Case Study 2 – How Engineer made Half Million


This next story is about an engineer and his wife making $500k from a rather low-risk investment.

(See previous case study.)

The engineer had observed that many wealthy people like to invest in property.

These rich people follow a rather simple strategy – buy an apartment or a shop when prices are low, rent it out, and sell when the price is right.

Often, they take a loan even when they can well afford to pay in full.

The engineer saw the beauty in this. To him, investing in property is easier than investing in equities (shares) where one often has to make “informed guesstimates” based on public information and sometimes rumours.

Property seems simpler to understand – all you need is a good location and a reasonable price. For the latter, he wanted the rental income to cover at least the monthly instalment for the maximum bank loan (mortgage).

A good location implies good rental return and ensures that there’s upside to the investment.

Taking a bank loan means leverage. Not risky leverage though, because a piece of property always has value, especially in land-scarce Singapore, more so if its location is good. (Note that it’s harder to use leverage with shares trading, unless you play with derivatives or take personal loans.)

So, in 2002, he bought an apartment in the River Valley area for $800k – paid 20% with cash and borrowed the rest – and rented it out to an expat for $3,000 a month, which was barely enough to cover the mortgage repayment.

In 2004, when the expat renewed the tenancy, the engineer raised the rent to $3,300.

He raised it again to $3,800 in 2006 when the economy started booming again. He was getting some additional pocket money.

Apartment selling price

Then in 2007, he sold the apartment for $1.3 million, making a net profit of more than $500k.

The return on investment is more than 300%, or more than 30% per year over 5 years.

How much return are you making from trading shares?

See other case studies.


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  1. The assumption that leveraged properties investment are safer because the value will be retained is not true. It is not well known that if you buy a private property and the market value drops, the banks are obliged to ask you to pay the difference (this is their way of reducing bad loans). And also, if the leverage is very high, if you buy at the wrong end of the curve, the buyer may end up paying for losses for the next 20 years of their lives. The $800K Bishan executive flat sold a few years back come to mind.

    Of course, if you read the timing well, the money earn can be a lot. The high returns comes with high risk due to the high leverage of 400% as stated in the Engineer’s case.

  2. Again not a fair comparison. He got lucky although I concede that the rental = morgage strategy is a good one.

    He took a big risk and deserved his returns. He called market turns which most ppl didn’t.

    Imagine holding positions in equities which you can liquidate today if you didn’t like. Try doing the same with your property. You also cannot downsize your property investment piecemeal.

  3. as he got his first house really cheap in the 60k to 70k range since he is in his 40+. i married
    late and just in the range of cannot buy new from
    HDB. A resale now will cost you in the range of
    350K to 500K. repaymnet per month is already quite high, and not to mention when the interest rate goes up. this is a big risk and gamble. and
    engineer are now counting month/s of employment.

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