Me & My Money Series (Sunday Times)

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At least someone has given his perspective on going through a crisis while holding on to a lot of leverage and debt! Good lessons to be learnt in the current environment, I feel.

The Straits Times
Jul 8, 2012
Burnt by Asian crisis, back with a bang

Victor Lim's business hit the skids in 1997, but he toughed it out and is now in better shape than before

By Joyce Teo

Businessman and property investor Victor Lim needed 15 years to recover from the wreckage of the Asian financial crisis but that searing experience has brought rewards, not least the insights he picked up along the way.

'Never give up,' he says. 'It is important for people to not be brought down by disappointment or be demoralised by defeat.

'They should continue to strive to get out of any dark patches they face and to come up stronger each time.'

The crisis destroyed Mr Lim's light bulb business, sent the value of his property investments plunging and hammered Asian Micro Holdings, a listed firm that he founded and where he is the chief executive.

He had invested heavily in industrial properties. 'The rentals fell and I could not rent out many of my properties. I also had to top up the loans. But I know that I will benefit from these investments in the long term,' he says.

'I was very stressed. My wife helped me a lot in managing the properties so that I could focus on running the company.

'For close to 10 years, we didn't have much money to spend on ourselves. We just made sure that our workers and rent were paid. But now, we are enjoying life.'

Mr Lim, 55, had to downgrade from a bungalow to a 1,100 sq ft rented apartment.

But he has clearly taken the experience in his stride.

The workaholic restarted his energy-saving light bulb business called saveOne two years ago - he invented the light bulbs as he was frustrated with the quality of the bulbs in the market.

'I want to help poor people... leave something behind that can help them save energy and money. My design can help people save 30 per cent to 60 per cent more than the other brands in the market.'

He is married to Ms Stella Leong Lai Heng, 54, a director at Asian Micro Holdings. They have four children aged 21 to 29.

Q: Are you a spender or saver?

I don't spend much. I prefer to invest in industrial properties, which gives me a regular rental income, while my wife believes in saving for a rainy day. She manages my money.

We have a simple lifestyle. We usually eat simply. I was from a very poor family so I am used to this. I don't shop much and I give my parents about $2,000 every month.

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

About $2,000 a month.

Q: What financial planning have you done for yourself?

My wife and I invested in many industrial properties and some land in Singapore, Penang, the Philippines and Thailand more than 20 years ago.

I was hoping to provide my kids with a space to do business if they want to do so as I believed prices might go beyond their reach one day.

With these investments, I know that if the day comes when I cannot work, I will be able to rely on the rental income or reap capital gains if I need to sell them.

We have sold our properties to reduce our debt or when the value went up a lot. Otherwise, I don't want to sell my properties as I believe that prices will appreciate in the long run.

In Singapore, we also own two houses, which give us good rental income.

My family used to live in one of the houses - a 6,500 sq ft bungalow with a pool.

But I was badly hit by the Asian financial crisis and found that we could not afford to continue living there.

The monthly expenses for the house, including the mortgage and maintenance, amounted to almost $25,000. That was when my wife 'forced' the whole family and one maid to move into a 1,100 sq ft rented apartment.

I will never forget that. The landlord did not even allow us to hammer nails to put up our wedding photo.

But I appreciate my wife's guts, thinking and sacrifice. It was for me to downgrade to survive.

We had to cut back significantly on our expenses. But I am a fighter. I refused to be defeated and have since recovered, thanks to the price appreciation of most of our properties and the rise in rental yields. We have greatly reduced our debt.

When we moved out, we paid $1,000 rent for the condo unit and collected rent of $14,000 a month for our bungalow.

We also renegotiated our loan with the bank a few times and, in the process, significantly cut down our monthly instalment.

People need to know that they can save a lot of money if they just renegotiate their loans.

My wife and I purchased a condominium unit in Woodlands after renting a place for two years.

We got used to the smaller space and it's actually a good thing because my family became closer. We didn't use to talk much at the house as it was so big and we sometimes did not see the kids. But now we do.

