Oct 12, 2008

me & money

Homing in on a good book

A home owner at 24, this new author has written a guide on property investment

By Lorna Tan, Finance Correspondent

Mr Getty Goh bought his first property when he was 24 and fresh out of university. Now at 30, he has two new properties after selling off the first one.

Last month, he launched a book, Buy, Bye Property, which is essentially a guide to new home owners and aspiring property investors.

He aims to build up a property portfolio and be in the property consulting business. He quit his job as an army officer in May after six years in the service, and founded property research firm Ascendant Assets.

He has started on his second book, on how to identify good property buys. By next year, he hopes to conduct workshops for property buyers on how to research in a systematic manner before committing to a property.

At the moment, he operates, a portal which reaches out to novice investors.

He is married to school teacher Eleanor Chia, 28, and they have no children yet. A Bachelor of Science (Building) graduate from the National University of Singapore, Mr Goh was named after the American oil tycoon Paul Getty, by his father.

Q: What motivated you to write Buy Bye Property?

When I first started investing in property, I was not sure about what I was doing. I bought my first property, a 678 sq ft one-bedroom condo in district 10, for $676,000 in 2002.

I was then 24 and earning $2,500. I had jumped right in and thought that I would not go wrong with a property in town. But the property market performed badly the following year due to the Sars crisis, and my property's value dropped.

I would have made a loss of more than $50,000 if I had to sell it then. Fortunately, I was able to hold on to it, and managed to ride out the bad times. It was then that I realised I had been lucky.

But how many of us can afford to make even the slightest mistake where it comes to property investing? I wanted to share mistakes like that, and so I wrote the book.

Q: What are your money habits?

My first property investment served as a 'forced savings' mechanism. This was because more than 40 per cent of my salary was used to repay the mortgage loan. Even when I was renting out the property, I continued to pay the loan from my salary and save the rental income to accumulate funds for the downpayment of my next property. My wife and I currently manage to set aside about $50,000 in savings and home loan repayment annually. This figure works out to 50 to 60 per cent of our annual combined salary.

Q: What financial planning have you done for yourself?

I'm fairly risk averse. I have some unit trust investments including a BRIC (Brazil, Russia, India and China) fund, using my CPF money. I am still holding on to them as they are for the long term and I do not intend to sell in the near future.

As for stocks, I used to hold blue chips like SMRT for two to three years. I sold them in 2006 with close to 100 per cent returns. In March, I bought into Li Heng and Roxy-Pac, but I have since sold them despite a small loss. I wanted to take a minor loss and to hold cash instead.

Q: What about insurance planning?

I have a wide variety of insurance policies ranging from whole life to term plans, as well as medical plans which will help defray any potentially substantial hospitalisation expenses. My annual premiums are about $5,000 and I'm insured for about $700,000.

Q: Tell us more about your property investments.

As I said, I bought my first property when I was 24. I held on to it for about five years before selling it in the middle of last year for a small profit of about $150,000. In addition, I had been collecting rental income from the property.

Before selling it, I bought my second property, a 936 sq ft two-bedroom condo in District 10, for $980,000 in January last year. It went up in value by about $500,000 during the property boom last year. The value has gone down now, but it is still higher than the original price. I want to build my property portfolio, so I am still holding on to it.

I co-invested $600,000 with two partners in a 2,000 sq ft factory unit at Admiralty at the start of this year for its potential for high rental yield. The construction of the factory will be finished by next year. In addition, I am exploring the possibility of buying a property overseas.

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

I'm an only child and I grew up in a middle-income family in a terrace house in Balestier. My father used to run an import-export business while my mother was a personal assistant.

They taught me to be prudent with my money and we led a relatively simple life. Meals at nice restaurants were reserved for very special occasions.

My parents do not believe in spending money on branded stuff, preferring instead to buy goods that provide good value for money. They are very willing though to spend on the things that count, like my education.

Much of their savings were invested in providing me with a good education, and I am very grateful to them for that. For the past four years, they have been running a confectionery in Thomson Road.

Q: What has been a bad investment?

That was when I tried options trading. As an aspiring property investor, one of the main stumbling blocks I faced was the lack of cash for downpayments. After buying my first property in 2002, I was looking to buy another property and was trying to accumulate the 20 per cent cash deposit. I thought options trading could provide the answer to my fund accumulation.

I signed up for an options trading course and started speculating in options shortly after.

Options are financial instruments that give me the right, but not the obligation, to engage in a future transaction on some underlying security. In this case, I wanted to transact some US stocks.

However, while I was holding on to the option, Hurricane Katrina struck in the United States and gas prices skyrocketed. I had an instant paper loss of more than US$10,000 (S$14,700), which was almost my whole investment capital.

My first instinct was to sell to cut my losses, but I managed to convince myself to hold on in the hope that the situation would improve.

Fortunately, the market recovered the following day and I eventually suffered an actual loss of about US$2,000. Had prices continued to drop, I would have been badly burnt. I have not speculated in stock options since.

Q: Your best investment to date?

My first property can be considered as my best investment. If not for that investment, I would not have experienced how it was like to have made all those mistakes.

Q: And your home now is?

A condominium in town, which is the second property I bought.

Q: And your car is...?

A red Hyundai.

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