By Mr. Propwise

Recently I had a reader of write in to share her story of how she built up a multi-million dollar property portfolio in the span of over ten years, despite being just an average earner. I’d like to share her story, and have also added in some of my own remarks. I think it is a great illustration of how even an average employee, with some wisdom and of course a dash of luck, can build up significant wealth over a period of time. I’d like to thank the reader, let’s call her KT, for generously sharing her story.

Enter KT:

I stayed in a private property for 18 years before it went enbloc. I bought it during the recession of 1986 when prices were low and picked it up for around $320,000. The property was sold for $900,000 in 2005.

Mr. Propwise: A wise investor once said that you make money when you buy, not when you sell. KT picked up her property during a recession when prices were low. Of course this is easier said than done, as during the lows of the cycle you’d be worried about your job security and whether prices would fall further. But as long as you have holding power and have built up a cash cushion for the tough times, there is no better time to buy.

While staying in the private property, I decided that I had to invest in another property at the end of December 2002. The market then was extremely quiet and I remembered the URA price index was about 100. I saw a unit in Normanton Park which I liked so much because it offered a lovely view of the Kent Ridge forest. I bought it for $385,000 and the property has since been rented out for about $3,300 per month. The current market value of the property is about $1.4 million.

Mr. Propwise: The PPI at the end of 2002Q4 was 115.1 and had gone up to 215.4 by the end of 2013Q2, or an 87% increase. KT’s property, on the other hand, has gone up by more than 260% over the same period. So other than buying during the right time of the cycle, what you buy is also important. Based on her monthly rental, she is enjoying an incredible 10+% rental yield on cost and about 2.8% yield on current market value. By buying a good unit at a low point in the cycle, you maximize your probability of getting a good yield.

After the enbloc sale I decided to buy a landed property with the proceeds from the sale. I saw one in 2005 and bought an inter-terrace house with a land area of 1,800 sq ft and a built in of 2,500 sq ft for about $900,000. I am currently staying in it and the current market value is about $3,000,000.

Mr. Propwise: A few points about KT’s move to buy a landed property. First, she took her proceeds from a successful property purchase and rolled that into an even bigger property. It’s important to get on the right side of the property market cycle and make that first good investment. In the future you will then be able to build on that momentum and roll your success into even greater wealth. Second, she made the very smart move to switch from non-landed to landed during a period when landed property was relatively underpriced (a situation that has now mostly been corrected). This maximized her gain with a 233% return in just the past 9 years. Third, she got to stay in the landed property and continues to enjoy living in it to this day.

Then in January 2007, I was passing by West Coast Road when I noticed a huge crowd at a show flat at Clementiwoods. I saw a ground floor unit facing a park which I fell in love with. At that time, prices were still reasonable, and I bought a 1,421 square foot unit for $800,000. The unit has been rented out since getting its TOP three years ago at $5,000 and is currently worth about $1.7 million.

Mr. Propwise: To use the terminology from the Property Market Cycle Model I’ve developed, the best time to buy property is during the Late Bear and Early Bull phases of the cycle. If we look at when KT bought property, 2002Q4 was during the Late Bear phase while the whole of 2005 and 2007Q1 were still in the Early Bull phase of the cycle. Contrast that with the current situation when we are currently in the Late Bull phase of the cycle (as of 2013Q2), which has historically not been a good time to buy property as the cycle is turning. Also, KT is getting a great 7.5% yield on her property based on her purchase price versus the current 3.5% based on market value.

I am no expert but I invest only when everyone is not interested in property. I don’t look at property nowadays as I think the prices are crazy. The last three properties I acquired were done during periods when nobody was interested to look at the real estate market. I don’t earn a lot but through my property purchases I think I have made it. It shows that in Singapore if you are patient and dare to take calculated risks, you can make it and become a multi-millionaire!

Mr. Propwise: To quote Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful.” This is the essence of being a contrarian investor, and KT has clearly demonstrated this in her property purchases over the years. The key, as KT put it, is to take calculated risks at the right time. As for the current market, just ask yourself this simple question – are the participants in the property market today showing more fear or greed?

Though she was just an average earner, KT today owns three properties, two of which generate $8,300 in monthly rental income, plus the landed property which she enjoys staying in. Based on my calculations, over the years she has made over $4.5 million in capital gains from her properties. She can now look forward to a very comfortable retirement. Congratulations KT! And thanks very much for generously sharing your story so that others may learn from you.

Dear readers, do you have an interesting story about buying and investing in property? It doesn’t matter whether the outcome was good or bad, do share them so that we can all learn from your experience. If you have one, you can email your story to me at

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