It depends on how you diversify your business or investments when you grow.
Some do stocks
Some bonds
Some do forex
Some do property
Some may do fixed deposit
Some do mix of all for the reason of balancing their portfolio or reducing their risk basket.
What I did is very simple.
I opt to do things ONLY which I think I can learn or I can manage.
My formula is to focus and complete focus on what I do. I don’t do even the most profitable thing if I am half focus. I try to identify one thing or product or market and try to do it better than others. I don’t rely on doing many things and keep guessing on someone else skill set like so called analyst or advisors.
I didn’t choose Stock market reason being no value addition of my skill set. Foreign exchange is too big to manage by a tiny player like me. I never bought a single dollar stock of any listed company. I don’t want to make money by speculation.
I was willing for calculated risk and invest where my effort can yield return –even lesser was acceptable to me.
So I focused on one domain only–which is property. I tried to understand and learn - ins and outs of that domain
Even in property domain, usually there are 3 choices, residential commercial and industrial.
While at times most of people will be running behind residential properties, I further zoomed specifically into commercial one and now even in commercial I am specifically exploring hospitality down the line.
It means that income from shop can save money to buy house but house will never able to generate income to buy shop.
An illustration given by my father can be of help:
A farmer was having a buffalo-which use to give milk everyday and he use to sell milk and gets some money out of it.
Somehow seeing other rich people in village he thought of having a horse too either because of prestige or desire or a lure of seeing others riding on it
So he sold the buffalo and bought a horse. Now every day
His earning from selling milk has gone as he has no milk since he sold the buffalo.
In turn he got the horse for which whole day he has to go in field and bring grass to feed.
So despite being well informed while buying a property most of us buy horse and in fact many times sell our buffalo to buy horse
In Hindi it was said as
JAAT KO LAGI OOT
BHAIS (buffalo) BECH GHODI (horse) LI,
DIN BHAR KHODI DOOB (grass).
Then I analyzed facts and find it really true
I realized that if I buy a shop of 1 Million, I can get 5000 rental while for same value of house I get only 2500-3000.
So I simply I invested in shop than house.
With excess generated I kept on buying and saving and buying until now I was declared biggest landlord in
Sim Lim Square.
Sim Lim Square.
To surprise till date writing of this book I stay in rented house which could have been horse to me. I would have ended up struggling whole life for covering installments like most of us do.
Further I realized that commercial shop has better occupancy (easier to rent), longer tenancy period (business tends to keep longer on same space than residents) and ease to manage (hardly any furnishing or air cons or kitchens or toilets to get maintained) so I kept investing in them.
During all these years there has been numerous up and down waves of prices and while most of general sentiments has been favorable to residential property I was never lured to kept my focus away.
The other thing I never do is speculation where we buy something for a quick gain and flips as soon as it gives some yield. If we gain from it, I feel it is luck. But if I based on my business or investment based on sheer speculation I think it is one or other form of gambling.
At times I have been approached by various agents or business to invest; I will study it with my perception and don’t get it influenced by short term speculative gains.
I don’t run behind property when people are queuing up for quick bucks. I don’t buy when people are dying to buy.
When any agent tells me-they have buyer for this. Not sure it is a sales trick or really they have someone but without thinking a minute, I directly tell them go and sell it first to them. Come to me when you can’t.
So I don’t get panic by tactics of pressure selling.
There were 2 shops in simlim square and one of famous property agent Colliers wanted to sell it for about 3.8 Million. She has been pushing me to buy being a good buy. I analyzed and said I can buy it for 2.5 million. She said they have buyer and they kept it many times even in auction. They tried and tried and tried in numerous auctions but could not sell.
I had almost forgotten but almost about 2 years later, she got me a call, Mr. Gupta now seller is willing to sell at very close price of your offer. We have offer for 2.5M now. Will you like to top it up for 100k to 2.6M?
I think for a moment from my heart and ask advice from my Inner voice. It said- Go ahead. On the phone itself I told her –ok I take it but my offer is valid till tomorrow evening only. She asked can u issue the cheque. I said come and collect from my office. The deal was sealed.
You know what-it was same shop I started my business in
Sim Lim Square. Though it was having some emotional value to me, but I didn’t get influenced to pay higher or exposed my emotions about it.
Sim Lim Square. Though it was having some emotional value to me, but I didn’t get influenced to pay higher or exposed my emotions about it.
Same Sales Agent within a week called me and said Mr. Gupta do you wish to sell it we have someone who can top up 150k from your purchase price. I was sure I cud have got even 200-300k in case I wish to sell. I shared this info with 1-2 of my friend and bankers even-they say just flip it.
But I decided to hold it.
And you know what - just less than 6 months of completion later, it was valued for 4.1 Million by other prominent valuer DTZ.
I don’t buy property to sell.
I buy them to hold.
I want to buy buffalo which gives me milk everyday and not a horse for which I end up digging grass to feed everyday.
I will sell only if I can get a better deal
What is purpose of selling a property with 5% return and keep the money in bank with 0.5% interest or return.
Is it wise?
To me it is not?
Good properties are not easy to get so once get I try to hold them. Fact is till date I have not sold any. Only recently I signed one option to sell that too for the reason of establishing prices. I will sell only when I will get either better ROI somewhere else.
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