Homes: It's where the money is

Straits Times: Sun, Nov 27 Property investment firm chief executive officer Tim Murphy is not one who looks back as he is busy moving forward. 'I have stuck by my decisions, never looked back and always looked forward,' said the 41-year-old who founded IP Global - headquartered in Hong Kong, with offices in Singapore and Dubai - six years ago. He was previously the CEO of Dah Sing Life Assurance in Hong Kong. 'I always think about the next investment, the next way to grow my life and my company as well as provide for my family,' he said. Singapore is just one of the many places where he has invested in property. But property prices here are now too high and it looks like there is no good value to be found in the next few years, he said. 'I'll wait out the market to see what happens. There may be some deals next year or after.' He has a degree in sports studies from Southampton University in Britain as well as a Master of Business Administration from City University London. His wife Caroline, 37, is a housewife. Their twins, Max and Amber, are 19 months old. Q: Are you a spender or saver? Generally, I am a saver. I invest 80 per cent of all the money I earn in a year. In terms of personal expenditure, I spend the most on my family and children. My family is very important to me and I take pride in them having a good quality of life. But I am not materialistic and neither is my family - there is a fine balance. I do spend a fair bit on travelling. There were holidays around the region and trips back to Britain and to the Maldives this year. I have various credit cards to accumulate air miles. I never pay credit card interest and very rarely go to the ATM. My personal assistant usually draws money from the ATM for me. She manages my bank accounts. Q: What is your general approach to money and savings? I am always moving forward in life, always investing and trying to grow my assets. At the same time, I do enjoy my life, going on holidays, having a nice car, looking after my family and buying property. I bought my mum's house and my own houses in Hong Kong and Britain as well as a lot of investment property. Q: What financial planning have you done for yourself? I hold equities, commodities, bonds, hard cash and property, but 90 per cent of my investment portfolio is in real estate and that is where I have made my money. I seldom buy off-plan but among my recent best investments are the five apartments in Butlers Wharf, Britain, that I bought around 2003, off-plan, for about &pound170,000 on average. I leased them all out and sold them 21/2 years later for &pound300,000 on average. I also usually hold a property till completion so I can lease it out, though I have flipped a few properties in Singapore. One was a 1,163 sq ft 8@Mount Sophia unit that I bought for $728,000 in April 2005 and sold for about $1.7 million in November 2007. IP Global manages my personal property portfolio, such as my rentals, leasing and mortgages. A broker manages my equities which include mining stocks listed on the Mongolian Stock Exchange, commodities and bonds. I hold equities for a psychological reason so I think I am diversifying my portfolio. My real estate investments have given me double-digit returns. I ideally look at an internal rate of return of 10 per cent to 20 per cent a year on all of my investments. I have US$2 million (S$2.6 million) worth of term insurance for myself and my wife. I am like a cash machine to my family. Q: Moneywise, what were your growing-up years like? My father died when I was 18 months old so I grew up in a small household with my mother and brother. We did not have much money as my mother was unemployed. Most of the money came from state benefits. My upbringing has made me very focused and serious about planning and investing for the future as well as taking insurance and making sure that if anything happens to me, my family is protected. My mother taught me the value of money and even now, with any spare cash I have, I always think of her and how she would manage her money. I can put her on a business-class flight today and it will be like the most amazing thing ever for her. I want to pass these values to my children. I am very conscious of teaching my children the value of money and not spoiling them and being overly materialistic. For example, I do not want to buy them big toys all the time. What is the point of Christmas if they get a toy in October? Q: How did you get interested in investing? I bought my first property in Britain when I was 21. I realised I was wasting money renting so I borrowed a small amount of money and bought a house. My friends moved in and rented rooms from me. I then refinanced the property and used the savings to buy another house, which I also rented out to students. I kept re-mortgaging and had three properties before 23. That very early experience taught me the huge value of financial planning and what a fantastic investment real estate can be. To this day, I stand by my belief that the best way to invest your money is in property. Q: What property do you own? In Singapore, I own an office unit in International Plaza and two rental apartments. I bought a 1,238 sq ft loft unit at Icon condominium in Tanjong Pagar in late 2004 for some $905,000. The rental yield is nearly 7.5 per cent and its value is at least $2.2 million. I have already refinanced it twice. Late last year, I bought a 1,119 sq ft unit at Ten@Suffolk in Newton for about $1.4 million. The rental yield is 3.2 per cent and its current value is about $1.6 million. I also own many real estate investments around the world. They are mostly prime city apartments in places such as Australia, Brazil, Japan, Spain, Hong Kong, Malaysia, Thailand and Vietnam. I own holiday homes in Niseko, Japan, because of the potential capital growth. Also, the quality of the tenants there is good. Today, I rent all my properties out to professionals. My first portfolio consisted of 30 student houses. I made a lot of money but it was a nightmare to manage. It is the thing to do when you are in your 30s, not your 40s. Students will just wreck the place. Q: What's the most extravagant thing you have bought? My Maserati, which cost me HK$2 million (S$336,000). I have no regrets buying it. In fact, I do not have any regrets about anything - every investment I have made, good or bad. Q: What's your retirement plan? Real estate has been the most trustworthy investment for me since I started my own portfolio 20 years ago. I plan for semi-retirement. I will manage my portfolio of 30 to 40 properties, read books and play with my children. Q: Home is now... A 3,000 sq ft, four-bedroom house with a pool in Clear Water Bay, Hong Kong, which I bought in 2008 for HK$19 million. The value has since doubled. Q: I drive... A black Maserati Quattroporte. WORST AND BEST BETS Q: What is your worst investment to date? I made a dreadful property investment of 400,000 euros in a tourist area in Spain around 2001 and have probably lost about 150,000 euros (S$260,000) to date. It costs me 1,000 euros every year just to maintain the pool. No one has lived in it for three years because it is not worth putting a tenant in. The holidaymakers are not professionals and they are going to ruin the place. It was more of a lifestyle investment, which was a disaster. Lifestyle investments are not always hugely profitable. You are far better off investing in city centres, where you get high yields, good rentals and easy liquidity. If you buy an apartment in the city, you get a tenant for two years. If you buy a holiday home, you get 30 tenants in a year and at least one of them will turn out to be an idiot. Unfortunately, I had a few idiots. Q: What is your best investment to date? It is the first property I bought in Britain, a house which cost &pound50,000. I got a 95 per cent loan and only needed to come up with &pound2,500. I rented out the rooms to my student friends for &pound800 a month, refinanced it to fund another property purchase and later sold it for &pound300,000. Source: The Straits Times