Long term use
I use very simple old wisdom as a first criteria. I am a long term investor and I must have a way to use the property that gives good yield as a fundamental criteria. Many of you think of acquiring a residential unit and renting it out, which is what most people will do. However do think about the 30 plus thousand units that are coming out in the next 2 years and you better think twice about commanding a decent rental. You need to have very good holding power as it is the eventual capital appreciation that will determine whether you make money or not.
I am blessed that I have a range of businesses that enable me to use whatever I buy and inject the right business in to enhance yield. My fundamental rule is yield to capital appreciation and I stick to that principle in all my consideration. I take a 7 to 10 years view and make sure I have the right resources to last the whole 9 yards till I can find the right buyer for my sites. However, if someone offers me a price that meet my objectives, I will seriously consider to dispose.
I was just sharing with a friend how I look for properties. I told him very honestly that I am a bottom feeder. I work very hard to know the market pricing very very well. I am the ultimate 'Giam kanna'. For those of you who do not understand Hokkien, it means that I'm stingy and hate to overpay. I work harder than everybody else which means lots of viewings and of course it takes a toll on me. On average I view 70 sites before acquiring 1. I have exhausted countless agents in the hunt for anomalies which is better sounding than a bargain. You may think it makes sense but actually making the effort to do so is an absolute pain.
I love beautiful sites but I am not willing to pay a premium for them. However, when I am able to get something at my price level, I will be all over the seller. Once I find something I like, I hate losing them too. However, what's yours is yours. I was extremely upset recently that I lost a mortgagee deal in Thailand. It was the right deal but my finances was jammed up at that moment. In the months that followed, the eventual buyer made a ton of money by dividing up the site and selling it. I was extremely upset for a long time and I still am pissed off. I had the cash but it was stupidly locked up. However, the experience has taught me that there are bargains if you look hard enough.
I hope you enjoyed my brief chat about my investment philosophy. I need to go back to work. Just a few quick parting words. Don't panic about the lifting of cooling measures. Go back to basics, make sure you have done your financial calculations and don't trust the agent, make sure you have the yield and potential capital appreciation to make it worthwhile your effort to invest.
Andy Ong Siew Kwee
ERC Holdings Founder, Andy Ong Launches BIGWork, the multi-city co-working space in Singapore, Bangkok and Ho Chi Minh.
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