Ep 3: How do People Make Money in Commercial and Industrial Properties? – Maureen from Abiel Real Estate Fund

Troy: So Maureen, we were talking about HDB and private condos in the first two episodes.

But what if, you know, let’s say I don’t want to get married or I’m not eligible to buy a condo, then what are the other options that normally, you know, the mainstream doesn’t talk about? That I can invest on. 

Maureen: Yeah. So just now, when I was talking about this whole HDB thing, right. That’s exactly what I was thinking. I was thinking, oh gosh, what if someone don’t want to get married, then HDB is obviously not an option. And I think that the government was very clever to create this policy, to encourage obviously marriage and birth rate. But with that, obviously condo itself is the only avenue for residential, because then you would have to save up all the money and get into the place.

But let’s say you want to work with property as your way to accumulate the equity before you enter into a property sector. Is that a possibility? Yes, it is. So that two subsegment inside, they’re actually further subsegment inside these two other sub-segments — but there are two possibility, which is commercial property. And industrial property is also part of the commercial property segment. But within commercial you have shop houses, you’ve got various other avenue. Now the thing is this. For the general people out there, commercial property is always seen as more complicated. 

Troy: Yeah. We don’t hear about that.

Reggie: Why? Why is it seen as more complicated? 

Maureen: The thing is this, it’s from the perception that… it’s quite interesting, before I touch on that, you can actually enter industrial property, not necessarily commercial, but industrial property with lower deposit requirement, because you can actually have various strategy to your borrowing capacity. Or your LTV can be much lower or higher, whichever you look at it. Which means that you need to come up with less deposit to get a place, an industrial place versus a residential, which is very much controlled by the government, right. 

Troy: You can leverage more. 

Maureen: Correct. So that means that then you can enter the market earlier with less saving. However, in saying that, why is there a perception? It’s purely because of this — and this doesn’t just apply in Singapore, but it’s also applied to the world, worldwide — it’s because residential property is seen as much more easier to understand for normal mom and pop than commercial property.

Why? It’s because of where the demand comes from. So residential property normally gets tenant who wants to live inside, right? So most people can relate to that. So if I own a place, I just lease it to someone who want to live in it. And it’s very easy and understandable. And even within the bank system, they would feel that residential property is much more predictable and also much more conservative, and also a much better or safer asset versus a commercial property.

And why is that? So this comes back to the demand factor. So let’s say if I own a residential property and in order to get it cashflow positive, I need to lease it out, right? So in a normal scenario, let’s say even if the market is flooded with residential property, but not so much demand, you only need to do one thing.

Troy: Reduce the price.

Maureen: Yes, so that’s all you need to do it. Your neighbor is leasing at 2000, you just need to lease it lower. But with that lower price, let’s say it’s 1817, you still can cover your mortgage with very minimal top-up, right. Let’s say if your mortgage is, let’s say 2000, you can just make up the difference of 300, which is not a major difference.

Reggie: Oh, I never saw it from that angle. 

Maureen: Correct. So that’s why it’s safer. And let’s say if I’m a tenant, I come here, of course, I’m going to lease a 1700 versus 2000, right? 

Reggie: It’s in the same condo what.

Maureen: Correct, correct. It makes sense. 

Reggie: Level 7, level 6, it’s okay. It doesn’t matter. 

Maureen: It’s $300 difference, is not a huge lot of difference. But commercial property is different. Commercial property by default is created to lease out for the usage of their purpose of business, right? So when the economy is not doing well, no matter how much you drop your rental, they don’t need the place, then they don’t need the place. 

Troy: So it’s cyclical. And then this trend, you can’t really predict that trend. 

Maureen: And also then it’s harder to create a demand just by dropping the price. It’s not like that.

Like right now I have a very good friend of mine who is also a student of mine whose parents bought a retail — which is an asset class, which I totally hate — a retail, strata retail inside a B1 industrial space. It can be also strata retail inside a commercial space, I don’t care, anything strata retail, which means that it’s not controlled by the same group is strata retail, right?

Strata retail doesn’t work. Just full stop.

Reggie: So what is a strata and what is a retail strata? Help me understand. 

Maureen: Retail strata being that normally, let’s say if we go to a mall, right. Give me a name of a mall. 

Reggie: Beauty World. 

Maureen: [Laughs] That’s a bad one. 

Troy: ION Orchard.

Maureen: Okay, ION Orchard.

Reggie: [Laughs] “That’s a bad one.” I love Beauty World! 

