There are two questions I often get from my blog readers and workshop participants.
“You said you only buy an investment property if the yield is 5 percent after expenses. I have gone for many flat viewings but can’t find anything that fits that requirement. Most only offer 1 to 2 percent. Some are even negative. Do you think it is still realistic to look for 5 percent these days?”
I don’t know about you. But I am investing my hard-earned money. Unless I am very sure I can make money the moment I buy, I won’t easily part with my humble savings and spend my precious time managing it. For that reason, I won’t compromise to invest in anything less than 5 percent net return.
“You said at the How To Buy Good Quality Property Workshop that we can’t buy any home near ‘undesirable objects’, any building with Sha Qi or bad fengshui, and any unit or house with floorplan problems. Do we think it is too troublesome to go through the long checklist?”
I don’t know about you. But I am buying a home for myself and my loved ones. Unless I am very sure I am buying the best unit in the project or the best house in the estate, I won’t call it home or let my family move in and stay there for years. I won’t compromise to buy any home with sub-standard quality, fengshui taboos, bad facing or poor layout.
Make your compromise and sacrifice worthwhile
My favorite Christmas song is Eartha Kitt’s Santa Baby released in 1953. Eartha is an accomplished singer, song-writer, actress, activist and author. She died on Christmas day ten years ago.
I couldn’t forget her intuitive response in her famous “love and compromise” interview.
The reporter asked her, “Are you willing to compromise within a relationship?”
She answered, “To compromise? What is compromising? Compromising for what? Compromising for what reason?”
“For men came into your life. Wouldn’t you want to compromise?” The reporter explained.
She burst into laughter. “Stupid. A man comes into my life and I have to compromise? For what? A relationship is a relationship that has to be earned. Not to compromise for. I love relationship. I think that is great. Nothing in the world is more beautiful than falling in love. But falling in love for the right reason. Falling in love for the right purpose. When you fall in love, what is that to compromise about?”
Imagine you are over 40 and still single, do you compromise and accept anyone, regardless of whether the person is whom you are looking for?
Of course you don’t.
Can you imagine eating and sleeping with a person that you don’t really love for the next 30 to 40 years?
Some things we can compromise. Some things we can’t.
You get married not because of your age, pressure from peers and parents, or fear of loneliness. You get married because of love. Even if you know that love, like beauty, will fade with the passage of time.
The person you love will grow old. Aging outside can be touched up by cosmetic procedures. But aging inside is inevitable.
But because of love, you can compromise, or compromise without even aware of it.
Afterall, marriage is all about compromise and sacrifice. Because you compromise, you sacrifice yourself. After you sacrifice, you compromise again. Repeat the process of compromise and sacrifice and you have a successful marriage.
If you don’t love the person in the first place, you compromise for what? You sacrifice for who?
Similarly, when you have been house hunting for a long time and can’t find anything you like, do you just buy anything, regardless of whether it meets your criteria?
If you used to stay in a 1,300 sq ft HDB flat, would you convince yourself that all new projects are the same these days so you don’t have a choice, and spend $1.5 million to settle for a 750 sq ft 3-bedroom unit?
Will you stay in a home you don’t really like for two to three decades? Will you pay for the mortgage of an investment property that doesn’t really make money for you for the next 30 years?
You buy a home not because of your age, pressure from peers or spouse, or fear of missing out. You buy a home because you want to buy the right thing at the right time with the right price.
Because you know that only if you bought what you really want, you wouldn’t be pleased to commit to the priciest big ticket item in your life; you wouldn’t be happy to be tied down by a 30-year mortgage, you wouldn’t be willing to pay the bank first every month when you get your pay check.
You know that your home will grow old and depreciate over time. Aging outside can be touched up by upgrading work. But aging inside and expiry of 99-year lease are inevitable.
But because of your love for your home, you can compromise, or compromise without even aware of it.
If you don’t really love the property in the first place, you compromise for what? You sacrifice for who?
I will commit. But not for you.
You may tell your long-term partner that you don’t believe in marriage. You are a bird with no legs.
But that doesn’t mean you will never settle down. One day you might. Unlike having babies, marriage is not confined by age.
After ending the relationship with your partner, you announce your marriage to somebody else in less than a year’s time.
The truth is: It is not “I don’t want to get married”. It is “I don’t want to get married with you. Of course I love you. But I don’t love you enough to marry you. I can’t tell you the truth. I am waiting for you to leave so I don’t have to be the bad person”.
You may tell others that you don’t believe in buying a home. You are a bird with no legs that won’t settle down in one place.
But that doesn’t mean you will forever be renting. One day you might buy. Who said you have to own your own home by a certain age or under certain circumstances? Unlike loan-to-value that has age restriction, paying a property in full with cash is not confined by age.
What you wish your property agent knew is: It is not “I don’t want to buy”. It is “I don’t want to buy from you now. Of course I like the property. But I don’t like the property enough to buy it now. I won’t tell you straight in the face. I am hoping you can see this so I don’t look like an insincere buyer”.
Because you understand that property is a cycle. Buy when the time is right, when there is value-for-money; when it is a good quality property that fits your purchase criteria.
To compromise? For what?
P.S. I am updating the presentation materials to run the new version of How to Buy Good Quality Properties Workshop for home buyers. Sign up now and see you on January 12.
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