OrangeTee MD swears by real estate

(2013-06-02 04:08:52) 下一个

Me & My Money Series (Sunday Times)

There are other ways to passive income other than real estate - he seems to imply rental income is the only way. And yes I think he has vested interest to say "prices will rise over the long-term". Notice that out of 10 interviewees, 9 will "swear by" real estate. Weird but true.

I have invested in a property in a nearby area, I am not surprised that his studio apartment bought three years ago has appreciated by a mere 5%. This is mainly due to the government's several rounds of cooling measures that deter foreign investors from entering the luxury property market. His Malaysian property has appreciated +15% over 2 years.

The Straits Times
Published on Jun 02, 2013
me & my money

OrangeTee MD swears by real estate

1990s property boom helped him clear debt, and he says prices will rise in long term

By Cheryl Ong

It is no surprise that property firm executive Steven Tan is a big believer in putting his money into bricks and mortar.

Mr Tan, 49, has bought and sold eight properties over the years so he knows the rewards - and risks - that real estate can bring.

In fact, it was a business crisis that led him to real estate in the first place. Mr Tan started his own architectural curtain wall business in 1988 and expanded to Taiwan and China.

But by 1991, China's construction sector was failing, eventually forcing the business to close in 1993. Mr Tan says: "After I liquidated my company, I still carried some debt with me. So I had to solve my financial problems.

"Partly because of my educational background in building maintenance and management, and because I had to resolve the immediate problem of personal debt, I entered the business of property, thinking that is the fastest way to make money."

He rode on the property boom of 1994 and 1995 and managed to recover his losses in just two years.

It also led to a career in property that is approaching 19 years now.

Mr Tan took on the post of managing director of property agency and consultancy OrangeTee in January last year.

He and wife May Thong, 49, live with their 17-year-old daughter Tan Hua Sze in the Pine Grove condominium in Ulu Pandan Road.

Q: Are you a spender or saver?

Both. When it comes to good food, travelling and golfing with family and friends, I am definitely a spender.

Occasionally, I buy luxury items like my Audi A7, but my family never makes it a habit. I always ensure I save enough money for investment, as well as for a rainy day.

Q: How much do you charge to your credit cards every month?

I charge about $8,000 to $10,000 monthly. This includes entertainment with clients, my personal expenses and the household expenditure. I am the sole breadwinner in the family and have to foot all the bills but I enjoy it.

I try to use the same credit card so that I can keep track of my spending every month.

Q: What financial planning have you done for yourself?

In term of investments, my top choice is definitely properties. My job allows me to feel the pulse of the property market.

Since I started work, I have always believed that property prices will rise in the long term despite the ups and downs.

It is still the best way to hedge against inflation. On top of that, it can generate passive income through rental, which other investments can't achieve.

As I am a married man, my goal is to provide better financial security for my family.

I do not like to invest in volatile and unfamiliar investments like shares or gold, because I do not want to spend my time monitoring the choppy prices.

So far, I have bought only one initial public offering stock - TA Corporation - a year ago just to show support for my friend. Fortunately, the share price has gone up by a significant 40 per cent.

The other way to ensure financial security is to have sufficient insurance coverage.

I revise my insurance policies regularly to keep up with my changing needs. My yearly premium is about $42,000.

Q: Money-wise, what were your growing-up years like?

I grew up in a low-income family. The same goes for my wife.

I lived in a two-bedroom HDB flat in Commonwealth Drive with nine family members, including my grandparents, parents, uncle, auntie and my two brothers.

We have never employed a domestic helper because we are just a small family of three. It also gives us more privacy to bond. Most of the time, my wife and daughter still take public transport.

Q: How did you get interested in investing?

My first investment was in my own business. I started an architectural curtain wall business at the age of 26 after working in that industry for about four years.

At that time, JTC Corporation had started installing aluminium and glass curtain walls on its new factories in Tuas, and I thought it was a golden opportunity to start a business in that.

My business boomed rapidly.

But when the construction sector went into a recession in 1991, many main contractors went bust and I did not get paid for some of my projects. My business folded. I used personal overdrafts to pay my staff.

My first business failure taught me that it is not just about how much money you make, but the importance of having enough reserve funds to tide you over a downturn. You cannot just think of expanding all the time.

Q: What property do you own?

I own three properties - two in Singapore and one in Malaysia.

In Singapore, I have a 1,750 sq ft leasehold property in Ulu Pandan Road bought during the Sars period in 2003. I bought it for $530,000.

The other one is a 580 sq ft freehold studio apartment near Somerset, which I bought about three years ago. It has appreciated by 5 per cent in value so far.

The property in Malaysia - Face Platinum Suites at KLCC - is a freehold 1,050 sq ft two-bedder which I bought two years ago. Its value has appreciated by 15 per cent.

I lost about $100,000 when I upgraded from a house I bought in Bishan to buy my current home at Pine Grove. But I do not think it is my worst investment, because I planned for it and it is worth about $1.6 million now.

Q: What is the most extravagant thing you have bought?

I would say it is my car, an Audi A7, which I bought 11/2 years ago, and cost about $280,000.

Q: What is your retirement plan?

Too many people lose their drive after retirement. I plan to semi-retire by the age of 60, by working as an adviser or doing voluntary work at my church.

Q: Home is now...

My condo in Ulu Pandan Road.

Q: I drive...

A dark grey Audi A7.


Q: What has been your worst investment?

In the early 1990s, I lost about $20,000 when I invested in the United States dollar. My friend had asked me to join him and I was also looking to diversify from property. I set a limit of $20,000 for myself and I decided not to continue investing when it was all lost.

This taught me a lesson that when it comes to investing, you cannot be too emotional, even if you think something is a trend. You need to look at all the figures and understand the numbers first.

Q: And your best?

My best investment is investing time in (OrangeTee). The benefits are not just about the job or monetary rewards, but there is a great sense of satisfaction when I work together with my staff to achieve common goals.
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