Maureen: The reason is because I think Beauty World is actually a strata itself as well. Like I believe it is. Far East at Scotts is strata. So it’s strata commercial. But talking about ION, it is all controlled by one commercial landlord. So he has control over, okay, I’m just going to have two coffee shop at this level.

I’m going to have, you know… and he will actually manage the common area to make sure that it’s clean, it’s done well. And also his job is also to bring the traffic inside the mall. Versus if I sell a strata retail, I strata to you guys it’s not my problem. And if let’s say 10 of the owner decided to have a coffee shop person running the place, you’ve got 10 coffee shops, the customer is only so many. So you often end up like the operator goes out of business and then the things goes empty and there is no common way to manage this, right. So it’s a horrible predicament. And right now, this compounding with the effect that retail in general is not doing well, it’s just not helping.

Reggie: So if you buy a strata retail based on what you say, essentially it is within a building and then the person chop up the space, right. It’s not owned by… the whole building is not owned by one guy. Not like Far East, not by CapitaLand, not one of the REITs. So you’re chop it up. Everybody owns a small part of it. 

That’s why that’s the challenge because everybody’s competing with each other in that sense. So then you said specifically about retail, right? Is there like a change of use potential or it’s like retail must be retail? 

Maureen: Generally in a building for a developer to get the maximum return, right. They may keep the upper floor as offices.

They might still strta it but it’s for offices and the lower ground, they will strata it as a retail. So that’s what I mean, those strata retail. Strata retail in Singapore is doing horribly, because generally the overall landlord of the building who, after they strata and sell to everybody, they have very little incentive to bring in traffic.

Reggie: Exactly.

Maureen: Cause it’s already sold to you, right? 

Troy: It’s none of their business already.

Maureen: Yeah. It’s already sold to you, Troy. Thank you very much. I’ve got my profit. I just need to manage the cleanliness of the place, but I’ve got no vested interest in you getting higher rental. 

Reggie: Is that why some malls just have nobody? 

Maureen: Yeah. Especially when it’s not centrally managed. 

Reggie: They have no interest to bring in traffic, right. So then those malls just don’t live, they just stay there. 

Maureen: Correct. And also let’s say like, for example, Far East at Scotts right after they strata, they sell, I mean, Far East Scotts, although it’s got a lot of foot traffic, as we all know, but then it comes the time of let’s say, touch-up, refurbishment, because the whole place is many years and it’s a bit rundown.

So I got to get all the owners to agree with me before I can do anything. Versus if I own the entire place, I’m just going to give it a facelift. 

Reggie: Same problem with en-blocing, right? It’s the same idea, right? If you, if multiple owners, which is the idea of a strata, multiple owners owning one thing, then you have to get everybody’s consent la. In this case, on practical terms, it’s actually very difficult. 

Maureen: So this friend of mine, they bought the place for like $1 million plus, can’t find tenants for the place and then now to resell, they have to sell at a discount. Because commercial property, the rule of thumb is that it’s only as valuable as the rental it can fetch. However, why a lot of sophisticated investor and also owner like to invest in commercial versus residential over time, as they get more skills and whatsoever, it’s purely because commercial can fetch higher rental. 

So you find a developer, let’s say, they develop a plot of land, right? They’ll sell all the residential, you know, they strata, they sell the residential to you guys, but they always keep the malls because that’s when they get highest return in terms of rental yield. 

Reggie: What is the gauge, you know, for someone that’s trying to get rental out of this kind of retail property? 

Maureen: Right now, if it’s strata retail, you’re looking at 1% even. 

Reggie: How is that good? 

Maureen: Yeah, so it’s no good, but if you’re, but if you are a landlord, let’s say, an ION, it’s different because you’re looking at the whole asset as the total. ‘Cause there’s maybe a hotel attached to it or various other things. So valuation is quite different. 

Reggie: And that’s when you buy REITs, right. You enter that kind of property through the REITs tool. 

Maureen: Correct. And that’s why, like, for example, I run a type of business, right. And I want to gain visibility in retail. I have to lease it from you, the mall owner, so that I can put my store there and whatever.

And so, you know, it’s no secret that Singapore’s malls, the prices and the rental is horrendous. Yeah, so some F&B operator, like even in Ang Mo Kio hub, only a very  small kiosk, they can pay $40,000-$50,000 in rental and that’s quite common per month. 

Reggie: A month? Ang Mo Kio Hub? 

Troy: Heartland malls have more and more people over there these days.

Maureen: And it’s only a kiosk. Well, to me, it’s only a kiosk. I’m thinking, wow, so small, but that’s exactly the type of rental that people are charging. 

Reggie: My goodness. 