I also believe in insurance. I bought two policies for each of my kids at birth.

And each time I buy a property, I will get insurance for the loan amount so that if anything were to happen to me, my family does not need to worry about the loan.

Another thing is I never leave any money in my Central Provident Fund (CPF) account. It's been this way since I started work 32 years ago as I believe I can make my money work harder for me on my own.

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

I have seven siblings. I am the second-youngest one. I come from a very poor family as my father was an alcoholic and jobless while my mother was a housewife.

But she is very smart. She would make wine for new mothers and make us sell it at the market. She would also buy whole cakes and cut them into small pieces for us to sell. We also helped her sell other food products this way.

She forced me to think about how to make use of the money she gave me, which was less than what I needed. For example, if I needed 60 cents a day to travel to and from Singapore Polytechnic, I was given only 50 cents. I used to hitchhike to school.

I do not blame her as she had eight kids to feed. She made us think of how to survive. My mum is now 87 and my father, who is a changed man, is 90.

Q: How did you get interested in investing?

I was a senior production engineer for a United States company and spent quite a bit of time working in the US when I was in my mid-20s. So I would visit the bookstores to read books on how to get rich and on property investment.

I did not want to stay poor as I know the sadness of being poor. But due to a lack of funds, I started investing only at the age of 28.

I borrowed $20,000 from my mum and got two of my brothers to use their CPF money to help me buy a $120,000 industrial property in Lam Soon Industrial Building. I leased it out right after purchasing it.

From the books I read, I learnt that you must have guts to invest in property.

When you buy, you may suffer for the first three to five years. After that, the investment should break even and be self-financing.

Q: What properties do you and your wife own?

Our current industrial portfolio comprises 32 properties, including 16 in Penang, two in the Philippines and the rest in Thailand and Singapore. Most of them are fully paid-up.

Here, we have eight Lam Soon Industrial Building units, which we bought more than 22 years ago for $90 to $280 per sq ft.

We also own some land in Penang. I went around to scout for investment opportunities when I was there for work more than 20 years ago and paid just RM4 per sq ft for four empty plots of land.

The Penang government acquired two of them recently for many times more. To hedge against currency depreciation, we have ploughed the money back into more land there.

In Singapore, we own two bungalows near the American School in Woodlands, which we bought about 15 years ago for around $400 psf. They are almost fully paid up.

We also own the condo unit that we are living in.

Q: What's the most extravagant thing you have bought?

A limited edition of the Classic Mercedes-Benz 300. Till today, I still have good memories of it because I could drive my young children around in comfort.

Otherwise, I would rather buy things for my wife, who has gone through thick and thin with me, without regret. I know many couples have divorced over money matters so I really appreciate my wife.

Q: What's your retirement plan?

We are financially independent now and can retire any time we want. But I feel that I want to do something that can benefit the poor or help people to save energy and electricity because I think a lot can be done. I do not believe in countries giving subsidies as it is not a long-term solution.

Q: Home is now....

The condo unit in Woodlands.

Q: I drive....

A black BMW 730L. Sometimes, I take the MRT if I have time.

joyceteo@sph.com.sg

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WORST AND BEST BETS

Q: What is your best investment to date?


It's a piece of empty land in Penang. I bought the one-acre plot for RM300,000 more than 20 years ago.

About two years ago, the Penang government acquired it, so I sold it for RM3.2million (S$1.3 million).

I had bought it at a low price, so I just kept it there. I knew the price would appreciate eventually.

Q: And your worst investment?

I lost nearly $800,000 in my energy-saving light business about 15years ago.

I had managed to obtain a joint US patent for high-power-factor energy-saving light bulbs.

I thought they would take off and I could help people save money. I was too enterprising and it was too early for the market.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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When he was young, he has a smart mother to look after the family, now he has a gutsy wife to look after the family, a very fortunate man.

I am under the impression that the future of energy saving lighting is in LED technology. No sure if his patented light bulb future-proof.

