided the CBDs because of the oversupply in Docklands and South bank. The Asians always buy the most obvious places, which is the CBD, and is always over supplied and over priced! I'm expecting 5% return in capital for the next three years, due to the over supply in the short term. But in the longer term, I'm expecting 7 - 8% return p.a.
http://www.realestate.com.au/project-ascent-vic-st+kilda-600003295
However, I am still invested in financial assets because of the following reasons:
1. I invest in a portfolio of funds which yield me around 5 - 7% return annually. I have an overdraft at a rate of 1.3% to invest and diversify into other assets.
2. I can short the stock markets when the trend turns. Imagine between Nov 2007 to Mar 2009, instead of holding cash, I short the S&P500 or the MSCI World ETF and capture 70% of the trend. 70% of 60% is 42% return in 1.33 years! That's close to my real estate returns!
I will emerge stronger when others suffer and when the stock markets turn, I'll be ready to buy more properties, yet keep my stock / unit trust / bond portfolio in tact!
I can easily achieve 13% IRR for unit trusts, no sweat. All I need to do is to pick a stable fund, like the following:
1. AllianceBernstein Global High Yield, 6% dividends. 70% LTV. I leverage 1.5x at a borrowing cost of 1.5%. Achieve 12.75% IRR.
2. Allianz Income & Growth. 7% return but -0.5% capital gains growth. 70% LTV. I leverage 1.5x and achieve 12.75% IRR too. It is 1/3 into equities, 1/3 US high yield and 1/3 US convertible bonds so there will be more capital growth vs AB GHY.
3. JPMorgan Global Income. 5% dividends and a further 2% capital growth. 70% LTV. leverage 1.5x and achieve 14.75% IRR.
But none of these can match my real estate performance. I can buy below market, achieve 50 - 100% IRR. You can check on my investment performance in the earlier posts.
I've recently bought another three:
1. A townhouse in Tingalpa, Brisbane for AUD398k. Expected rental yield is 5.5% gross. Around 1500 sf internal and another 800 sf external. 3 bedrooms, 2 bath rooms, 1 internal garage and 1 external car park. It's 13km from CBD, and around 10km from Brisbane airport. There is no empty land nearby so there's scarcity. I'm expecting 6 - 7% capital appreciation annually.
http://tingalpagreen.com.au/
2. An apartment in St Kilda with sea view. On a high floor and it costs me AUD635k. The apartment is around 710 sf of internal and another 80 sf of balcony. 2 beds, 2 baths and 1 car park underground. St Kilda is 7 km from the CBD and is an absolute delight to live in. There are good restaurants and pubs around the area. Transport is fantastic! I avoided the CBDs because of the oversupply in Docklands and South bank. The Asians always buy the most obvious places, which is the CBD, and is always over supplied and over priced! I'm expecting 5% return in capital for the next three years, due to the over supply in the short term. But in the longer term, I'm expecting 7 - 8% return p.a.
http://www.realestate.com.au/project-ascent-vic-st+kilda-600003295
However, I am still invested in financial assets because of the following reasons:
1. I invest in a portfolio of funds which yield me around 5 - 7% return annually. I have an overdraft at a rate of 1.3% to invest and diversify into other assets.
2. I can short the stock markets when the trend turns. Imagine between Nov 2007 to Mar 2009, instead of holding cash, I short the S&P500 or the MSCI World ETF and capture 70% of the trend. 70% of 60% is 42% return in 1.33 years! That's close to my real estate returns!
I will emerge stronger when others suffer and when the stock markets turn, I'll be ready to buy more properties, yet keep my stock / unit trust / bond portfolio in tact!
