I’ve been kept rather occupied this whole weekday at work and seriously thinking about the next article I want to write. I have a few number of issues and topics to cover, but eventually, I’ve decided to hold them all off until the week is almost over … to make time to put together this week’s exciting SMART Investment and Property Expo 2008!

This year, this event was held in Suntec City Singapore on 29th and 30th March 2008, shocasing overseas properties and many other investment products. Visitors are most welcomed to patron the exhibits and live seminars from 10am to 7pm on both days.

If you’re not interested about your financial future, then I’m sorry because this article will be filled with information that is of no interest to you. Even so, I highly encourage you to check out the information below because this exposition are not 100% catered for local property investments. There are a great deal of lower priced assets like properties that are based overseas which can be readily affordable by small retail investors like you and me.

Allow me quickly summarize my personal findings on the exposition…

I arrived at Suntec City, approximately 3pm, and found out that there were already a number of exhibitions running concurrently. I was quite surprised to find a very long queue at the level 3 halls, but I’ve no idea why.

The investment exhibition is based on level 4, occupying the whole of Hall 402 so there was no mistake that those people I saw weren’t queuing to discover a great investment hit.

I found my way to level 4 and was quite surprised at the quietness! I think for a second and decided to take my first shot of what happened as you’ll see what I mean.

Here is a snapshot of the traffic as I move up the escalator and approaching the registration counters.

As you can see, and unlike the IT Show 2008 held earlier in Suntec City this month, there were hardly any people rushing in to check out the latest/alternate investment vehicles around. I conclude that the majority of folks out there are more interested to spend money and enjoy luxury items, than to take efforts to discover ways to make their money work harder for them.

Anyway, I took a number of interesting pictures of the happenings around the Hall. Below are some samples and descriptions.

Personally, I really enjoy gazing over miniaturized models of private houses and condominiums. Though I can’t afford them now, it pays to check them out and put them on my visualization listings.

My perspective of Malaysia properties are a lot vague and personally, I don’t like the idea of investing in properties in Johor Bahru (JB) or Kuala Lumpur (KL). As you can see, the government of Malaysia has just been formed and I’m not quite sure if it’s a go for expensive investment like property. Imagine that you’ll depend very much on the stability of the economy and the law enforcement agencies to protect your invested assets. I could be wrong about this though.

As I’ve heard too, Thailand is another attractive location for property investment. Much of such investments in Thailand has a lot to do with tourism. You guess it already - it’s resorts and residential real estates.

Unfortunately, I do not have the information to assess such deals, and often too, such investments are worth millions of dollars, putting retail investors like you and me out of reach. It is possible in the future that ownership of such assets, may be made readily available to small investors.

The exposition is not all about exhibits of real estate developers and retailers. There are a number of exciting seminars too!

Seminars are conducted concurrently in two separate locations across the hall. I’ve already missed quite a fair bit of the keynote speeches by the time I arrive so I try to squeeze in to listen and take some occasional pictures of the interactions between the guest speakers and the public audiences.

From what I understand from the points presented, there is no better time to buy properties here in Singapore. No comments on that one because I don’t have a few millions dollars to take their advice anyway. Do consult your trusted property/real estate agent before committing huge bucks on any long-term high ticket investments, even if you can afford to.

I’ve found an interesting booth at D05 from UM Land Berhad showcasing some projects with Capitalland. I like their miniaturized model of a condominium with all the cool lightings coming from within the little windows!

Are you already tempted?

How about these ones from Sunway City Berhad?

I’m sure they’ll blow you off your socks!

As I wonder back and froth the exhibits, looking out for any familiar faces, I caught sight of Vittorio (one of the most prominent guys in my coaching class back in year 2005) standing next to Seminar Area 2! Not really sure if it was him and if he could even remember me, I went up to him to say hi anyway!

Boy was I glad that he can still remember me!

He is still with Walton International Group even after 3 years since we’ve last met, and have thus progress to the position of Assistant Vice President for Walton’s land banking sales force.

What surprised me more was his close contact with coach Manoj and that he is now receiving coaching that he missed in the final phases of the coaching course. I took the opportunity to learn much more from him about his approaches to solid ground investment and options trading using methods taught by Dr. Clement Chiang of Freely Options Trading School.

Vittorio also taught me some important lessons on wealth building, such as by attending and learning as much from seminars like this one. According to him (and taken from somewhere which he had forgotten), it has been statistically measured that as much as 50% of people who ever take action to learn, improve and enhance their investing strategies, 90% of these people shall eventually succeed to attain what they want financially in life.

I had the fortune also to pass this photograph to him the next time when I get back to him and his coaching progress with Manoj!

