Case Study 2 - How Engineer made Half Million - Forums Forums  

Go Back Forums > The 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

Thread Tools
  #1 (permalink)  
Old 07-01-2008, 11:47 PM
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.

Reply With Quote
  #2 (permalink)  
Old 11-01-2008, 03:37 PM
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
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
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
Posts: n/a
Default 835

Kelvin, very good points. Thanks.
Reply With Quote


« 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 Investments and Net Worth 18 17-12-2013 03:39 AM
Case Study 3 - How Couple got Stuck with Property Investments and Net Worth 16 19-07-2009 04:42 PM
Case Study 6 - Bankrupt and Successful Businesswoman? Income and Jobs 8 17-07-2009 01:08 PM
Case Study 4 - How High-Income Lady Lost $33k in Shares Investments and Net Worth 4 30-06-2008 01:37 PM
Case Study 5 - Shrewd Millionaire Employee Investments and Net Worth 9 18-06-2008 01:46 PM

» 30 Recent Threads
Mid-Year Civil Servant Bonus 2020 ( 1 2 3... Last Page)
154 Replies, 35,917 Views
Bunker trader ( 1 2 3... Last Page)
47 Replies, 24,206 Views
Q: Big4 - Yearly salary increment ( 1 2 3... Last Page)
1,049 Replies, 833,430 Views
Compare civil service salary ( 1 2 3... Last Page)
10,895 Replies, 6,026,218 Views
HSBC Graduate Programme 2021 ( 1 2 3)
20 Replies, 2,710 Views
Career as Teacher ( 1 2 3... Last Page)
2,954 Replies, 1,811,432 Views
How much does a typical FP&A... ( 1 2 3)
24 Replies, 2,165 Views
Civil Service Performance Bonus ( 1 2 3... Last Page)
1,659 Replies, 1,369,000 Views
MINDEF DXO (All FAQ on it) ( 1 2 3... Last Page)
3,458 Replies, 2,049,045 Views
ST Electronics ( 1 2 3... Last Page)
1,045 Replies, 281,134 Views
How much are you earning per annum? ( 1 2 3... Last Page)
12,089 Replies, 3,883,910 Views
How is life as a doctor in... ( 1 2 3... Last Page)
1,515 Replies, 1,003,013 Views
OCBC Graduate Talent Programme... ( 1 2 3... Last Page)
359 Replies, 124,794 Views
Civil Svc/ Statboard - Typical... ( 1 2 3... Last Page)
2,800 Replies, 1,179,182 Views
Engineer Pay ( 1 2 3... Last Page)
146 Replies, 54,396 Views
Civil Service Bonus 2020 Year End
2 Replies, 281 Views
DBS tech seed programme ( 1 2 3... Last Page)
161 Replies, 16,935 Views
Any advice for a final year...
3 Replies, 3,508 Views
Advice for a troubled Designer ( 1 2)
13 Replies, 4,796 Views
Insurance Management Associate... ( 1 2 3... Last Page)
63 Replies, 20,626 Views
GovTech Tech Associate Program... ( 1 2)
16 Replies, 3,863 Views
anyone work as trainer with...
3 Replies, 2,076 Views
Exxon Mobil Equipment tech or... ( 1 2 3... Last Page)
1,786 Replies, 533,669 Views
I need advice
4 Replies, 828 Views
Job offer from Apple ( 1 2 3... Last Page)
492 Replies, 108,426 Views
Business / System Analyst
1 Replies, 1,066 Views
MAS : Mid Career Professionals ( 1 2 3... Last Page)
234 Replies, 145,534 Views
Lawyer Salary ( 1 2 3... Last Page)
9,724 Replies, 3,172,452 Views
Powered by vBadvanced CMPS v3.2.2

All times are GMT +8. The time now is 03:06 PM.

Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
Content Relevant URLs by vBSEO 3.3.2