The email address in "Contact AK: Ads and more" above will vanish from November 2018.


Featured blog.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.


"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Financially free and Facebook free!

Recent Comments

ASSI's Guest bloggers

Bankruptcies and property auctions rising. Rule of 15 ten years later. Are those who ignored the rule paying the price?

Friday, February 3, 2023

"Bankruptcy petitions are on the rise amid interest rate hikes, growing inflationary pressures and the expiry of pandemic support measures for borrowers, notes real estate consultancy Knight Frank."

The Business Times, 31 Jan 2023.

I first blogged about the Rule of 15 in 2013.

That was 10 years ago.

Scary how quickly time flies.

It was something that generated plenty of discussion.

Most readers were curious.

Many agreed while some, mostly property agents trying to sell properties including those trying to sell properties in Iskandar Johor, disagreed.

Some who disagreed were even pretty belligerent and said I was spouting nonsense, which, to be fair, I do from time to time.


From that blog, a few more were published.

Since it has been so many years, readers new and old might ask what is the Rule of 15?

Basically, the "Rule of 15" says that if we could buy a home at a price that is 15 times (or less) the annual rent a similar property would fetch in the area, it makes more sense to buy than to rent.

I felt that the simple "rule" could be used as a guide to help in decision making not just in buying and renting properties but also in selling if we happen to own properties.

I still feel the same today.

Anyway, if you are new to my blog or if you need to refresh your memory, this is the link to the blog which has examples too:

You could also tune in to a video AK produced on the Rule of 15 if you prefer to listen than to read:

At the time, I said that the low interest rate environment which, of course, persisted more or less till early last year, made the very much lower rental yields acceptable to investors.

Now that interest rates have risen or normalized, if we have purchased a property with the help of a bank loan, we would have a heavier debt burden and would have to demand a higher rental yield from the property.

Property value could, however, reduce if the property we own is unable to command a higher asking rent which is highly possible in a weaker economy.

Doctor Evil getting a haircut in Iskandar, Johor?

Paying more every month to service the loan and seeing the value of the property reducing which might or might not lead to lenders knocking on our door?

Double whammy?

So stressful.

It would be even more stressful if we took on huge loans or many loans and leveraged to the hilt.

Interest rates rising seems to have led to the tide receding and we could begin to see who are the people who were swimming naked.

So embarrassing.

Very cham like that.

Remember this blog in which I said we could grow richer if we didn't think of three things?

I also shared a story about what happened to someone I knew:

Of course, as usual, AK is just talking to himself.

Is my blog for entertainment or education?

I blur.

You decide.


garudadri said...

Dear AK
Agree with the principles outlined and a timely reminder for people to not overreach in these difficult inflationary times
Higher rates are going to linger this decade as compared to the previous two, the result of too much money supply post-GFC QE
However, when I did some suns applying the 15 times rule, almost no habitable condo could tick the box!
I used the more modest 2020 rentals and still found that even for resale condos you ended up needing around a multiple of 25-35 times, even with 2020 prices
However, this rule of 15 is easily achieved in countries like the UK outside Greater London
This, to me, means that house prices are intrinsically “overvalued “ just like tech stocks in the US
The problem is that despite this insight, we will end up renting perpetually if we wait for “valuations to come down”
I mulled over this
One way out for us here in SG, is to put in a bigger deposit and manage your mortgage efficiently by prepaying now and then etc to increase equity and STAY in that home thereby saving rent
I am doing that and when I did my sums, the opportunity cost of the deposit was offset easily by saved rentals
It is a difficult conundrum but needs active strategic management
You are absolutely right when you leverage and try to “invest in rental property “ though- that IMHO is a certain way to lose money
Warm regards

ted said...

Hi AK,
One headsup and one question.

Headsup, can apply for CPF-OA TBills via DBS online website already. No need to queue!

Question that a friend asked me during our discussions about FIRE, but I don't have a very good answer to.
"If you are FI, say $2 million in the bank, paid up house, top bill of health, what are top 3 things you want to do, to spend your available LIFE on.
Not how to invest the money, which are the easy and trivial answers, invest stocks, buy real estate etc... And try to exclude typical answers like travel the world."

And I thought, hey, there's this person I know about online that's has been living this life for a few years already. Maybe can ask him for some inputs or advice.

So, Mr AK71, what's your advice or answers?
Suspect you might spawn a blog post to answer this, maybe. Haha.

I only know you play ESO and Genshin, what else do you do mostly?
Amongst them, what are highest rated things to you, and why?
(Because yeah, everyone everyday also have to spend time to sleep, eat and go toilet. HAHAHA)


AK71 said...

Hi Garudadri,

People talk about the dramatic crash in cryptocurrencies.

People talk about the dramatic crash in tech stocks.