Just checked that the last time Asian Micro declared a dividend was in 2007. (Not vested)
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I just had to leave some comments when I read this one.

1) He seems to idolize those who drive a sports car and who appear successful, from what I read. The Uni grad who is taking the bus/MRT may just be rich but thrifty; while the real estate agent may be simply flashy but is loading on a lot of debt. I feel appearances can be very deceiving, but apparently if he idolizes such flashy characters then it's no wonder he also aspires to own a sports car (and now he owns one which costs nearly half a million $ - almost the entire profit from the sale of his first property in 2007!).

2) If I read correctly, it seems he is taking out an equity loan on his existing property as its appraised value has gone up. Isn't this a very risky move? It's like taking additional loan on your collaterized property in order to buy another - basically increasing your gearing. These people interviewed always leave out the liabilities section of their Balance Sheet, but with such gearing it can be significant.

3) I think it's not good to let people know you are a co-owner of a property but your name does not appear on it! How will you then be able to enforce your rights/obligations if the property gets sold for a profit? To me, this is very risky indeed!

*For full article, please visit the website, thanks.

The Straits Times
www.straitstimes.com
Published on Jul 15, 2012
New launches not for this agent

Real estate seller prefers investing in older properties which can give him immediate rental yield

By Joyce Teo

Mr Kevin Lim may be a property agent but he is disarmingly candid when it comes to the hype over new launches.

'When you buy new launches, you are buying at a future price. You are buying a hope,' says the 31-year-old. ' If that is the case, I might as well put my money into something that allows me to benefit immediately.

'People here love new launches. They are hype-driven. They buy new launches because the showflat looks nice, or because the condo is designed by a celebrity architect. They like to snatch. So when there's a queue, they will rush there. But they can find better value elsewhere.'

Mr Lim, who studied at Ngee Ann Polytechnic, is a senior division director who leads a team of about 500 property agents at ERA Realty Network. He has been in the trade for nine years.

'A small group of agents will make it past the 10th year in the trade,' he says. 'Most drop out after a few years because they are unable to look at the big picture. They don't see this as a business. They just see themselves as agents.'

The optimist in him helps him face the ups and downs of the market.

'Every down time, there is always an opportunity lying somewhere,' he says.

'Everyone would want to buy a property. It's not something that will go out of favour like bubble tea.'

Mr Lim is getting married soon to Ms Olivia Sie, a stewardess with Singapore Airlines.

Q: Are you a spender or saver?

I guess I am both. I save about 20 per cent to 30 per cent of my monthly income.

I do spend but I can manage my money well. I spend mostly on my toy collection and clothing as I enjoy nice things in life. I also like things with a story behind them.

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

About $8,000 to $10,000 for work and personal expenses.

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Q: How did you get interested in investing?

I realised that my parents' thinking and money management habits are wrong.

They just save their money in the bank and don't invest the money.

So, I did the opposite and decided to learn about money and investing and how the rich think and work. I also attended seminars on how to manage money.

Back in the 1990s, when I was a kid, I met this agent who didn't have a good education but drove a nice sports car. I was very impressed.

And then, I looked at my cousins who had university degrees but took the bus to work. So I told myself then that I wanted to be an agent.

My first investment was a semi-detached house in Bukit Timah. I bought it in 2007 for $1.7 million and sold it six months later for a profit of $500,000. It was a big risk then as other houses in the area were selling for $1.2 million to $1.3 million.

I was 26 and $500,000 was a lot of money. But, with hindsight, I realised that I was short-sighted as the house may now be worth about $5 million.

People always say it takes money to make money, but I have realised that it takes creativity to make money.

If you don't have enough money, you can always find co-investors to invest, for instance. I have invested in a few properties since 2007.

Q: What properties do you own?

A 1,324 sq ft unit at Costa Del Sol in the east, which I bought for $1.35 million in 2010. It is currently valued at about $1.75 million.

I recently geared up on the loan to prepare for another investment, taking up an 80 per cent loan based on the new value. I am the only borrower so my next property will be purchased under my future wife's name.

