Executive Condo – NOT a Money-Making Pot!

Executive Condo – A purchase for Home use, NOT investment!

You all know me from my massive posts. If you want sweet words, look elsewhere. I have no silver tongue. I have humility and fear from past experiences and background. My years in the trenches has not shaped me to fight with words.
Nobody should subject themselves to reading Alan Cheong’s recent article. It is literary hemorrhage at its very worst.
Alan’s article is nauseating and repulsive like a parent on excessive drugs and alcohol. His thoughts of EC (Executive Condo) as a “low-risk, high-return investment” is like telling your 10 year-old kid learn martial arts to counter violence is the only way to progress as a peaceful society. But the answer to our problems isn’t more violence.
Using your home as an ATM machine isn’t a solution to your financial problems either.
And this is exactly what the context of his article is – targeting the uninformed, the ill-informed and the greed of “drunken” buyers.

Executive Condo – A Public Housing Scheme and Home, NOT a Money-Making Pot!

The EC in the truest sense, is a hybrid public housing scheme – no matter how marketing companies and private developers glorifies it with fancy marketing showrooms and terminologies meant to confuse the general public.
Call a garbage collector a sanitation technician. Given such fancy job description, should one advise a poor, homeless “sanitation technician” to speculate all his money in a hot real estate market or instead, first buy a proper home for himself to live in?
Similar to HDB, the EC public housing scheme is government subsidised only for deserving true-blue Singaporeans who have worked hard to contribute and thus benefit from a prosperous economy. It should NEVER be treated or desired as any form of speculative investment by buyers to take greedy advantage of.
An EC as a “low risk, high-return investment” makes even less sense. Public housing is a fundamental value in our society, and neither ethical investors or buyers would tolerate anyone using it as a speculative money-making tool.
I can’t decide what good or bad is for people—I don’t want to make moral pronouncements about why any buyers would want to use public housing as any form of investment – which to me is clearly wrong and ethically immoral – and does not fit into the rightful description the real meaning of productive investment asset.

What is Clearly Wrong and Ethically Immoral?

Government subsidies and grants for public housing are essentially tax-payers money – used economically to benefit Singaporeans as a whole and not enhance the narcissism of selfish profit-interest individuals and greedy corporations.
I know and heard of EC owners who game the system. Some own a current HDB flat, EC or private residential and used their parent’s name to apply for another EC taking advantage of loopholes in government subsidies and grant programs.
Some illegally rent out the whole unit before Minimum Occupation Period (M.O.P) hoping not to get caught.
Some leave the unit empty or weekend stay and wait five years before selling to realise profits.
Some simply own it to speculate on future profits since they benefited from government grants and subsidies.
We don’t have the exact numbers how many owners are actually profiting illegally from hard-earned tax-payers money. HDB is looking hard to catch errant EC (or HDB) owners who bypass the laws for selfish interests. 

Rob Peter to Pay Paul

Even the idea of which EC owners wait for a full 10-year period for privatisation from date of T.O.P (Temporary Occupation Period) to sell and profit seem somewhat repugnant. Why would any sensible home owner want to profit greedily from his home, a place of emotional family attachments and beautiful memories with the kids and spouse?
Even if EC owners do profit (let’s assume that they do), what are the costs involved and opportunities lost? One of the major cause and effects of property appreciation is inflation. And we know inflation sometimes have nothing to do with sustainable economic fundamentals if we look back to the years of easy paper money.
Unless the profited owner is prepared to rent, stay with their parents or out on the streets, he’ll have to buy another property very likely at a higher cost, not withstanding even higher mortgages – which in a sense, buy low, sell high, buy HIGH again. Back to zero!
Home owners who somehow hope to profit selling their property does not seem to understand the simple yet fundamentally crucial logic – They’ll always be spinning the wheel like little hamsters in a cage.
The FACT about EC prices todayThey’re HIGH and overly-expensive. So as a matter of judgement, and unlike previous years, I don’t see how current herds of over-eager EC buyers can profit or profit much in later years with a huge over-supply looming in the horizon. Limited monetary resources with enough education and patience can be best used instead, in real quality investments and grow wealth when opportunity strikes again.

A Too Convenient Way… to Get Rich

I think moving away from mainstream news sites is important. To think, if we look at mainstream news reporting on real estate that as long as it can be sexy and does not involve any hard work (just sit and wait), we’re kind of eating at McDonald’s all the time. It’s the investing equivalent of eating all our meals at McDonald’s.
I want to make the analogy again with food. Again, for the longest time, organic was a really small niche market, and then when corporations realized there was money to be made, they got on-board. That watered down the meaning of “organic”.
Everyone thinks simply going organic is “healthy”. There’re two serious consequences to this uninformed or misinformed mentality.
One, personal quantity of food intake is completely ignored. You can eat all the organic food you want but know this – if you overeat your daily calories requirements coupled with a high intake of salt, sugar, bad fats and too much carbs – cancer, stroke, high cholesterol levels, obesity and other self-inflicted illnesses will still find you regardless.
Two, quality of food and regular exercise are like your tongue and teeth. One cannot do without the other no matter what fancy diet plans and pills you worship.
Swearing by organic food, diet plans and magic pills seems to present a very convenient way for those too lazy to start on a regular exercise regime – Because exercise is very tough and spending money is a lot easier. (anyone for expensive water-filters?)
Regular exercise coupled with nutritious food bought from local wet markets cannot hurt your wallet while eating within personal calorie requirements is very sustainable over the long-term for effective weight management and a healthy, fit body – not fancy foods, diet plans, magic pills and overly-marketed expensive health products.
Executive Condos have became the same convenient way since it’s inception (and other types of properties too) –  a magnet of easy-get-rich-quick schemes for middle-class property buyers  – No hard work involved, just buy, pray and hold to make money. 
So instead of spending the time cultivating their craft, learning the ropes and getting bloody in the trenches, they ignored basics and tried to enter suspicious wealth schemes that often over-promise but under deliver.
A lottery mentality will never be sustainable in the long term.
What do you think are the messages that these “drunk experts” like Alan Cheong send?