Maureen: Yeah. So, so with that rental over the space, you can imagine why it’s quite good if you know how to manage your mall. You can drive the traffic in there, but it’s a skill.

And you know, so commercial investment becomes a skillset to create a demand for your product. Whereas residential is very easy. Oh, well, you know, to get it leased I just dropped my price. I get somebody else. Whereas commercial, it’s like a place of business for someone. You need to apply some skill to create that attractiveness around your property, so to attract rental.

And yes, you can get high rental if you’re good at it. For example, just give another example. You know, some food court, some F&B rental can go from $12 upward to even $30 PSF. So that’s versus for example, versus B1 industrial where you’re getting $2.30.

Reggie: Yeah. But industrial is the cheapest amongst all of them, right? 

Maureen: Industrial lately, obviously everybody knows this in the marketplace. There’s been a lot of promotion on rental yield for B1. And what they’re hedging on is the fact that those B1 are already quite aged. So they have like, 30 years left to their leasehold.

Again, we talked about Bala before. The same factor also apply for B1, as long as it’s lease hold. So they enter at very low price because there’s only 30 years leasehold left. But when you are a tenant, when you are leasing, let’s say a B1, you don’t really care if it’s a freehold or a leasehold, right.

You just want that place for your place of business. For B1, the leasehold prices and the freehold, there’s a huge gap. So if I buy cheap as a leasehold, or I’m left with 30 years, you’re also paying me $2.30. Versus another freehold guy that might be buying at $1,000 per PSF versus my $300 for a 30 years leasehold, of course, versus rental yield I’m going to get much higher. So my rental yield could be like from 6 to 9% at times. 

Reggie: That’s interesting. 

Maureen: Yes. That’s interesting if assuming you can get it leased out.

Reggie: So w we were kind of switching between commercial and industrial, right? So let’s get the commercial thing out first. So commercial property, we talk about the malls, right? If it’s a strata mall, or if it’s the whole mall, too bad, you cannot buy it. You can buy REITs, okay. You still can get some exposure, Far East, blah, blah, blah.

And then what about… are there other kinds of commercial properties, like shop houses? 

Maureen: I love shop houses, everybody in the marketplace know that I love shop houses, purely because shop houses has the greatest flexibility in usage, right. And it also tends to hold its value very, very well. But then if we move on to let’s say office, strata office, again, it’s very economy-driven, right. 

Like right now during COVID season, you find that CBD, a lot of the offices are empty,  because people downsize or they move to fringe area where the rental is cheaper or they close down. Normally office buildings tend to reflect the economy. So when the economy isn’t doing well, it’s empty.

And no matter what you do, especially in strata environment, where you can only control your own place, right, it’s not like you can control the building. So that means that you just have to find ways to attract tenants. Cheaper rent might be okay potentially, but it’s just not a good way to go. Yeah.

Reggie: Now that you put it so vividly, right? I actually can really tell which building is centralized managed and which is a strata. It’s like, this ah, confirm is strata wan, right? It’s like, people don’t really care, the walkway look so old, you know, it’s like different people kind of doing their own thing. There’s no centralized management kind of, kind of thing. 

Maureen: Correct. Generally I avoid strata retail, of course, my most hated segment. 

Reggie: Why? Why is it the most hated? 

Maureen: Purely because strata retail just doesn’t work. Yeah. It’s expensive. You cannot get the rental that you want and you have got very little control over tenancy.

It just doesn’t work. Whereas strata office, there are still ways to make it work in terms of rental you’ll, this is my experience. But even strata office, there’s limit. Strata office you can only use it as an office. You can’t use it for anything else. Whereas with a shop house, let’s say, we all know if upstairs I can lease it an office. I can still apply to URA to convert it for residential usage and lease it out as a residential. There’s so many place, but office is just office. And then when there’s so many offices, let’s say around the same area, you’re competing on price then. And I don’t like that. Yeah. 

Reggie: So across the board, what I’m hearing is in the commercial space, that’s the strata retail, there’s the strata office. And then there’s the shop house. Generally, these are the three breakdowns, right. And strata retail, because it’s so difficult to manage the whole mall’s traffic, you know, and it’s just too competitive as a space. So the rental is crazy. So you’re out, right? 

Strata offices are very reflective of the economy. And given the current economy situation, it’s not a great  place to be. So in your experience, shop houses has the flexibility to do what you want. 

Maureen: Yeah. The change of use, the conversion, all that. And also, B1 is also classified as commercial as well. That’s another element to it, but obviously B1 traditionally, it was used for light industrial usage, and then there’s also B2, which is for heavy industrial.

