When to buy (and sell) a private residential property?

Please don't take what I say as the Gospel truth. I am just sharing my thoughts and limited experience. This was an exchange on FB:

• M
  

  Bro. Your property post always trigger my interest and thinking!

  Anyway during the talk, you mentioned there are still good property deals around.

  I wonder what's your definition of good deals?
• 7:44pm
  

  Assi AK
  

  Well, if people are looking for a BTO flat for own stay, I just shared an example in CCK (on my FB wall). Good deal.
• 7:44pm
  

  M
  

  How about private?

  Ps. I should be clear.
• 7:45pm
  

  Assi AK
  

  If people are looking for condos for investment, it is quite hard to find a good deal now.
• 7:45pm
  

  M
  

  Still will like your brain juice on what are good deals on private. Lol

• Assi AK
  

  I know that some developers like Bukit Sembawang and Capitaland are slashing prices but I don't think the prices after discount are good (enough) yet.
• 7:46pm
  

  M
  

  Haha. How much you will go in?
• 7:46pm
  

  Assi AK
  

  For example, someone bought a condo in Cairnhill by BS and it was heavily discounted. Just under $2m. Previously, would have to pay $2.4m to $2.5m for similar unit. However, the current rental is only $4K a month.

  ... Buyer said good deal. He said earlier buyers overpaid. I think (earlier buyers) just overpaid more than he did.

  His gross yield at $4K a month rental would work out to be about 2.4%. His housing loan interest rate is (probably) 1% + 3 months sibor... So, it is almost 1.7% now... It is probably going to be higher in the next 2 years... -.-"

  But what to do? D9 atas. I had a D9 property that I bought during the GFC and sold it when market recovered. This person (I feel) bought as market peaked (again) and beginning to correct.

  I sold off my properties that would have yielded just under 4% per annum. I found properties that were able to yield 6.1% per annum (later on). It made sense to me even though the 6.1% yielders are not in atas locations.

  In the current environment, those that I sold are yielding just above 3% per annum while the would be 6.1% yielders are now 5.1% yielders. (What a difference 2 years make.) All declined but I have a bigger margin of safety now.

• M
  

  Power!! Love your explanation. Gonna share w my wife bro.
• 7:56pm
  

  Assi AK
  

  Aiyoh, pai seh lah... I anyhow say de.
• 7:56pm
  

  M

  Nvm. Keep anyhow say
• Assi A
  

  I think I cut and paste for my next blog post. I ran out of ideas. This one just nice. LOL.
• 8:01pm
  

  M
  

  Yes. This one really vvvvv good

  It will educate a lot of property standbyers
• 8:04pm
  

  Assi AK
  

  Kamsiah. You very kind lah. I only sharing my thoughts and experience. I pai seh.

• 8:05pm
  

  M
  

  You Pai seh what. Haha. I sincerely appreciate that. My frens and wife learnt a lot too
• 
  

8:06pm

Assi AKReally? Thanks for the encouraging feedback. Very happy they enjoyed themselves.

Feeling happy (but also a bit scared) to share.

One thing is for sure though. You can safely ask AK if you need a haircut because AK is not a barber.

Related posts:
1. An evening with AK and friends.
2. Affordability and value for money.
3. Considerations for first timers.
4. CCR, RCR or OCR for rental income?
5. Smaller apartments' prices more resilient.

IREIT: What is a more realistic distribution yield now?

A reader who attended last Saturday's event sent me an email asking me about IREIT Global because he got in during its IPO and he is now worried after hearing what I had to say. 

I was puzzled because I asked if anyone was invested in the REIT on Saturday but there was no indication that anyone was.

Anyway, for those who are interested, I did not say anything new last Saturday. 

Please see related post at the end of this blog. 





Basically, I again explained why I avoided investing in IREIT Global when they had their IPO middle of last year.

I also said that people who invested in the REIT because of the expected 8% distribution yield would probably be disappointed. 

So, what is the expected yield now?

The Euro has been in a downtrend against the S$. 

Today, the exchange rate is one Euro to S$1.54 which is much lower than it was middle of last year at S$1.70.





Based on the estimated income available for distribution to unit holders of Euro 8.3 million (6 months) and approximately 419 million units in issue, annualising the DPU in S$ terms now gives us a distribution yield of about 6.8%.

IREIT Global's unit price has retreated since hitting a high of 90.5c a unit.

Will IREIT Global's unit price go much lower? 

It looks like it could, especially if Mr. Market still demands an 8% distribution yield.

What? Take a stab in the dark? 

Er, well, if the annualised DPU is 6.1c, to get an 8% yield, the REIT would have to trade at 75c a unit which is some 15% lower than its IPO price of 88c a unit.





Related post:
IREIT Global: Distribution yield of 8% safe?