I also co-own a 1,500 sq ft, 27th-floor unit at Sherwood Towers in Bukit Timah with a few of my agents.

We bought it for $990,000 last year and it is now worth about $1.15 million. My name is not on the contract but we, the co-owners, have an agreement.

I chose the place because it is near Ngee Ann Polytechnic and I plan to lease it to the students there.

After we bought it, I partitioned two bedrooms out of the living room so there are now five bedrooms. I also renovated it and put in new furniture. It is being leased out to foreign students for $5,800 a month, inclusive of cleaning services and Internet connection.

Many agents do not invest in properties. When they make money, they will spend it on cars, gambling and other beautiful things in the world.

They will say let me make more money first. So I want to lead by example.

Q: What are the most extravagant things you have bought?

Other than my car, which cost $455,000, it would have to be my $48,000 rose gold Audemars Piguet watch and my $42,000 Patek Philippe watch.

Q: What's your retirement plan?

Given my personality, I will never retire. At the end of the day, it depends on what you want in your life.

But by the time I am 40 years old, my target is to work only when I want to.

Q: Home is now...

The three-bedroom condo unit at Costa Del Sol.

Q: I drive...

A white Maserati Gran Turismo MC Sports.

joyceteo@sph.com.sg
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WORST AND BEST BETS

Q: What is your worst investment to date?


In 2007, my friend recommended some China, Singapore and India funds to me. I was very busy with my work and I also thought I needed a lot of money to invest in property.

So when my friend told me about the funds, I said to her: 'I will give you the money and you just invest for me.'

I have since realised, that was not investing but more like gambling. I went in at a high. Because of Lehman Brothers collapse, the fund prices fell very soon after I bought them. I hung on for a few years, but the prices did not recover so I cut my losses after that. I invested $260,000 in all and lost almost $180,000.

I thought I was very smart to entrust the investment decision to my friend. Till today, I don't really know what funds I bought. So now, I would rather invest in something I know than something I don't understand or have no interest in.

Q: What is your best investment to date?

It has to be my Costa Del Sol condo unit because it is now worth more than what I had bought it for.

This has enabled me to cash out as the bank is willing to lend me more money than before. I already made money from it so I am now preparing to invest the money in my next property.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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He's been in the business for nine years? So where was he in 2008...? Then again, the local ppty market then did not collapse the way the US one did. The more who are leveraged this way, the deeper the next fall is gonna be.
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property agents are in part source of property inflation
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Comments below. Anybody noticed that this section of the news was very property heavy today? Both the interviews were on property guys, there was a columnist comments on SGX's published study of property vs stock returns and even in the sports section, there was the news about some Singapore athletes paid to attend a condo launch.

(15-07-2012, 08:26 AM)Musicwhiz Wrote: Q: How much do you charge to your credit cards every month?

About $8,000 to $10,000 for work and personal expenses.

Just my five cents.

While the raw nos. may seem high, quite a bit of these can be tax-deductible. I have a friend who's a financial planner who told me as much.

So it's not very meaningful to know how much agents and financial planners actually charge to their cards since quite a bit of what they spend on can actually overlap both personal and business expense.

Having said that, they usually tend to be in the 'earn a lot, spend a lot' category which is why when assessing wealth, I'd rather use what the authors of 'The Millionaire Next Door' termed PAW or UAW (prodigious accumulators of wealth or Under Accumulators of wealth respectively). That's a more relevant measure in my opinion.
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Q: How did you get interested in investing?

Quote:Back in the 1990s, when I was a kid, I met this agent who didn't have a good education but drove a nice sports car. I was very impressed.

And then, I looked at my cousins who had university degrees but took the bus to work. So I told myself then that I wanted to be an agent.

I wonder what was his takeaway from this...Smile
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Hi Kazukirai,

Yep I did notice it's very "property-heavy" as you mentioned. Two separate detailed interviews on property agents who made it big (though I think the Dennis Wee guy and his wife made it much much bigger haha), and I know Koh Brothers is launching their Parc Olympia this weekend and inviting some sports stars over for the launch. That's the reason for the sports overlapping property.