People don't talk about the dramatic crash in property prices in countries such as Japan, for example.

Even in Singapore, we had dramatic crashes in property prices before and I shared some examples in this blog before.

A couple more blogs on the topic:
1. Investing or speculating in real estate?
2. Investment philosophy and property market.

I was so bullish about Saizen REIT so many years ago for good reasons.

The REIT owned freehold residential buildings in second tier cities in Japan.

They were valued at below replacement cost and their NPI yields were 13% or more in some cases.

They were better value for money than HDB flats in Singapore.

If I had $10m in spare cash, I would have gone to the REIT and offered to buy one of their smaller buildings but, of course, I didn't have that kind of money.


The "Rule of 15" is just something to consider and not all would agree, of course.

To buy a condo in Singapore, wait for the next property market crash.

I bought my first two condos in Singapore when Mr. Market was extremely pessimistic during SARS.

Both condos almost met the "Rule of 15."

Having said this, there will always be opportunities as long as we are not looking at the same places everyone else is looking.

My current home which is a shoebox condo which I bought just a year or two after GFC ended also almost met the "Rule of 15."

Although the COVID-19 pandemic made a mess of things, it is meeting the "Rule of 15" with rents skyrocketing now.

Unless we are in a hurry, there will always be opportunities to get better deals or at least I think so. :)

AK71 said...

Hi Ted,

Yes, another reader, Chenheyuan87, told me the same thing.

It is too late for me as I deployed at one go more than 90% of my CPF-OA money last month already. ;p

Still, this is good news for anyone who is applying for T-bills using their CPF-OA money if they are DBS account holders.

I can tell you are a long time regular reader of my blog when you ask a question and then say:
"Suspect you might spawn a blog post to answer this, maybe."

OK, I won't disappoint you. LOL.

Wait a minute.

"Spawn" a blog post.

Hmm. You gamer too? ;p

Before I give you the list of blogs which you can share with your friends, I will ask you a question.

Do you have a bucket list?

If you don't have a bucket list, don't retire.

I cannot tell anyone what to do in retirement.

Not everyone enjoys gaming, for sure.

However, if you don't have a bucket list, you will be bored to death in retirement.

Literally, retire earlier, die faster.

Oh, I play mostly Neverwinter and Genshin Impact these days.

Have not tried ESO as it isn't F2P.

I did spend many months in Black Desert Online as I got it free during its 5th anniversary celebrations.

Now, the blogs you are waiting for:
1. Confession and what AK thinks of retirement?
2. Why did AK want an early retirement?

There are many hyperlinks to more related posts in these blogs, especially the second blog, and your friends should read those too to get a complete picture.

If AK can do it, so can you! ;p

ted said...

Thanks AK.

Yep, a gamer too.
Although younger than you in real life, probably your senior by many many years in gaming life.
So I've pretty much reaped the gaming tree for most of it's fruits.
Don't think I can actually stand spending that much time gaming even if I become FI(RE), although it definitely will still continue to be a part of my life regardless of FI status.

Definitely have a bucket list that I've been working on over the years, together with FI.
With time and age, somethings become less relevant and I think might have just been societal programming e.g. travel the world, not really that interesting to me. (but okay will travel here n there lah)

Thanks for the advice, it's definitely one of the reasons why the question popped up during our discussions. "Don't retire FROM (the job you hate), but retire TOWARDS (something you enjoy)"

Wish you a long, fun and interesting gaming life ahead!

AK71 said...

Hi Ted,

AK salutes senior gamer! :D

I have a lot of catching up to do in the world of gaming.

It is no longer a whole new world to me like it was a few years ago but, for sure, I have only seen a small corner of the world.

Spending 8 hours daily gaming is still pretty normal for me.

At one time, I was gaming 14 hours a day!

Terrible, I know. -.-"

Why terrible?

I have to make time for anime and period dramas which I enjoy too, right?

Terrible of me to neglect those. ;p

Good to know you have a bucket list.

Then, you are ready for retirement! :)

As for travelling, my passport expired during the COVID-19 pandemic and I have no intention of getting a new one. ;)

Lovely phrase you shared there.

Don't retire from the job you hate but retire towards a life you enjoy.

Couldn't have said it better myself. :D

ted said...

Pretty apt that I'm reading this on 15th day of CNY too. 13 years later. :D
(From your 2nd blog post's related posts)

AK71 said...

Hi Ted,

That blog is a classic (at least to me.) ;p

Didn't have as much spare time as I have now since I was still working towards early retirement 13 years ago.

Looking back, I must have really enjoyed blogging as I probably spent most of my spare time doing it.

Pretty apt too that I read your comment after getting home a while ago from tossing raw fish with my family during lunch. LOL.

Huat ah :D

Monthly Popular Blog Posts

All time ASSI most popular!

Bloggy Award