My wife and I own six properties. This excludes other real estate related investments like private equity, co-ownership of land and investments in hotel rooms.
As we progress, we can understand why many people do not own more than three properties. Here are the reasons:
1. Property investments require lots of administrative work. We are looking for tenants for two of our places in London. The void periods are usually around a month but they can be stressful periods. The solution is to find good managing agents when you own properties abroad.
2. Never ending negotiations with banks. Because we leverage on our properties, we have to constantly fill in forms, talk to bankers to refinance our properties.
3. Negotiations with tenants directly. The ones we own in Singapore, we negotiate with our tenants directly, which means we have to chase them, motivate them to pay rent on time.
4. Lack of knowledge. It is not easy finding properties that outperform the general market. We tend NOT to buy prime properties, because the yields are too low and we could be in cashflow trouble. We look for up and coming areas so that the rental yields will at least give us neutral cashflow after paying our mortgages.
But the rewards are plentiful. We are sitting on around SGD5m of assets and around SGD2m of equity just on real estate alone. Including other financial assets, our combined networth is around SGD3 - 4m. The power of leverage allows an asset that appreciates by 4 - 5% yearly to magnify into 25 - 35% IRR after gearing. We practically double our money every two to three years.
Our next challenge is now to increase our cashflow. We can do it through cashflow from operations, where we increase our rents gradually. We can also do it through CF Financing. We can take some money out from our equity. This can be recurring. I must say that the UK and Australia are more investor friendly than Singapore though.
Investing and succeeding as a property investor is not easy. Holding down full time jobs, our property investments are like our third job. Eventually one of us has to quit our full time jobs to do this. After another three to five years, we will be free, God willing.
You see, rewards of investing goes to those who persist and work hard.
As we progress, we can understand why many people do not own more than three properties. Here are the reasons:
1. Property investments require lots of administrative work. We are looking for tenants for two of our places in London. The void periods are usually around a month but they can be stressful periods. The solution is to find good managing agents when you own properties abroad.
2. Never ending negotiations with banks. Because we leverage on our properties, we have to constantly fill in forms, talk to bankers to refinance our properties.
3. Negotiations with tenants directly. The ones we own in Singapore, we negotiate with our tenants directly, which means we have to chase them, motivate them to pay rent on time.
4. Lack of knowledge. It is not easy finding properties that outperform the general market. We tend NOT to buy prime properties, because the yields are too low and we could be in cashflow trouble. We look for up and coming areas so that the rental yields will at least give us neutral cashflow after paying our mortgages.
But the rewards are plentiful. We are sitting on around SGD5m of assets and around SGD2m of equity just on real estate alone. Including other financial assets, our combined networth is around SGD3 - 4m. The power of leverage allows an asset that appreciates by 4 - 5% yearly to magnify into 25 - 35% IRR after gearing. We practically double our money every two to three years.
Our next challenge is now to increase our cashflow. We can do it through cashflow from operations, where we increase our rents gradually. We can also do it through CF Financing. We can take some money out from our equity. This can be recurring. I must say that the UK and Australia are more investor friendly than Singapore though.
Investing and succeeding as a property investor is not easy. Holding down full time jobs, our property investments are like our third job. Eventually one of us has to quit our full time jobs to do this. After another three to five years, we will be free, God willing.
You see, rewards of investing goes to those who persist and work hard.