And then there is another class of industrial that is doing very well. It’s industrial lease out for people for food preparation. Now because of all the… 

Reggie: Ah, all the delivery stuff. 

Maureen: Yeah, it’s doing exceptionally well. So ghost kitchen, especially if they are built like co-working type  infrastructure but in the ghost kitchen format, they can lease up to $25-$35 per PSF.

But those that you lease like six months, and then you, you know, that kind of stuff. So you go in, the kitchen, it’s already there, you just prep and cook and get your delivery business happening. So that’s another Avenue, but generally industrial that is leased out for food production is doing quite well.

Troy: But is that cyclical? Is that constantly always so well? 

Maureen: You see, as an investor, we take a forward position into the future, right? Then it’s whether you think that food delivery is going to be something that phases out, or it will always be like that going forward. This whole thing was further enhanced by the fact that, with the circuit breaker, everyone was ordering food, right? 

So, but then it’s the fact that do you foresee that this behavior will change over time or will it be a case that, oh yeah, I think food delivery is here to stay. So you just have to take a forward position on that. I mean, people still are social creatures, especially in Singapore where houses are traditionally quite small, people do like to go to the restaurant to socialize  and talk. 

But in saying that, as we progress in our lifestyle, people are busy. Food ordering is becoming a norm. Like people just order food, you know, all the time. 

Reggie: People have beautiful kitchens, but they don’t use it. [Laughs] It’s a showroom pluck and play, you know? Put at home and then wah, very sui sui ah. All my guests come and see this beautiful kitchen, then all the stoves are never on.

So based on what you just shared with us, right. Essentially, there is a very clear difference between like residential and commercial industrial. The kind of capacity to understand the space, understand the economy, understand the use, it sounds like many tiers above. 

Maureen: Yeah. Residential is good for passive property investor, so they buy it and then they want to lease it out. They don’t want to have to worry about it. It’s good for people who wanted to build property portfolio. It’s always the way that traditionally people go first, right? Because it’s easier to understand, Id just need to drop the price or whatever. And then I get the place leased out. I just accumulate the equity over time and that’s that right? So that’s residential space. 

But commercial space, when you play in the commercial space, you are operating the property like a business. And that’s where people don’t grasp it. And so if a mom and pop was to come into a commercial space, especially when they don’t have an understanding that that’s a place or that’s a product that you’re trying to create. So it’s a form of business basically. Then you stand to be quite at risk because you end up buying something at very high price and no matter what you do, it remains untenanted. So once cashflow becomes an issue for any property investment, every month, you’ve got to cough up that extra cashflow to service the loan, right?

Whereas residential very easy what, just put down the price, someone will rent it and then I just have to feel the gap between the loan and the money. And then plus in Singapore, you remember you have the CPF top up as well, right? 

Reggie: So it kind of masks the reality that you are leaching money out,  right. You’re cashflow  negative, but ok la, you don’t feel the pain, ’cause it’s not coming from your wallet. 

Maureen: Correct. But at least you’re surviving, right. You’re going from month to month, whereas commercial there’s no CPF top up, man. 

Reggie: Oh, okay. Wow. Okay. Okay. And I know that you actually do spend a lot of time in this commercial space, right. And you’ve helped a lot of people to kind of sort out their shit essentially, right? They couldn’t lease other commercial space and they hire you to come in to then do your magic. So what are some of these, you know, big problems that these guys face prior to, you know. 

Maureen: I mean, it can range from one industrial strata place through to a major building, like a shop house or commercial building that they own, but the issue or the fundamental issue remain the same, which means that they don’t get that this is a place of business. So they need to market and package this as something that is attractive for people to want to place their business in. So no matter whether we’re dealing with a strata industrial, strata office, through to a building. 

So my job, I think where our company was very strong, it’s actually matching the two. We look at place and we ask ourselves, given what we have to work with, how can we create a demand of this place? And then from there, the rental happens, and once the rental happens, the whole place works, simple. 

Reggie: And also because the rental tends to be way higher compared to what you get from residential, right?

Maureen: Correct. And it has to be that way. So right now, for example, residential, majority of the residential I would say, that people buy post-2013 is trading negative, right? It’s just that because you’ve got CPF top up, it’s fine, but  commercial right now, some of the commercial places, commonly quoted in the marketplace, the gross rental deal is sitting at about 3%.

And it doesn’t take like a rocket science to work out like 3% gross rental yield, you’re either at break even or negative in terms of cashflow every month, confirm. ‘Cause your loan is already like, let’s say you’re very good, you get 1.68% or whatever, but it can go up to 2% and plus all your other costs of running that place, or that commercial space, it’s definitely  minimally break even if not making a loss, right. 

