Case Study 2 - How Engineer made Half Million - Salary.sg Forums
Salary.sg Forums  

Go Back   Salary.sg Forums > The Salary.sg Discussion Forums: > Investments and Net Worth

Investments and Net Worth Talk all about money making exploits, shares, property and building net worth




Case Study 2 - How Engineer made Half Million

Reply
 
Thread Tools
  #1 (permalink)  
Old 07-01-2008, 11:47 PM
Salary.sg
Guest
 
Posts: n/a
Default Case Study 2 - How Engineer made Half Million

This next story is about an engineer and his wife making $500k from a rather low-risk investment.

(See previous case study.)

The engineer had observed that many wealthy people like to invest in property.

These rich people follow a rather simple strategy - buy an apartment or a shop when prices are low, rent it out, and sell when the price is right.

Often, they take a loan even when they can well afford to pay in full.

The engineer saw the beauty in this. To him, investing in property is easier than investing in equities (shares) where one often has to make "informed guesstimates" based on public information and sometimes rumours.

Property seems simpler to understand - all you need is a good location and a reasonable price. For the latter, he wanted the rental income to cover at least the monthly instalment for the maximum bank loan (mortgage).

A good location implies good rental return and ensures that there's upside to the investment.

Taking a bank loan means leverage. Not risky leverage though, because a piece of property always has value, especially in land-scarce Singapore, more so if its location is good. (Note that it's harder to use leverage with shares trading, unless you play with derivatives or take personal loans.)

So, in 2002, he bought an apartment in the River Valley area for $800k - paid 20% with cash and borrowed the rest - and rented it out to an expat for $3,000 a month, which was barely enough to cover the mortgage repayment.

In 2004, when the expat renewed the tenancy, the engineer raised the rent to $3,300.

He raised it again to $3,800 in 2006 when the economy started booming again. He was getting some additional pocket money.



Then in 2007, he sold the apartment for $1.3 million, making a net profit of more than $500k.

The return on investment is more than 300%, or more than 30% per year over 5 years.

How much return are you making from trading shares?

See other case studies.

http://www.salary.sg/2008/case-study...-half-million/

Reply With Quote
  #2 (permalink)  
Old 11-01-2008, 03:37 PM
Amazed---
Guest
 
Posts: n/a
Default 739

These are great case studies. Keep'em coming. Good work!

Reply With Quote
  #3 (permalink)  
Old 14-01-2008, 01:15 PM
SmartTrader---
Guest
 
Posts: n/a
Default 745

The assumption that leveraged properties investment are safer because the value will be retained is not true. It is not well known that if you buy a private property and the market value drops, the banks are obliged to ask you to pay the difference (this is their way of reducing bad loans). And also, if the leverage is very high, if you buy at the wrong end of the curve, the buyer may end up paying for losses for the next 20 years of their lives. The $800K Bishan executive flat sold a few years back come to mind.

Of course, if you read the timing well, the money earn can be a lot. The high returns comes with high risk due to the high leverage of 400% as stated in the Engineer's case.

Reply With Quote
  #4 (permalink)  
Old 10-02-2008, 11:21 PM
Kelvin---
Guest
 
Posts: n/a
Default 833

Again not a fair comparison. He got lucky although I concede that the rental = morgage strategy is a good one.

He took a big risk and deserved his returns. He called market turns which most ppl didn't.

