Hello Malcolm, I am at Sunday here in Hong Kong, but there is no sun today, just overcast sky and rain.
You are the victim this weekend :0)
Today is a great day regardless of the weather. Why? Because I figure everyday is at least a good day, and some days are great days.
I am listening to Ottmar Liebert’s Nouveau Flamenco guitar CD earfloss.com . His music pieces are some of my favorites; upbeat, cheerful, evoking thoughts of skipping through the rain on a tropical summer’s night, bare foot, after wine, before astronomical wonderings and primitive rituals.
The next album in the CD changer is Tricia Lee Kelshall. Who? You know, Tricia Lee Kelshall images.amazon.com , the rising star from Trinidad and Tobago, touring with the group Way Out West. Buy her single. It is awesome.
Her sister Candyce of the British Royal Navy is a brainy hotshot who can help to solve all manner of homeland defense issues in all types of countries for just about all kinds of situations.
Their father is into the only homeland defense problem I really care about, that of the protection of Trinidad and Tobago islands, all its energy resources and vacation beaches navynews.co.uk .
The girls mom is, but of course, an Acham-Chen :0!
I think of SI as my journal, and my website is both an investment and a hobby, to not only keep me disciplined on investment matters, but also help me in attracting lost families and missing tribes achamchen.com from however far across time and space, an activity more urgent than investment.
I am also fortunate to have recently netted happy cousins Lee Bayne and brother of about equal genetic distance, not in tropical Trinidad, but in Nordic Norway achamchen.com !
So many places to visit and so many folks to see :0)
I am trying to re-aggregate an extended family grouping before they are irretrievably lost to the next generation, and thus my hobby of aggregation, validation, and communication, and if it fails to keep brian h sufficiently amused, oops, well, cannot help that ;0)
On another hobby, and your pondering, <<real estate>>
... I am no expert, but had tried my hands at it helping others achamchen.com and drank a lot of coconut juice :0)
Onward and forward … restricting the choices to education, work, cash, family, real estate, stocks, bonds, precious metals, collectibles of various sorts, and spending, I believe a youngster should start with education, and progress along the above script in any variation of order. Other than this clarification, I understanding your thoughts and recommendation on real estate, and agree.
I do not dwell on real estate very often, because (a) they are not thrilling in the way that stocks are, and one has to wait some time before being able to get a buzz from them, (b) they take capital away from the thrilling action of the paper markets, and (c) they are stationary, at the mercy of officialdom, partners and creditors.
I am OK with real estate even if I am not thrilled about them, because (a) they are not too exciting, (b) the capital, properly leverage, with location not off the beaten path, and rent not requiring capital top-up, will by and by not totally disappear, and (c) they are stationary, not going anywhere ;0)
I had spoken about four real estate wagers in context of portfolio management on SI before:
Industrials next to old HK airport:
Message 14869886 <<November 23rd, 2000>>
Thailand:
Message 16313885 <<September 7th, 2001>>
Message 16416227 <<September 26th, 2001>>
Retail/Brothel in Mongkok:
Message 18219046 <<November 11th, 2002>>
Message 18615902 <<February 23rd, 2003>>
Retail in Mongkok:
Message 19210327 <<August 14th, 2003>>
Message 19233400 <<August 22nd, 2003>>
Real estate, sized appropriately, like fixed deposits and treasury bills, should be laddered, pipelined, and harvested like softwood, by year of planting.
[EDIT: whereas Newmont Mining, manipulated the right way, is just like real estate, to be rented, leased, borrowed against, insured, and milked for rent, like a cow, or QCOM ;0) ]
The industrial properties (bought at the low of post-1997 HK real estate crash) next to the old HK airport are still exactly where I had left them, collecting rent and waiting. Many of the buildings adjacent to the property are gone, leaving behind land to be groped at. The old airport will be, by and by, cleaned by money from public coffers hk-lawyer.com so that its immediate neighbors can undeservedly benefit, as in any good democracy or bad dictatorship, from additional officialdom sanctioned spending by privateers funded by savers hhf.com :0)
The Thai property (bought at the low of Asian Financial Crisis) on is now subdivided into building lots, and proceeds from sale of little less than half of the lots is enough to cover the original land cost and fund the shared infrastructure costs (road, utilities, water well as well as rain water storage, and clubhouse plus shared swimming pool). The partnership should also complete two spec houses by this September and the bespoken for lots should progress well by then as well. We should undeservedly gain at least by 150%, maybe more.
