Property Exit to Investment Advisor
Investment Property #1 Completion of Sale
It has been 3 months since I last posted about my sale of investment property #1 and here are the finalized details. I received $472k in cash, 6k lower than expected due to transfer of tenants’ deposits to the new landlord, as the sale includes transfer of existing tenants.
Property Yield
I bought this 1173 sqft penthouse unit at People’s Park Complex on 8 January 2016 at $850k and sold it on 12 July 2022 at $1.3M, and the total cash proceeds generated over the 7 years is about $850k, inclusive of rent. When I first bought the unit, the rental was $4850 per month, which is a gross yield of 6.85%. At that time, the mortgage payment was about $2500 per month. When I sold the unit, the rental was $6450 per month, which is a gross yield of 9.10% based on my initial purchase price. However, it is 7.37% based on the bank’s valuation price of $1.05M. Based on the sale price of $1.3M, it would be 5.95% gross yield.
Reasons to Sell
When you see these yields, do you wonder why I would sell this property since the yield is so “high”? Firstly, I am selling it at $250k above bank valuation. Based on a estimated $3k positive monthly cashflow from the property, I am getting 83 months in advance. That’s almost 7 years of positive monthly cashflow paid to me upfront, which is worth more if you factor in potential gains over time. Secondly, the property is aging, it has 51 years left when I bought it and 45 years left when I sold it. I bought it as a retirement backup plan and had no need to sell it. However, the price is right, so the deal is done. Thirdly, I think the property market is overextended and it is the right time to sell. After all, property is a leveraged asset and leverage cuts both ways so it is a good time to stop the leverage when Powell says interest rates are going up. Fourthly, the past 7 years of low interest rates helped me a lot because that means I get to maximize cashflow. Covid was also good because I did not have to pay monthly installments for almost a year, which is a bonus cashflow.
Investment Advisory
Over the past 1 year I have been trying to find a good investment advisor to manage my funds. It is very difficult. I am not able to find someone whom I can invest $100k in. So I decided to go into the investment industry. It is time to join the big boys. I am going to invest like a research scientist, since that’s my training. After all, investment is more science than art. I am also going to give back to the community and not charge any sales charge. Join me in my investment journey ahead. If you’re located in the CBD, join me for coffee or tea. Don’t be shy!
Relevant Links
Why I hired a Fund Manager: https://medium.com/@singaporeanlandlord/why-i-hired-a-fund-manager-a2624df88bae
Update on Fund Managers Q2 2022: https://medium.com/@singaporeanlandlord/update-on-fund-managers-q2-2022-6182d619075d
Mortgage Broker (Mortgage Masters) click here to contact via WhatsApp: https://bit.ly/SGLLmortgage
Singaporean Landlord e-book (details of my property investment journey): https://bit.ly/SGLLbook
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