The Question is … How does one achieve time freedom?

Daniel: I grew up in Singapore, where people work long hours. Even from a young age at school, it is not uncommon to see kids heading for tuition classes after school and on weekends. When they enter the workforce, working overtime or on weekends is not uncommon especially if one is trying to do well in their career.

In the rat race of life, one seems to need to work longer, harder in order to get ahead. When one only has a limited 24 hours a day, I started to think about how I could “Have money work for me, rather than trading my time for money”.

How do I make my money work for me?

If you’ve read this far, good on you. Mastering the game of money is a simple 3 step process. As you read through the steps, take note of which step you are at. These steps need to be done in sequence to be successful.

Step 1. Make more money than you spend, spend less money than you earn
This sounds simple, but many people are in bad debt with credit cards, and continue living lifestyles that their paychecks cannot support. Until and unless you can get this simple step correct, my recommendation is not to start any investing. See my blog post on “Finance 101: Being a good steward of our monies” for more details.

Step 2. Save your money into an investable sum
What differentiates Step 2 is the key word investable. By investable monies, we mean monies that is firstly a sizeable pot (e.g. $50k), and more importantly, monies that you don’t foresee you would need in the next 5 years or more.

Step 3. Invest in assets that generate a passive income (at least 6% returns per annum)

People save but don’t invest out of fear of losing money. While it is important to manage risks, there are no such things are risk-free investments. (even crossing the road or driving a car has risks) One simply needs to identify and manage those risks. The only guarantee of not investing is that your monies are being whittled away by inflation (3 to 5%) every year. Surely, we need to be at least beating inflation to protect our hard-earned income.

What are Golden Goose Properties?

There are many ways to make money. It is important for us to invest in things we understand. For us, the most stable and straightforward is property. Even a 5 year old can understand how it works. Every property we buy is a Golden Goose, which lays golden eggs for us every month. Inspired by the The Story of the Golden Goose (click HERE to learn more!)

A man and his wife were lucky enough to own a special goose. This goose laid a golden egg every day. At first the man and wife were very happy with their golden eggs, but soon they began to think that they were not getting rich quickly enough. They thought that perhaps the bird was gold inside, or could get out all the golden eggs inside the goose and so decided to kill it. However, once the goose was dead and they opened it up, they found that it was just like any other ordinary goose and there were no eggs inside, golden or otherwise.

We were thrilled to discover that the golden goose actually does exist in real life - in the form of Property Investments. With over 30 years of combined property investing experience, we use a stringent selection criteria, to ensure our properties generate golden eggs every month in the form of rental income, which then funds our lifestyle needs.

It could be school fees for our kids at a school of choice, pay for our car installment to provide the family more mobility, provide for our ageing parents’ medical bills or allow us to fly around exploring the world, collecting more experiences.

Beware that not every property is a golden goose, some are actually alligator properties in disguise! Let’s look at some definitions.

Golden Goose Property: Puts money into your pocket every month in the form of passive income. The rent is able to cover all outgoing expenses and generate a positive cashflow. E.g. a 3 bed terrace house in the Manchester / Liverpool costs an average of S$200k. Receive $1.5k in rent every month, outgoing expenses of $500, positive cashflow of $1k each month.

Alligator Property: Requires you to take out money from your pocket every month in order to feed the property. The rent is not able to cover all outgoing expenses and generates a negative cashflow. E.g. 2 bed condominium in Singapore, receives $3k in rental income, but the bank loan is $3.5k. Not including other expenses, the negative cashflow is already $500 per month. How many of these properties can you afford to service?

Now, some of you may be thinking, wait a minute, the properties I own in Singapore, Australia, Malaysia, are Alligator Properties! That’s not your fault, but the nature of the market. Whilst some of these properties achieve capital gains in the long run, remember the key goal we are after is time freedom, and passive income allows us to achieve that.

FAQs

Why Invest in the UK?

The UK offers great opportunities for passive income which are not available in many developed and developing cities in the world and ticks all the boxes for investment / wealth creation:

Property Prices are Low
Rental Demand and Rental Income is High
Good legal system (Singapore Law modelled after UK Law)
English is the lingua franca (Contracts are in English)
Brexit offers the opportunity of a lifetime if you have the know-how

40% of people in the UK rent their homes. With such a strong renting culture, it is a great place to be a landlord. Though prices have risen significantly in central London in recent years, the rest of the UK is only beginning to see the ripple effects of the growth. Did you know that one could buy a 3 bedroom terrace house in many parts of the UK for £130,000? A similar house in Singapore would cost in excess of S$1,500,000 ($1.5 million).

With our extensive network and experienced team in the UK, we buy properties in any market cycle for positive cashflow. Like the story of the golden goose, we collect golden gooses and enjoy the fruits of the golden eggs they lay every month. Because all properties we buy are below market value, stress tested against rises in interest rates and yield a strong positive cashflow each month, we are well positioned for any market correction and will be in no pressure to sell our properties. With our strong business model, the aim is to hold the properties over the long term and leave a legacy to the next generation.

Is my Investment Safe?

Investments are backed by physical assets. As in the Maslow Hierachy of needs, Property is one of the safest asset classes as people need a place to live in regardless of market condition. In addition, all agreements will be drawn up by professional solicitors to secure the interests of all parties involved.

What are key risks to investing in properties, especially overseas?

Developers not completing on projects or going bust, causing investors to lose deposits.
We buy existing properties not new builds. A member of our team physically inspects every property we purchase (boots on the ground).
Unable to find reliable contractors or builders to carry out renovation works. Afraid they will do a bad job or run away with monies.
We use tested and proven teams of builders who professionally manage the renovation project and provide timely updates. A member of our team inspects the property fortnightly during the works to ensure the project is going smoothly.
Properties unable to sell or rent out. (This is a common issue for new builds, as hundreds of identical units flood the market at the same time)
We use a strict criteria to assess rental demand of our properties.
Bad Tenant issues. Unable to find a good managing agent to manage the rent collection, and general maintenance of the property or an estate agent if they want to sell the property.
We manage the properties ourselves, or use a team of tested and proven letting agents who are professionals in vetting tenants even before they enter the property.
Our properties are having more than 98% occupancy at any one time.
If a sale is required, we appoint estate agents who are local to the area and know us and the property well.

What is the impact of Brexit?

There is a lot of uncertainty in the market. However, the impact is most felt in London whilst our investment areas are still growing and experiencing high demand. We are not speculating for capital gains. Instead, buying properties for cashflow is a recession proof strategy as you are investing for the long term. We view Brexit as a great opportunity that doesn’t come often. As Warren Buffet says, be fearful when others are greedy and greedy when others are fearful

What if interest rates rise or loans are recalled in market downturns?

We fix our interest rates for the long term. Hence, we are immune to interest rate changes, and enjoy monthly cashflow with peace of mind. If and when property prices go down, our properties are stress tested to ensure it continues to generate a positive income to be able to pay its monthly loan. Properties are also never leveraged more than 75% ensuring a minimum of 25% of equity and margin of safety in the property.