I Was Stopped In The Hawker Center This Morning By A Lady

Luckily not by the Covid-19 Safety Distancing Ambassador.

She was a course mate. We met long time ago attending a property investing course. We were team mates and had to gather to do research. She was always wearing pearls, gold jewelry and Rolex. Always well-dress and groomed. (makes me wonder how early she woke up to get ready for class … hmmm). That must be 20 years ago.

Now she still same same… bling from head to toe.

She asked, “hey Marko, I see your facebook all the time, teach me ley, how come I got so many properties and struggle every month , while you eng-eng-cheng-cheng (please help me interpret) , kia-lai-kia-kee (please help interpret), Lui-ba-ba (again please help interpret).

I pointed to a coffee shop, we sat and ordered some drinks.

I took out my phone to send a message to Jill so she could find me later…. Maybe rescue me even if this friend should get too toxic.

The drinks came. She offered to pay. She put her bag on the table, it’s a nice bag. Dug into for her purse for some nice, wrinkle-free notes… it’s a nice purse. And then dug into bag for a coin purse …. It’s a nice coin purse. The hawker was getting irritated and started to look left, look right and whistle a Hokkien song “tong khor seah lan chai” (please help translate… something about pain who understand)

Lets get to business, I thought.

She listed her properties for me. Using her fingers to count, she had about seven properties. Several residential properties bought before the law restricts citizens from owning more than one resi per person (Although this law affects my speed to financial freedom, I support it as I have seen other countries offering S$500K for an apartment slightly larger than a car park lot).

She listed another few offices, industrial units and shops.

I think I know the problem. I spotted a pattern

All her properties are freehold (FH).

I asked her why and she replied that freehold properties can hold its value. In my head, a neon sign lighter up …. Not entirely incorrect, not entirely wrong too.

FH properties may hold its value, however, this may take a few decades. Meanwhile, the buyer has to have the cashflow to top up the bank payments every month.

It used to be ok buying FH resi properties and rent out at high dollars. However, that era has passed. These days, plenty of resi properties are 99 years LH and being cheaper, the owners asked for lower rental dollar. Tenants will not pay you $1 more becos your property is FH. They pay a little more for facilities and sometimes views. These non-FH resi pty sets the market trends. Hence FH pty owners are suffering.

For eg, a tenant will pay $3K to rent your apartment. If its 99LH, your apt likely cost $800K. If its FH, your apt likely costs $1.2M.

The same goes for her shops, factories and offices. It used to be that these properties will quickly appreciate and that allows the owners to go to the banks and get more money. However, newer properties are shorter lease and the owners are asking for lower rentals … which attract flocks of users.

Over the years, speaking to thousands of people, I noticed one thing – there are three types of people who still buy FH properties :

(1) Buy for own use with intention to rent out when they exit the business.

(2) Pay full cash because they are usually older and rents collected is easily 4% ROI vs fixed deposits usually with depressing returns that is lower than inflation (guys, that means your money is growing smaller).

(3) People who are still stuck in the old mindset of Motorola pagers and Windows 95.

With all these thoughts in my mind, how can I tactfully tell her that she is going to be screwed for a long time? Can you help me? Any suggestions?

Please help.

Love, Marko
Investor, Practitioner and Full-Time Coach