That said, I don't usually care how much each interviewee charges to their credit card - it's not really a good indication of how they built their wealth, or how they spend their money. As you rightly pointed out, most of it may be business expenses which are deductible as they are considered self-employed.

But it sort of makes me wonder - quite a few of the interviewees mention of their parents struggling and only "saving, not investing", yet when these people make it big they spend equally big! Is there not a smidgen of conservatism and prudence in terms of living life more simply rather than in a glitzy, flashy manner? One could even argue that b being interviewed, you're trying to expose your money habits (and wealth) to the world. Of course in many cases it's vested interest as the interviewees may have an agenda to promote (e.g. courses, books, salesperson etc.).

As for the takeaway from the sports car versus bus/MRT observation, I'd said it in my comments before - image matters very much to this young man! Which is probably why he got himself a $450,000 Gran Turismo Maserati...... Tongue
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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quote "..... I partitioned two bedrooms out of the living room so there are now five bedrooms. I also renovated it and put in new furniture. It is being leased out to foreign students....."

His neighbour paid so much for the condo unit and now lived next to a hostel? Or maybe his neighbour also running a student hostel?
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(15-07-2012, 11:19 AM)Musicwhiz Wrote: As for the takeaway from the sports car versus bus/MRT observation, I'd said it in my comments before - image matters very much to this young man! Which is probably why he got himself a $450,000 Gran Turismo Maserati...... Tongue

Hey MW,

Yea, that last question was meant to be a rhetorical one. I wonder though, in the long run, will his children or mentees under him learn anything more long-lasting and valuable?

I'm wondering out loud because I have relatives who are like that. The parents (having made their own money of course) have nice things like Mercedes-benz cars, Rolex watches, bungalows.

And of course, their kids (even before knowing the value of work) grow up accustomed to luxuries such as being driven in nice cars (to eventually driving them), taking holidays (paid for by their parents), buying branded stuff like jeans or belts that go into triple digits or more. It doesn't help of course, that most of their friends have similar lifestyles. Of course, now these kids are fully grown and holding jobs (mostly jobs that your average PMETs are doing) while their lifestyle remains the same.

I'm honestly curious to find out what their futures will be like 10-20 years down. I must say that I grew up in a similar environment. Only difference is that I never got around to liking that kind of life and my parents were a bit more tough on me in that they gave me a fixed allowance and that was that, no supplementary cards that I could charge to (at least not without paying them back when the bill came).

Therefore, I'm pretty sure I'll end up better than the average working adult (or at least I hope so!) seeing the way things have been going the last 4 years since I started working.
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Hey Kazukirai,

Haha now that you mention it, wow these are really rich relatives! A Bungalow? Most of my friends or peers who are well-off "merely" live in a condominium Tongue, but a bungalow really takes the cake, haha.

OK jokes aside, I think what we are witnessing today seems to me (sadly) like the beginning of the destruction of prudent values in our next generation. The strawberry generation who have it too good, until it all goes bad. The problem is that most parents are not even aware of the potential harm they are doing to their offspring - as a person who struggled hard you'd want the best for your kids, yet it is by giving them this best that you destroy them! Ironic, eh?

I think the best fundamental values I can impart to my kid (she is now 3) is a sense of appreciation for the things you have. On where the money came from, how hard it is to earn it, and what it can be used to buy. To appreciate the hard work and sacrifice which comes with wealth. Easier said than done though, but as a parent I want to instill this.

Forget about studying hard, getting good grades and a fantastic job - what's more important is to teach your kid financial literacy and the basics of personal finance! Or else they'll end up earning big and spending even bigger, like so many famous rock stars/actors who imploded because of their wanton spending.

And don't worry, being on this forum means you're probably one step ahead of most of your (pampered) peers, kudos for that! Big Grin
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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