Sharing – My Investment Journey (Part 5)
Updated: Feb 18, 2020
In 2011, I chanced upon an old 5-storey commercial property along Geylang, Lorong 25 which was put up for sale.
It had a gross rentable area of 45,000 square foot and located directly opposite Aljunied MRT at a large prominent road junction between Aljunied and Geylang Road.
Currently Owned By Union Group
The property served 2 main business functions:
1. A popular coffee shop on the first floor.
2. A workers dormitory rented to a corporate company to house their workers on the above floors.
Apart from the convenience of an MRT, the location itself has good human traffic flow from nearby commercial and residential entities – A POSB bank, a super market, and several other convenient stores. Easily accessible, easily noticeable and easily rentable.
Condition of Property
Outside the building with its hustle and bustle of street life, the interior is a world of its own.
Evidently, the property was in very poor condition due to neglect. The building was ravaged by years of little maintenance, made worse by its dull black exterior.
Two old stairways located on both sides of the building leads to the upper floors with broken gates that have not been maintained for years. Stepping onto the upper floors, you can smell the stench of perspiration, unwashed clothes (especially hanging underwear), floors and dirty toilets.
Opening the main doors, you will find yourself in a quiet dark hallway with little lights flickering. Rooms with their partitioned walls had graffiti on them and were lined on each side similar to an ‘old haunted’ hotel. (No one was around as all workers were out for work)
The dark dingy dormitory was occupied with several beds in each room, its occupiers apparently more concerned about eking out a living than the care for a proper place. With the beds, you can estimate 8-10 workers sharing each room.
Old smelly shoes, dirty slippers, boxes and other stuffs littered the dark hallway. Fire safety was not observed by the landlord, owner or the company housing their workers.
Over the years, I’ve seen many properties in poor condition and this property would rate high on the list.
Asking Price of Property before renovations: $25 million.
An estimated cash outlay of $10 million is needed with all closing and renovation costs included, assuming the property can be approved with a 70% LTV commercial loan.
With more than 10 years on-the-ground feel for Geylang locality, naturally I had the intuitive this property is a good buy for both cash flow and capital growth.
My initial plans for the property were either:
1. Buy it over and apply for Change of Use from URA: commercial to residential and rent it out as an apartment after extensive renovations.
2. Buy it over, remain and operate as a commercial property with multiple tenants after extensive renovations.
3. Buy it over, do extensive renovations to the old ageing exterior and interior, and re-sell to another buyer with its original commercial use.
The coffee shop on the first floor was to remain in operation as usual.
The first plan did not sound feasible as it can be very expensive and time consuming just for the approval for Change of Use by URA.
The second plan may work well but the risk was I may not have enough experience in managing commercial tenants.
The third plan seemed the most feasible after much considerations, as my thoughts were to leave the renovated building to another experienced buyer to manage it while making my profits too.
And I was very confident if I buy it over, renovate and re-sell, there will be eager buyers for this property due to its many prominent benefits.
An Opportunity that slipped by again.
Good plans are only as good as the paper they were written on if they cannot be carried out in reality.
The property price was a major hurdle. I certainly do not have $10 million of cash sitting anywhere!
When I made the first phone call to view the property, my mind did not register the initial huge ‘price tag’ on the property. I was simply excitingly overwhelmed with its potential.
It’s old and dilapidated. But there’s tremendous investment opportunities which I see.
To make the story short, I never bought the property due to a lack of funds and investors.
The property was bought by another buyer after a few months after my first viewing. Today, it has been completely refurbished with brand new rented offices and a bright coat of white paint on its exterior.
With what the new owner had accomplished with the property, I knew I was right with my original investment plan, but had to let the opportunity slip by again due to little access to a network of wealthy investors. It’s really frustrating, especially every-time I walk pass the building and could only admire it.
Today, the property is currently owned by Union Group and easily worth more than the inital $25 Million dollars in 2011.
This property was a lesson which meant to tell me something.
To me, these are not set-backs. These are lessons meant to convey an action. Lessons which will light the way ahead if you’re willingly to experiment, fail and learn.
Failing to buy this property together with the experiences from my first US deal which did not work out, set the beginning of a new dawn for my investing career and CREI Academy Group.
2 Key Learnings for Part 5
The 1st Key Learning – ‘Convictions & Your Success’.
Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.
There can be no great courage where there is no confidence or assurance, and half the battle is in the conviction that we can do what we undertake.
The beauty is that through disappointment you can gain clarity, and with clarity comes conviction and true originality.
It’s the quality of one’s convictions that determines success. Believe in yourself, in your ideas and your desire to succeed.
It’s the repetition of affirmations that leads to belief. And once that belief becomes a deep conviction, things begin to happen.
The 2nd Key Learning – Luck is Preparation Meets Opportunity.
Every once in a while, a great opportunity comes along and changes everything.
And you’re going to be very fortunate just to work on that one opportunity that may change your life.
I don’t believe in luck. Luck = Leaving things to chance and outside world. I believe in being harbingers of our fate, taking action and creating our own path and destiny in life. Your life is yours to create. Don’t let others do it for you.
Success is 99% attitude, 1% aptitude, 0% luck.
If I had beforehand a ready network of wealthy investors who can trust and support me, I would have bought the Geylang property without hesitation when the opportunity presented itself to me. But I didn’t and that opportunity went away in a flicker of a moment.
Are you readily prepared today with the right knowledge, skill and expertise to tap on that opportunity when it arrives?
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