I picked up more information about the truth of CPF ordinary returns of 2.5% and how the lock-in and minimum sum schemes will affect all of us in the long term.

Imagine if you do contribute CPF from age 25 to 65 (40 years) at 2.5% compounded annually, here is what it is if the same initial $20,000 OA and SA account would grow to at 3.5%, 5%, 7% and 8% compounded annually.

And that most investors with CPFIS on average, does not even beat 2.5% offered by the government…

Even government investment agencies like GIC and Temasek Holdings are making returns at higher rates (8.25% over 25 years and 18% for Temasek over 32 years).

In short, if you can wisely invest your CPF in various investment vehicles to yield higher returns year-on-year, do not allow it to get eroded by high inflation and low rates promised by the CPF board.

Use free, unlimited fund switching and portfolio re-balancing techniques to your advantage to average out loosing investments while keeping focus on wining ones.

It took me a long time before I’ve found AAG’s booth for REDEV Properties. For your information, I am already invested with REDEV on some solid commercial real estate properties, just earlier this month.

Coincidentally, I was invited to a much privileged buffet dinner at Royal Plaza Hotel the night before, with many of AAG’s private investors. The evening was casual and was graced by the presence of REDEV’s president, Richard Crenian and his young partner, Darwin Forer, VP Sales for Asia Pacific.

Real estate income and gain (REIG) programs in my understanding, is an attractive investment vehicle not commonly known to the public. Such investment offers unique rental income returns, and at the same time, very attractive capital appreciation of anywhere from 25% to 40% when buyout takes place, and upon 60% votes by stakeholders.

Each project is 100% own by REDEV, the residents of Canada (similar to CPF), and the remaining ownership is open to all global investors worldwide. Liquidation is easy as potential buyers and sellers are within the same pool of investors who are already making comfortable returns from existing ownership and want more equity of its kind hoping for larger capital appreciation share on buyouts.

To take advantage of such unique opportunities, one will have to establish the relevant connections and timing of entry for new project offers, such as vacancy of offer from REDEV and floating foreign exchange rates which you must be comfortable with (since it’s a mid to long term investment vehicle).

Investment Type: Cash Flow + Capital Gain (Tax already factored)
Investment Size Per Lot:

• CAD$10,000 minimum (Arrangement By AAG)
• Multiples of CAD$25,000 to CAD$100,000 (REDEV)

Income ROI: 8-10%pa (passive income paid in CAD)
Capital ROI: 25-40% of initial valuation
Breakeven: Approximately 5 years
Income Life: Until estate buyout upon voted by > 60% investors
Payment: Check of once or twice per year

That’s it… for now!

I’ll be heading off again now (in the morning on day 2 of this exposition) and I’ll be right back to keep the rest of this article updated as soon as I possibly can!

Latest Updates (30th March 2008, 1600hrs):

I’m back again!

I caught up with my friend, Edmund Lee who is particularly interested in investment vehicles and he’s eager to check out what this exposition has to offer.

I showed him around to some other cashflow producing asset such as oil and gas field.

OilPods is a marketing company was established here in Singapore since 2005 and works with their partner at Powder River Petroleum International Inc (OTC:BB Symbol PWDR). Powder River Petroleum International is the business of active production, acquisition, and marketing of crude oil and natural gas properties.

Cashflow as opposed to capital appreciation, is vital if you happen to have a lot of spare cash and you are looking out for stable source of passive income for your retirement. Other strategies involve yearly investments to build multiple streams of passive income to your bank account through Giro.

The interesting fact about cashflow driving assets is that you can stagger them up in the order you want each year as you re-invest those monthly generated income into more and more cashflow.

In theory, if you have USD$100,000 of spare cash right now, you can potentially generate USD$1,500 (possibly 12% to 15%) or more passive income into your bank account month after month! If you re-invest all that income year-on-year for straight 5 years, you can retire on USD$3,000 or more worth of residual income (and keep rolling) for the rest of your life!

Investment Type: Cash Flow (Tax already factored)
Investment Size Per Lot: Multiples of USD$10,000
ROI: 12-15%pa (paid in USD)
Breakeven: Approximately 5 years
Income Life: Until the oil/gas well runs dry in 12-20 years (and possibly 30 years for gas well).
Payment: Monthly GIRO
Not bad at all for small retail investors!