The retail/brothel properties in Mongkok that nestles up against this monster greateagle.com.hk is doing well. The wager was made post HK iDotCom eSlashNet plus China Labour Arbitrage slump, but pre-SARS trial by fire. Thankfully, as I noted in the above linked February 23rd, 2003 post (right before SARS got widely know and turned nasty! <<Real estate is ever forgiving and ultimately self-correcting, as long as there are crowds>>.
The retail building in Mongkok was purchased at the tail end of SARS and before the beginning of China mania.
Timing is a question of preparation and luck.
Location is a question of availability and decision.
Oh, yes, and chaos is a gift, crisis a partner, volatility friend, lonely path right way :0)
I have just received a note from the lead partner on the subject of the retail building that indicates our partnership net worth is up by 100% (total value increased 50%, on 50% leverage on original purchase) since establishment 6 ‘long’ months ago (no, I definitely do not mark-to-imagined market for real estate in considering overall portfolio management, and I do not generally borrow against imaginary values):
[EDIT: too bad Ray is no longer hanging out here, for he would have gotten a 'kick' out of the following letter segment :0) ]
“During the past few months, the sentiments of Hong Kong's real estate sector has turned 180 degrees, thanks to an economic recovery driven mainly by a revival in consumer confidence and an increase in the number of shoppers from mainland China. We are pleased to report that our property has performed extremely well.
… The Langham Place, the core rationale for our project, is on schedule. The hotel and office portion of the project will open in June this year, while the retail portion will open in September … We understand that the leasing response from the market was very positive. The monthly rental for retail space in Langham ranges from HK$80 to HK$300 per sq. ft. In 2005, when Langham Place is in full operation, the appreciation potential for our property will be further enhanced.
… Ever since the purchase of this Nathan Road property, we have been receiving unsolicited offers yielding us a tidy profit ... However, we have not entertained these offers as we believe it is pre-mature to cash-in at this time. We wish to stay true to our stated strategy of holding until a couple of years after the completion of the Langham development to maximize profits.
Also to be considered: Profits from properties which are held for short periods (if less than say, 3 years) run the high risk of being chargeable to the full 17.5% "operating profit" tax. On the other hand, profits from investments held for longer periods is considered "capital gains" and NOT subject to any tax.
We will continue to monitor the situation with a view to maximizing after-tax profit.
The current tenant, which we "inherited" from the former owner, is a restaurant operator paying $550,000 per month rental. We believe the current market rental should be above $700,000 per month. The present tenant is a problem-tenant, in the habit of paying very slowly and always several months in arrears. As mentioned in our previous report dated 13 August 2003, our strategy is to be very tough on this tenant. We have threatened to evict them if they continue to be delinquent in paying. On 27th December 2003, after several months for repeated follow-ups to collect on late payments, we took legal action (the Distraint Case) against the tenant for the sum of HK$577,500 for rental in arrears and interest (see appendix A). On 19th January 2004, the Court sent a bailiff to close the restaurant. On the same day, the tenant paid us in full to avoid the closure. We will continue to be tough on this tenant until they learn to pay us on time or vacate the premises.
We continue to be optimistic about our strategy. We are definitely on the right track. But there may be some hiccups as we go forward. As you may be aware, there is a possibility that Hong Kong may suffer a new bout of the bird-flu outbreak. If this happens here (none yet as of this report date), we believe it will be short term. Hong Kong has had past experiences (in 1997 & 2000) with this type of epidemic. However we are confident that the Authorities will be able to respond effectively against this threat, as in past episodes.
Wishing you all a happy and prosperous Year of the Monkey. We hope to bring you more good news in our next report.
So, you see, Maurice may find QCOM interesting, and its dividend satisfying, I prefer to think that real estate is possibly more steadily rewarding, and definitely more solid :0)
Chugs, Jay |
