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mr funny
01-02-09, 14:39
http://www.straitstimes.com/Invest/Story/STIStory_332760.html

Feb 1, 2009

me & my money

Landing a good investment

Switch to high-end landed property pays off for founder of property agency

By Lorna Tan, Finance Correspondent

http://www.straitstimes.com/STI/STIMEDIA/image/20090201/williamwong.jpg
RealStar's William Wong and his wife, Pamela, with their children (from left), Maximus, Matthias and Abriez. Their rented Seletar property is four times the size of their Frankel Estate bungalow but the latter is being rented out for a sum that can cover its mortgage and their rental. -- PHOTO: ASHLEIGH SIM

Mr William Wong, founder of property agency RealStar Premier Property Consultant, wants to provide a landed home for each of his three children, and sets himself a target of 10 years to do so.

His plan appears to be on track as he and his wife already own two landed properties - a bungalow and a semi-detached house - both of which are being rented out.

His wife, Ms Pamela Quek, 38, is the financial controller at RealStar. The couple met when they were property agents at ERA Realty.

But life was not always so rosy for Mr Wong, 41. His first nine months in the real estate industry in 1995 were a nightmare, as he managed to close only one sale and two rentals.

He found himself living on overdrafts from five different banks and, at the end of that year, owed the banks a total of $70,000.

But things got better and he went on to become one of ERA's top 10 agents during his six years there, grossing close to $500,000 in sales commissions each year, by selling mainly HDB flats in the Hougang area.

In 2001, he left ERA and invested $200,000 of his savings to set up RealStar. At its peak, it had 700 agents. The firm broke even in the first year but encountered losses in the third year when margins became thin in the highly competitive market.

In 2005, he decided to change his business model to focus on the high-end landed property market and scaled back his agency to just 30 people. The move paid off.

A computer science graduate from the National University of Singapore, Mr Wong worked as a systems engineer in a Japanese firm for 31/2 years before he joined ERA. The couple have two sons - Matthias, five; and Maximus, 19 months old - and a daughter, Abriez, two months old.

Q: What are your money habits?

Half of our funds are invested in properties, 10 per cent is in cash, 10 per cent in stocks and options, 10 per cent is invested back in the company and the rest is for household expenditure.

My wife and I enjoy eating out, so we enjoy spending on food and holidays for our family.

Q: What financial planning have you done for yourself?

I started investing in stocks early last year. I have about $400,000 invested in local and US stocks, mainly blue chips like Singapore Airlines, Neptune Orient Lines and Citibank.

Currently, I'm looking at paper losses of 20 per cent. I've also set aside another sum for options investing, which I started after attending a course last month.

For any investment I make, I also work out the worst-case scenario so I know what steps to take should things not go according to plan. For example, in property investments, we must have the holding power in the event the market fluctuates and values drop drastically.

Q: What about insurance planning?

Our insurance plans are mainly for accident, health and hospitalisation.

Q: What's your investment philosophy?

In investing, there are bound to be winners and losers. The latter are normally those who do not have a good understanding of what they are investing in or are not good at it. Right now, most of my funds are in property investments, an area that I am relatively competent and confident in.

Q: What are your current property investments?

I have a bungalow in Frankel Estate near Siglap and a semi-detached house in Sennett Estate near MacPherson Road. The average rental return is about 3 per cent. It is not very high but I'm looking for capital appreciation. I usually look for real estate with development potential.

For instance, my 3,000 sq ft bungalow has the potential for its land to be redeveloped into two semi-detached houses eventually. It sits on a land area of 5,600 sq ft. I bought it in early 2007 for $4.6 million.

The 2,800 sq ft semi-detached property, which sits on a land area of 4,300 sq ft, was bought in October last year for $1.9 million. It has potential to be redeveloped into a bungalow. It is fully paid up.

Our 10-year goal is to own four landed properties which will be fully paid up for by then, of which one will be for my wife and me, and the other three to be passed on to our kids.

Half of all our earnings are redirected to either offsetting the loan quantum or used as down payments for the properties we bought. We will not borrow more than 70 per cent for any property we invest in so that we can achieve a positive cash flow from the rental returns.

Q: Moneywise, what were your growing-up years like?

I grew up in a relatively poor family of five. We lived in a rented one-room flat in Bendemeer.

My father was a school bus driver while my mother did ad hoc domestic work like cooking and washing clothes for other families.

Later, we moved to a four-room flat in Hougang.

I fully understood the importance and value of money from a young age.

To supplement the family income and pay my school fees, I gave tuition once I was in secondary school. We had no luxuries and my parents' savings were used mainly for our education.

Q: What has been a bad investment?

It was a walk-up apartment in Orchard Road, bought in 1999 for $1.35 million. I bought it on the assumption that it was going to be sold en bloc. Unfortunately, the news was not accurate and the sale did not materialise immediately. It went on en bloc sale only in 2007 and I got $1.25 million for the apartment.

Q: Your best investment to date?

My best investment is RealStar. I invested another $100,000 over the last three years to re-focus the company business to target high-end landed property sales and investment.

The investment has paid off handsomely as the company is one of the top players in the landed sales and investment segment and it has recouped more than 10 times the initial investment so far.

I will invest more in RealStar to improve its branding and I plan to recruit another 20 agents in the next four months.

Q: What is your retirement plan?

I will consider semi-retirement when I've fully paid up for the four landed properties. I will then travel every three months with my family and kids. I have published a book Billion Dollar Challenge, on salesmanship and I plan to publish another book on property investment once I'm semi-retired, hopefully in the next five years.

I think a monthly sum of $10,000 is sufficient to provide for a comfortable but not extravagant lifestyle for both Pamela and me when we retire.

Q: And your home now is...?

I'm renting a 2,000 sq ft bungalow in Seletar for $6,100 a month. It sits on a land area of 25,000 sq ft. It is four times the size of the bungalow we own but the latter is being rented out with a rental income that can cover its own mortgage and the rent here.

Q: And your car is...?

A silver Porsche Cayman and a black Chrysler Grand Voyager.

[email protected]

Covering all the bases

'For any investment I make, I also work out the worst-case scenario so I know what steps to take should things not go according to plan.'

MR WILLIAM WONG, on the need for a long-term view in holding property

Change of focus

'I will consider semi-retirement when I've fully paid up for the four landed properties. I will then travel every three months with my family and kids. I have published a book, Billion Dollar Challenge, on salesmanship and I plan to publish another book on property investment once I'm semi-retired, hopefully in the next five years.'
MR WONG, on his retirement plans