Recently, quite a few people in Singapore want to be a landlord. Some HDB flat owners buy a condominium unit and rent it out. They are probably thinking “It is a wonderful to be a landlord. Every month I just collect rent from my tenants and shake my legs at home. In a few years time, I can quit my day job and retire. Life is wonderful, Ha ha ha.”
While I agree being a landlord is one way to earn passive income, being a landlord is more than that. A closer look reveals more expenses of being a landlord.
Say for example a landlord owns 5 properties and each property give him a monthly rent of $4,000. That will be total monthly income of $20,000. It sounds good till we look at the expenses involved in owning 5 rental units. The monthly installments for 5 units for example can hit $15,000 if we assumed each unit bank loan is $700,000 and 3% (conservative) interest rate. The monthly property tax can reach $1,000. The monthly maintenance fee for 5 units may hit $1,200 (each unit monthly maintenance fee is $250). This does not include expenses like home insurance, minor repair (eg: spoilt washing machine, water heater etc), income tax, commission by agents, vacancy cost etc…
After deducting the expenses, the $20,000 monthly rental income is left with $2,000. This sounds miserable after all the hard work of searching and buying 5 properties. It made you flinch after you know that there are one-time fees like stamp duty, lawyer fees, agent sales commission and furniture payable for the 5 units upon purchase. It is certainly not fun at all.
At work, we receive a pay for our work. In the case of the landlord, he is working hard to pay the government (in property and income tax), bank (in monthly instalment), maintenance company ( in maintenance fees).
Rich Dad Poor Dad’s book mentioned “it is not how much money you made ( in salary or rental income), it is how much and how long you can keep the money you made.” This statement sums it up.
Wednesday, December 19, 2012
Tuesday, December 11, 2012
An opinion of life
Life as we know is short. In the twinkle of an eye, time flies. Christmas is coming again.
My view about life is a book that I am interested to finish reading. No matter what happens, whether the ending is good or bad, I am determined to read this book till the end.
Life is similar to be a movie or TV series, in which I am the director and the main actor, influencing many events in the show.
Life is like a blank piece of paper in which we are each given pens or pencils to draw and colour it. We are the owner or master of the painting and how the painting will turn out will depends on how well we draw the painting.
In summary, this is life from my point of view.
My view about life is a book that I am interested to finish reading. No matter what happens, whether the ending is good or bad, I am determined to read this book till the end.
Life is similar to be a movie or TV series, in which I am the director and the main actor, influencing many events in the show.
Life is like a blank piece of paper in which we are each given pens or pencils to draw and colour it. We are the owner or master of the painting and how the painting will turn out will depends on how well we draw the painting.
In summary, this is life from my point of view.
Monday, December 10, 2012
Singaporeans are gracious
I travelled often on the MRT trains and buses. The last I heard about Singaporeans’ behavior on the train and buses are that they are ungracious and unkind.
My experience on the public transport convinced me otherwise. I often see Singaporeans giving up seats to elderly folks or pregnant ladies. Although, some of them could be foreigners, I still believe that generally Singaporeans are kind and gracious.
This belief is so strong that I wanted to set up a website and post photos of these marvelous people who give up their seats for the needy. Let us see how it goes.
My experience on the public transport convinced me otherwise. I often see Singaporeans giving up seats to elderly folks or pregnant ladies. Although, some of them could be foreigners, I still believe that generally Singaporeans are kind and gracious.
This belief is so strong that I wanted to set up a website and post photos of these marvelous people who give up their seats for the needy. Let us see how it goes.
Reading other blog
Today, I m comforted and reassured to know blogger in similar situations as me, otherwise I begin to feel that I am an alien from outer space. There are plenty of lessons to learn from others.
In this Blog, titled “5 Million dollars in 10 years time”, he or she has set a goal of achieving $5 Million in 10 years time. His or her financial journey in life is recorded in his or her blog. One particular blog I read was about the job situation in Singapore in December 2008. It was horrible according to the writer. He or she knew about his colleague who was retrenched together with his wife. I wondered how the retrenched couple is doing now.
It would be wonderful to gather all the bloggers with similar blogs in one corner and let them mingle around. One day I can send invites to all this great bloggers and share our thoughts, opinion and viewpoints.
The last recession was in year 2008. The next recession if it comes, may be worst. I certainly hope this time is different. Although my belief is that the more things change, the more they remained the same.
In this Blog, titled “5 Million dollars in 10 years time”, he or she has set a goal of achieving $5 Million in 10 years time. His or her financial journey in life is recorded in his or her blog. One particular blog I read was about the job situation in Singapore in December 2008. It was horrible according to the writer. He or she knew about his colleague who was retrenched together with his wife. I wondered how the retrenched couple is doing now.
It would be wonderful to gather all the bloggers with similar blogs in one corner and let them mingle around. One day I can send invites to all this great bloggers and share our thoughts, opinion and viewpoints.
The last recession was in year 2008. The next recession if it comes, may be worst. I certainly hope this time is different. Although my belief is that the more things change, the more they remained the same.
Tuesday, December 4, 2012
Manufacturing sector contraction
In the TV news, we heard manufacturing sector in Singapore has contracted. What does this mean for most Singaporeans who are in the sales, operations, service sector and not manufacturing industry?
It means that the demand for Singapore goods is coming down. When the demand for goods reduced, we can be sure that the transportation industry will contract as well. Retail shops may find that they are unable to clear their stock. Shoppers may find “Sale” at every location. If this persists for a long enough time, “Sale” will become “closing down Sale”.
The manufacturing sector contraction may signal a general slowdown in the economy in next year. If the slowdown persists for a year, sooner or later companies may have no choice but to retrench workers.
It means that the demand for Singapore goods is coming down. When the demand for goods reduced, we can be sure that the transportation industry will contract as well. Retail shops may find that they are unable to clear their stock. Shoppers may find “Sale” at every location. If this persists for a long enough time, “Sale” will become “closing down Sale”.
The manufacturing sector contraction may signal a general slowdown in the economy in next year. If the slowdown persists for a year, sooner or later companies may have no choice but to retrench workers.
Thursday, November 29, 2012
The paper chase
Many Singaporeans chase after a degree. The government encourages us to upgrade our education and skills if we lost our job. Many Singaporeans heed the call and have taken this step. However, the fact remains that it is not a given that their paycheck will rise if a degree is gotten.
For example, management of people in sales, customer service will not bother if the person has got a degree or diploma or ITE certificate. All the company care is how much sales is done, how satisfied are the customers, how many customers are served today. For those in administration, operations, a new degree may mean additional responsibilities or new posting.
Thus, it will be wise that working Singaporean do not equate a newly gotten degree with a pay rise.
For example, management of people in sales, customer service will not bother if the person has got a degree or diploma or ITE certificate. All the company care is how much sales is done, how satisfied are the customers, how many customers are served today. For those in administration, operations, a new degree may mean additional responsibilities or new posting.
Thus, it will be wise that working Singaporean do not equate a newly gotten degree with a pay rise.
Wednesday, November 28, 2012
Expansion of retail business
Today, I read the newspaper about a young company called “Twelve Cupcakes”. It is expanding rapidly. Within a year, the number of outlets rose from 4 to 8. It is encouraging to know that young entrepreneurs are doing well.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
Subscribe to:
Posts (Atom)