Born in Singapore in the early 1970's, I am brought up in a middle class family. My father worked hard as a mechanic to provide for the family and my mother was a housewife looking after three boys. Since young, I was taught to study hard, get a good job, get married and provide for your family. Money was not discussed at home, apart from we were told not owe people money.
With a finance and marketing degree, I worked in project management, sales and analyst roles in multinational corporations in Singapore. I had put myself in the rat race.
I have always been inspired by people who are able to attain financial freedom and have the option to retire early. When pursuing my MBA in Singapore, I met a classmate who own a sizeable property portfolio in New Zealand that generates a large enough passive income for him to retire and provide for his family.
I started reading and educating myself as much as I could. One book in particular, Rich Dad Poor Dad, really gave me an aha moment to the concept of leveraging, i.e. using the bank's money to make money through property investment. It was clear to me that this is the approach I wanted to pursue to get out of the race race.
In early 2000's, I bought my first investment property, which is an off the plan townhouse in Auckland. I was still living in Singapore and information on the internet was lacking then. The moment slick real estate spruikers gave a presentation in a hotel ballroom and gave me the glossy brochure, I fell for their hook, line, and sinker.
Determining to build my property portfolio quickly, I continued investing passively, scrimping, saving and sacrificing lifestyle for the next few years and ended up with a reasonable portfolio of 7 properties.
In 2006, I migrated to Brisbane and turned hobby into work and became real estate sales agent. I soon realised that the market value of my investment properties were pretty much the same as what I paid for them years ago, i.e. the value of my property portfolio was not growing fast enough. I was not getting the returns I had hoped for, and it seemed like my passive income was nowhere where I had hoped it would be after buying a number of properties. In short, the buy, pray and hold strategy is not working.
Instead of giving up, I focused on educating myself on how to increase capital gains and rental yield. I adopted the buy, manufacture equity, uplift equity and hold strategy.
I began by deploying more proactive strategies in Brisbane to manufacture equity. Like many investors, I tried renovation on a rundown post war house. These non-structural improvements are time intensive, need specialist skills, labour intensive and require cash investment.
However I still did not get the returns I wanted.
Because I was being capped by the fundamental value of the existing houses and land. No matter how much renovation I did, even it was to the entire house, I still ended up with a renovated smallish (average 100-120 sqm) post war house. I always questioned how much equity a renovation project would manufacture.
I started trying for other strategies to manufacture equity. Subsequently I bought a unit/townhouse site and obtain a development approval (DA) for 6 units. After going through all the work to obtain the DA, seeing the intensive capital requirements ahead of me, the extremely long timeframes (3 to 5 years) to complete the project and the risk involved in a large-scale development, I realised this was not a good fit for my strategy and I sold out of the project.
I refused to give up or be deterred by these mis-steps and I continued to seek other strategies to manufacture equity.
It was only after I started focusing on subdivisions and new builds of high value properties in high demand areas that I began to develop and perfect my strategy around manufacturing equity in small lot developments.
By focusing on only suburbs within 10 km to Brisbane CBD, I could ensure that the demand for a brand new house would be strong, which meant:
- The higher valuation potential allowed me to uplift more equity from the bank, which will fund the next purchase or project.
- I could achieve a higher rental yield to dramatically improve the passive income stream that I was seeking in the first place.
- A relatively short timeframe (10 to 12 months) to completing the project, which allowed me to repeat the same strategies quickly.
Encouraged by the success of the projects, I kept perfecting these 2 strategies, deploying them over numerous times and refined my approach over time. Eventually I completed 4 subdivisions and built 11 houses. I have built a team of town planners, surveyors, civil engineers, hydraulic engineers, ecologists, builders, other consultants and subcontractors. With a good eye for detail, I was able to minimise costs and dramatically increase the equity manufactured within my projects.
As the number of successful projects increased, my skills got sharper, the projects easier to manage and the strategy became more streamlined. I quickly became addicted to the eye watering equity manufactured by these strategies and grew my property portfolio to 15 properties. I am controlling $14M worth of properties, the overall LVR (Loan to Value Ratio) is currently at 46%, overall rental yield is 7.0%, and net positive cashflow is $7,000 per month.
Now that I have achieved my original goal of financial freedom and reached my borrowing capacity (because I do not sell properties that I developed), what motivates me now is sharing my passion for manufacturing equity and wealth creation. I absolutely love helping other ambitious property investors to achieve their own portfolio goals. I am very grateful that I have the opportunity to do this as project manager full time now alongside with being a real estate sales agent, which makes me a better project manager and vice-versa.
If you have a property portfolio or are starting one, and you would like to chat with me about your strategy, I would love to hear from you. Please feel free to reach out to me right away, I am always glad to spend some time talking property!