Imagine holding positions in equities which you can liquidate today if you didn't like. Try doing the same with your property. You also cannot downsize your property investment piecemeal.
Reply With Quote
  #5 (permalink)  
Old 10-02-2008, 11:38 PM
admin---
Guest
 
Posts: n/a
Default 835

Kelvin, very good points. Thanks.
Reply With Quote
Reply

Bookmarks

« Previous Thread | Next Thread »
Thread Tools

Posting Rules
You may not post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Case Study 1 - How Poly Lecturer became Millionaire Salary.sg Investments and Net Worth 18 17-12-2013 03:39 AM
Case Study 3 - How Couple got Stuck with Property Salary.sg Investments and Net Worth 16 19-07-2009 04:42 PM
Case Study 6 - Bankrupt and Successful Businesswoman? Salary.sg Income and Jobs 8 17-07-2009 01:08 PM
Case Study 4 - How High-Income Lady Lost $33k in Shares Salary.sg Investments and Net Worth 4 30-06-2008 01:37 PM
Case Study 5 - Shrewd Millionaire Employee Salary.sg Investments and Net Worth 9 18-06-2008 01:46 PM

» 30 Recent Threads
High Finance Thread ( 1 2 3... Last Page)
1,361 Replies, 295,469 Views
MINDEF DXO (All FAQ on it) ( 1 2 3... Last Page)
4,655 Replies, 3,198,323 Views
ST Electronics ( 1 2 3... Last Page)
2,993 Replies, 901,231 Views
Private hospitals
7 Replies, 1,697 Views
DBS tech seed programme ( 1 2 3... Last Page)
2,436 Replies, 658,772 Views
Lawyer Salary ( 1 2 3... Last Page)
17,452 Replies, 6,735,135 Views
For those with 2-5 YOE, what is... ( 1 2 3... Last Page)
996 Replies, 220,123 Views
Ex-MOE Teachers ( 1 2 3... Last Page)
250 Replies, 266,877 Views
HDB (under MND) ( 1 2 3... Last Page)
487 Replies, 447,969 Views
Career as Teacher ( 1 2 3... Last Page)
5,821 Replies, 3,674,808 Views
DSTA (under Mindef) ( 1 2 3... Last Page)
1,215 Replies, 927,209 Views
Compilation of MAs/Analysts Gross... ( 1 2 3... Last Page)
1,093 Replies, 404,393 Views
Compare civil service salary ( 1 2 3... Last Page)
14,610 Replies, 9,258,531 Views
DBS ACE Programme ( 1 2 3... Last Page)
38 Replies, 4,590 Views
Micron starting pay ( 1 2 3... Last Page)
528 Replies, 191,500 Views
NCS (SingTel subsidiary) ( 1 2 3... Last Page)
1,042 Replies, 675,718 Views
Engineer Pay ( 1 2 3... Last Page)
508 Replies, 263,133 Views
How is life as a doctor in... ( 1 2 3... Last Page)
4,091 Replies, 2,008,956 Views
CSA (Cyber Security Agency) ( 1 2 3... Last Page)
555 Replies, 210,946 Views
MAS for Mid Career Professionals ( 1 2 3... Last Page)
1,194 Replies, 550,566 Views
Q: Big4 - Yearly salary increment ( 1 2 3... Last Page)
8,701 Replies, 2,624,356 Views
Aircraft Maintenance License and... ( 1 2 3... Last Page)
697 Replies, 609,101 Views
Factual Local Bank Salaries - DBS... ( 1 2 3... Last Page)
960 Replies, 604,836 Views
GovTech Tech Associate Program... ( 1 2 3... Last Page)
341 Replies, 121,637 Views
Polytechnic lecturer salary range ( 1 2 3)
29 Replies, 82,776 Views
Roles in accenture singapore ( 1 2 3... Last Page)
5,261 Replies, 1,059,173 Views
SIA AO grades ( 1 2 3... Last Page)
90 Replies, 34,092 Views
crypto trading tech roles
9 Replies, 2,128 Views
Civil Svc/ Statboard - Typical... ( 1 2 3... Last Page)
4,400 Replies, 2,405,116 Views
Working Culture in IRAS ( 1 2 3... Last Page)
66 Replies, 117,652 Views
Powered by vBadvanced CMPS v3.2.2



All times are GMT +8. The time now is 06:14 PM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2022, Jelsoft Enterprises Ltd.
Content Relevant URLs by vBSEO 3.3.2