Story of my fourth property (part I)

I haven’t been writing about my property stories since early last year. For readers who have been waiting and sending me reminders, my sincere apology and thank you for your patience.

Just three months after buying my third property, I sniffed another good deal in July 2004.

It wasn’t a normal 3-line run-of-paper advertisement in the Classified. The property agent went for a more eye-catching column ad to put in descriptions in point form, his photo and a contact number. The two big words ‘Urgent Sale’ was so prominent that no one could possibly miss it!

It was a two-bedroom flat in a reputable condominium that had always been under my ‘wish list’ of target properties.

1) The location was perfect.

It was situated in district 3 – one of foreigners’ favorite locations to call home. In front of the development was an overhead bridge leading to the MRT station. Behind was the quiet embassy area that was just a few minutes’ drive to the Orchard shopping belt.

2) It was popular among expatriates.

It was completed three years ago. The place was very well-maintained. The majority of units in the condominium was purchased for investment and tenanted to expatriates. For some reasons, this condominium was particularly popular with Japanese tenants.

3) It was the rare type of unit.

There were three blocks in this project. Only two units on each floor in Block A came with two-bedroom units. The rest of them were all three-bedders. The rare two-bedroom units would definitely have less competition whether it was for lease or for sale. An added bonus was that this was the two-bedder facing the quieter side – the clubhouse rather than the tennis court.

4) It was selling below valuation.

Valuation of the unit at that time was around $600,000. The owner was only asking for half a million though he would accept the highest offer. The place was tenanted to a Japanese company at $3,400 till end of the month.

Remember my three purchase criteria for buying properties?

1) Good location and layout;

2) Minimum 5% net rental return; and

3) At least 15% below last transacted price.

They were all met perfectly well!

But there was still one small problem: I didn’t have the money for the down payment.

After paying for one property a year in 2002, 2003 and 2004, my savings and money in my CPF ordinary account were almost depleted. Relying on a single income would mean at least another 12 months before I felt comfortable to fund another property. Getting a personal loan for the down payment was out of the question.

I began looking around for friends or acquaintances who might have the financial means and were also keen on buying properties.

You know it’s not difficult to find smart and capable people who have wealth and success early in life. But it’s rare that he/she is trustworthy, and above all, he/she also trusts you.

At last, I talked to a friend who was very good in another form of investment (not shares or any form of trading) who didn’t mind getting a property.

I quickly ran through the deal and the ROI calculations with her. I went on so fast and disorganized that I doubted anybody can grasp it.

When I finished, she simply asked,

“How much money do you need?”

“$120,000.”

“Okay.”

She probably misunderstood that I wanted to borrow money!

Anyway, I was grateful that she believed in me. It was also at that moment that I decided to help her secure the property, put it under her name and I won’t make a single cent out of it.

It is a pity to pass over a good deal, but it is a shame to lose a friend because of money.