Over-Confident Buffoons Running Amok

Raw facts and data have never been more abundant or accessible. The usable information gained via the analysis of these raw facts and data, is likewise unprecedented in quantity and quality. Unfortunately, judgement, which is the interpretation of information, has never been worse…
Subjectively speaking, when I say “worse”, I mean in the past decade since the World-Wide-Web became very easily accessible by anyone with an internet connection. Never before in Singapore’s real estate history has there been an explosion of ECs of the magnitude that we have today since 1997. (Read more here)
The primary sponsors and beneficiaries of this YOLO mentality – those who encourage middle-class earners to live and spend more today without regards to tomorrow – live at the top of the socioeconomic ladder.
Yet for some reason, the broader society of middle-class earners and EC buyers ignore this overwhelming conflict of interest and turns to this same privileged country club to listen in to their theories and ideas on how best to make more money in a “FaceBook” society to sustain or continue an expensive lifestyle they clearly cannot afford.
For instance, most middle-class EC buyers (include private property buyers) require dual incomes of more than $10,000 to sustain their 1,000 year mortgages. You know the type – Holds a respectable job, look and feel wealthy, with a new expensive home and expensive car and an expensive wife but underneath it is all nothing.
One partner cannot afford to give up a well-paid job or escape the chains being a subservient employee to a nasty boss without financial consequences. And top it all up with personal loans such as car and credit card loans and expensive wife (again). They live pay-check to pay-check. No financial freedom, no control of their lives, trading time for money and limited life choices dictated by lending banks.
Yet, those coddled real estate experts, the “wolves” of real estate who encouraged middle-class earners to “Upgrade” are the furthest removed from reality, and will be the last to realize that the entire EC profit model is already imploding with slower economic growth, a huge over-supply and potentially crippling economic events in the near future. A very real scenario that has materilised – Obsolete skills of PMETs are quickly being replaced by constantly evolving technology.

Adopt the Standard Position – Bent Over, Head Straight Up Own Axx

99.9% of the opinion and analysis rendered today is contaminated bullshit, “wealth gurus” notwithstanding. To varying extent, all current opinions are now distorted by the presumed sustainability of the “status quo”.
That said, the over-confident thought dealers at the top (wolves of real estate) – have the strongest opinions, the largest audience and the least objectivity. They unfortunately will be the last to realize that the old ways to invest in real estate has already stopped working. Add in the fact that most of these thought dealers in real estate are all in out-dated thinking, which adds one more distorting bias.
Of course, the commercialized lame-stream media is highly complicit in maintaining the illusion of the status quo. These entitled comfort seekers are totally incapable of imagining an existence that doesn’t have them at the center of the universe pampered by unfettered access to copious resources.
The fact that the majority of uninformed and ill-informed middle-class property buyers are forced to toil in 12-hour or more work days five to six days a week in subservient jobs to sustain that fantasy, is of no concern to them. Unfortunately, all this means is that we are being led down a blind alley by a cadre of the most bloated vacuous blowhards in a materialistic society.

Fairy-tale Sells. Zipping Your Pants is Harder in Reality

Today’s thought dealers are the alpha alchemists of our time, who bulldozed their way to the top by inventing various specious and unsustainable theories that only contributed to inflation of lifestyle and false hopes that is now on the verge of implosion for middle-class property buyers.
They don’t possess the courage, honesty, or veracity to even acknowledge the problems they created, much less to fix them.
Again, the whole idea that Executive condos as a “low-risk, high-return investment asset” gives real estate investment a bad name.
Besides being unethical, it speaks of an extreme amateurish method, a lottery mentality, poor grasp of proper investment fundamentals, and a totally confused mixed-up what productive investment really means.


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About the Author

Gerald Tay Author, entrepreneur, professional investor and loving father, runs with a tongue-in-cheek approach to property investment - and himself. He is widely regarded in the industry as 'The Common-Sense' Investor. Gerald writes with passion and straight-forwardness, disclaiming wild claims and impractical investment strategies behind lies and ignorance pervasive in the property industry for vested interests. His well-known statement, "All I did is to value my investments with science, logic and common sense.'

Comments (1)
  • Frederick Apr 19 2016 - 5:51 pm Reply

    Hi Gerald
    I like your no nonsense approach with much personal morals in it as well. However your imposition of moral judgements onto others are equally repulsive.
    I happen to disagree with your perspective that EC is solely a home and should have no investments attachment. You may remember Goh Chok Tong’s tenure, he advocated asset enhancement as part of wealth building. He was referring to public housing. HDB flats can be use to rent out, can be sold in general market( With conditions) for capital gains.

    Using private property alone to build wealth means 80% of Singaporeans would never afford it. Worse, it promotes elitism. Condo prices will sky rocket as they become exclusive. The rich will be richer and the poor be poorer.

    Many Singaporeans have done what you despise; using public homes as investment tools, EC included. Many succeeded albeit your claim of repugnance. Your theory of buy low, sell high, and buy high also, is not so correct. In realty, a person has two times to buy a HDB. The second time,a Sporean applies, albeit without grants but is still heavily subsidised. So it is buy low, sell high and buy low again. Many Singaporeans have aspirations to stay in private property. The smart ones will use HDBs (some even twice) as a step-up to reach this aspiration.

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