Before you get over excited, let me identify investment risks associated with this asset class:

1. Monthly deposits of income generated from foreign is subjected to foreign exchange rate. One may argue that the dollar is weakening against Singapore dollar and it may be a good time to buy US assets. Unfortunately, your income is converted to SGD which means your income is very much affected the strength of the dollar.
2. Hurricanes or other natural disasters may hit your oil or gas fields (as much as twice a year?). As such, mineral minings may be disrupted for months until repair work is completed. Fortunately, these assets are insured against such disasters so that may not sound too bad after all!
3. Risk of liquidation of Powder River Petroleum Inc. Fortunately, mineral title deeds are issued to private investors like you and I. If so unfortunately, that the company is filed for bankruptcy or other legal lawsuits, you still own the asset titles. Your title may be auctioned and sold at market value, depending on the amount of reserves under the fields that you own. Generally, your investment principle is recovered (breakeven) when you received your 36th checks (3 years) or 60th checks (5 years).

Interesting?

Wait till I check out another deal which is a competitor of OilPod. It’s always good practice to find out differentiated investment products before committing cash for long term.

I haven’t got a chance until next week to find out more from their presentation. Once I’ve got the details, I’ll keep you posted on my findings here!

Updated On 6th April 2008!

I attended the open presentation from Oil Estates on Thursday and found out a lot more about investing in Oil & Gas.

It turned out that Oil Estates is a newly established competitor to Oilpods (about 1 month old now) and it looks like it’s the only competitor you can find in Singapore. Important discovery I made was, Oil Estates IS a Lead Investor in minerals, unlike Oilpod, which the latter is solely a marketing company.

What does that mean to investors?

Simply put, if a company exist purely to provide an investment service to real estates or oil/gas fields, investors themselves have to engage their own attorneys should disputes occur. The service agency have in no way liable for the losses of their clients.

Oil Estates in this context, is a lead investor. This means that they have a vested interest in the projects they work on and they are unlikely to default unless the company liquidates. In this case, the speaker claimed that the company has a paid up capital of more than SGD$500,000 and has been around to the past years serving clients in acquiring UK assets (land).

Oil Estates works as follows:
They take investor’s money and buy existing oil wells from their 2 operators in US Texas. These two operators are GM SOUTHEAST ENERGY VENTURES, LLC and DAYSTAR OIL & GAS CORP. DAYSTAR is a private equity-funded company established in 1996, while GM is a public-listed company on NASDAQ OTCBB USA, and being the 39th largest producer in the State of Texas. These 2 experienced operators together, manages Oil Estate projects to help spread risks for investors.

With the money raised from 8 different countries where they operate, Oil Estates pay a premium for existing oil/gas wells from one or more of the above operators and start paying investors 3 month after they receive their Mineral Title (also known in USA as Working Interest).

Other portions of the money raised goes to pay for lease secured by the operators. With secured lease, the operators can start exploration and drilling in preparation for production.

Important thing to note, is that the working interest is filed and safekeep in the County of Orange (Texas) where operators are obliged by law to pay all parties in the working interest from the profits made in mining from their fields.

Subsequent money raised from investors are used to run other projects, include redevelopment and exploration programmes.

Unlike Oilpods, Oil Estate seeks to minimize risks by spreading investor’s money on a whole programme, rather than per project as marketed by Oilpods. This means that in the case of dry, uneconomical and low production wells, this can vastly reduce investors’ returns.

Unfortunately, such investments have their risk, the biggest being natural disasters such as hurricanes (Texas), and the weakening of the US dollar.

Investment Type: Cash Flow (Tax already factored)
Investment Size Per Lot: Multiples of USD$12,000, unlimited
ROI: 8%pa plus variable bonus (passive income paid in USD),
thereafter 5 years breakeven, no less than 10%pa.
Breakeven: Approximately 3.5 to 5 years
Income Life: Until the oil/gas well runs dry in 12-20 years (and possibly 30 years for gas well).
Payment: Monthly check or GIRO

—

I turned around finally to Walton International and caught a quick chat with their sales team manager. Interestingly, he and Edmund share the same name and to commemorate this special occasion, I offered to take a photograph of them.

Finally, I introduced REDEV and Managing Partner of AAG, Lawrence Wong to Edmund. We learned a lot more about REIGs, the potential of passive incomes and capital appreciations by investing in commercial real estates.

Lawrence was very patient and kind to explain further on some of our other queries, for example, the types of other investments that AAG recommends to clients and what are the pitfalls of similar products that salesman do not tell you about.

—

That’s it and thanks a lot for reading this far!

I trust that you may have benefited somehow from some of my own findings.

If you have anything interesting to share, or want to know more about a particular investment class, do feel free to drop me your comments below!

Good investing and live a life with passion!

Resources:

1. The Official SMART Investment Property Website
2. The Official SMART Investment Property Website

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