Sunday, 21 October 2012

My Property Journey Rewind - 2009

Let's continue with part 7 of my journey. This time round it is for only 9 months.

It was Q1 2009. I rub my hands with glee because I really didn't expect to be able to experience 2 cycles within a short 10 years!  I have shared with you previously that the prices has fallen to an attractive level of 140 and I base it from analysing the chart below where 140 is the breakout neckline which has now turned into the support zone.

The earlier years of trading and losing in the stock market has actually helped me sharpen my market "feel" and i have learnt to impart that to trading the property market as well.

I began hunting for properties. I told a good friend that it was time to hunt for property and that if she is looking for a property in the Rivervalley area, please call me along. I even told her to hunt for units at Rivergate or The Sail  where I saw units being advertised for between $1,300 to $1,500 psf. 

I called an agent who has placed out a long series of units that is for sale The Sail @ Marina Bay. He said he will arrange viewings and call me back but he never did. Let me share with you what i learnt about the tricks of property agent.

Lesson Learnt: If you see any advertisements showing a long series different units within the same condo or different units in different condo, these are agents who usually have no units for sale. In other words, they don't have real units on their hand. They are not the 'exclusive agent'. They are doing a 'shot gun' approach whereby they hope to receive phone calls from you. If you are a genuine seller, they will try to make you appoint them as exclusive agent. If you are a genuine buyer, they will then try to arrange some units for you to view. If you see only a short description of the property for sale or a picture of the property in the classified ads, the agent is probably the exclusive agent or acting for the seller.

So what happened was that i have called someone who either think that i am not a genuine buyer or that he really couldn't find any units for me. Another agent i called claimed that the owners are out of town or that the units are being rented out and i can only buy it from the floor plan. I was quite put off by these agents and stopped calling after a while.

Lesson Learnt:  Persevere. I should not give up so easily. My intention was to buy a 1,033 square foot apartment at The Sail for $1,300 psf. The condo will cost me around $1.34m. My lack of perseverance cost me dearly as prices has since increased to around $2,500 to $3,000 in June 2011. The "profit loss" is around $1.2m.

Between May and Sep 2009, I visited many showflats. I visited The Arte, the Illuminaire on Devonshire. The units at The Arte were going being sold at between $850 to $900 psf if i remember correctly but i didn't like that location. 

The Illuminaire showflats were full and super crowded and that was in the midst of the crisis! In fact, all the 2 bedroom units were gone when i visited on the 3rd day of the launch of illuminaire and they were transacted around $1,600 psf. Again, the "profit loss" will be significant as the prices has since gone up to around $2,500 psf. 

For one reason or another, i didn't pull the trigger. I don't want to give any excuses here but basically i felt that i have missed the boat. I couldn't make myself chase after rising prices. 

By Nov 2009, i gave up looking at condominiums as i felt that they were overvalued. If you refer to the red rectangle, i was hunting actively for a condo during that period but the recovery is so fast that I couldn't catch it! It will look quite silly if i buy back a unit at the price i sold last time.

Lesson Learnt : Buying a property is not like going to the market. You need time to hunt for one ideal property but sometimes, time and tide waits for no one! When the V shape recovery comes, the prices just keep moving up and there are many who just let the agents market their units and are not genuine sellers. They just wanted to test the market. On the other hand, 6 months is pretty short to find an ideal property....

In Dec 2009, I decided to turn my focus on landed property for my own stay as i felt that the landed homes offer better value and more space and i should "exercise my right" as a Singaporean to own a landed home. I started to hunt for an intermediate terrace and found one in District 15. It has a land size of 1,600 sqt foot unit and was a 2 storey house with an attic and the built up is around 2,700 psf.

The owner asked for $1.68m and i paid the 1% deposit that evening. I was in a hurry as we were flying off the next day for our holidays. Big mistake. 

Lesson Learnt : Never make such an important and hasty decision when you are flying off the next day and never do any prior research.

I have no experiences buying landed homes and i didn't do any homework. In other words, i wasn't prepared. When i came back from the holidays, i started to do my homework and discovered two "harsh" realities. 

1. We are paying the record prices for landed homes in that area! In fact, i will be the record holder if the transaction goes through. I realised that landed homes is valued on the land size and not the built in area.
2. The banks are only valuing the home at $1.5m and i will need to cough out the difference on top of the 20% downpayment.

On top of that, the house will still need some renovations which will set me back by another $100-150k.

After much deliberation, i decided to "cut loss" and move on. My wife has always been supportive of me and i am pretty thankful. Here you go, my hunt for a landed home ended in a disaster in 2009. It was the worst Christmas i had. I became Santa Claus and gave the owner a big Xmas present of $16,800. I paid school fees again.


The house was subsequently sold for a lesser price than $1.68m to another buyer but fast forward till today, i believe the terrace house can be sold for around $2m to $2.3m as landed homes have moved up very strongly in the last 2 years.

Did i ever regret my decision to become a Santa Claus and forfeit my 1%? I will share my journey with you in the next instalment. At the end of my journey, i will share with you the next support level to watch out for if you are looking to buy a property.


Ironman said...

I enjoy reading your blogs so far (IPO and Real Estate Fund). Really appreciate you share your personal journey with us. Thank you!
All signs point to next big crash in 2014-2015. What's you take?

Mr. IPO said...

Well it's always very difficult to predict but that is my current "take" at the moment. However, you will need to witness unfortunate "catalysts" such as retrenchment or companies going bankrupt before a meaningful correction can set in.

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Anonymous said...

Hi Mr IPO,

I might have missed it but I believed you sold your condo in late 2007. Did you rent for 3 years while looking for the next property to buy (which is your current house)? Wouldn't the rental eat away at the profits that you made from the condo? Hope to hear your advice.

Mr. IPO said...

Hi, thks for visiting my blog. You might have missed my earlier posts. I actually was holding on to a completed and another uncompleted condo. I sold the one under construction. Hope that explains. Feel free if you have any qns, more than happy to share whatever little experience I have.

Eitri Iba said...

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I'm searching a real real estate company to sell my home. I have got a real real estate company called "Lynnpercell" But I didn't understand that is it far better to sell my home?
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RES Course Provider said...

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odin said...

Neat and tidy blog of urs

kei said...

Gd post you have here. Did you do it by yourself? Do share more with us, thks.

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