So then from that perspective, and this is commercial space, we’re not talking about B1 buying leasehold and then leasing out, ’cause B1 leasehold generally sell at a much lower price. So anything that is leasehold, right. That has got very few years left. They sell at a good price. And so the pitch for people is always the yield.

So in fact, traditionally there’s always been a play between yield and equity. For example, in city area, I buy something very expensive. There is a lot of equity upside, but the yield is generally less than if I buy it at a very far away place. Even though it’s cheaper, the equity upside might be less, but the rental yield is very high.

So it’s two, so same things generally. And generally, so within industrial space it’s the same. So B1 with 30 years left, you can buy it cheap, the rental yield is good. Because the capital upside potential is very minimal, right? So you just need to be aware of that. 

But commercial space, let’s say commercial shop house, generally trade at about 3% because the equity upside, generally in Singapore, meaning you don’t go and buy something very funny, like woo woo, nobody wants that kind. They’re quite good. And so generally it’s about 3%. That’s the commonly quoted rate. But you know that you’re not going to make money out of your rental yield. It’s equity upside. 

But we’re not happy with that as investor. Because rental not only service the loan and make sure that you’re above board and give you some cashflow, but it’s also reflected in the cap rate, which means that if I have an asset that is giving me income, when I sell this commercial property, it’s going to be worth a lot more to the next buyer so they will pay higher price, right. So it translate into equity increase. 

But this doesn’t happen in residential as much because residential in Singapore is quite efficient. You know, you look at your neighbors stack what, you know, selling at what, so you will be selling at that price, because the rental is about there.

Reggie: Right. I get it. So is it… let me just kinda understand it, okay. So is that like if let’s say I buy a strata retail and my strata retail has McDonald’s in it, right. And McDonald’s will never shift out, for lack of better way to put it. So when I sell this, you know, strata retail to the next person, I can definitely sell it higher just because McDonald’s is using my place.

Maureen: Correct. And why? First, they will assume, and normally quite correctly, that McDonald’s will pay higher rental, right. And that also McDonald will be, there’ll be quite an assurance that once McDonald do an analysis, they decided to come in, it’s going to be fairly longterm. And so that is a kind of guaranteed income, right. Cashflow. 

And that cashflow then translate to a greater equity upside for commercial property. And so that’s why commercial property is often played by the… 

Reggie: Seasoned guys. 

Maureen: Yes. Because then you can get the increment. So same. So let’s say my friend under the B1 strata retail, suddenly get Sheng Siong inside there.

Same thing. And the thing is that mind you, let’s say your strata shop is next to my friend. He’s got Sheng Siong. You don’t, you got some I don’t know. Like printing shop. Whatever price that you can fetch in the marketplace, even though we’re right next to each other, it’s going to be much less than mine.

Reggie: Really, it’s not going to like, I’m not going to get influenced by Sheng Siong? 

Maureen: No. 

Reggie: No, wow, okay. 

Maureen: I mean, because I’m the one getting the rental or maybe there is some foot traffic, maybe I correct that. Because you know, all the shops that is around Mustafa, their rental is a lot higher and their selling prices are a lot higher because of Mustafa. 

Reggie: Just because next to Mustafa. Mustafa brings in the crowd.

Maureen: Correct. Correct. Correct. But I’m just saying, like, let’s say we were to sell, even though you say, eh, but I’m the same as her. Not really. It’s determined by the tenancy as well. 

Reggie: Okay. Interesting. Wow. That’s…. 

Maureen: Yes, the mind boggles. And so that’s why traditionally, Abiel, the company has always been hired by landlord to say, eh, I’ve got this building, I can buy, I’m rich enough. I can, you know, do stuff to it, but what do we do with it? How do we create the rental revenue to make the valuation higher? And that’s where we specialize in doing all the magic and making that happen. And if people have traditionally bought REITs, they would have come across this term called asset enhancement initiative, which is AEI for short.

And that’s exactly what the big boys do. So they buy a rundown mall,  let’s say Bugis, for example, not Bugis now, but before, then they buy under-value hopefully, and then they will enhance it through two means, functional or aesthetic. 

Aesthetic is very clear, after they went through it, the whole place looks fresh, looks new, looks modern. You want to go there, right? The other thing is that they also changed the functional usage, meaning inside, instead of all retail, maybe they perceive that there’s a great demand for serviced apartment. They’ll carve out a certain space for serviced apartment and then blah, blah, blah, they’ll enhance the yield of that place. Or increase the efficiency. So that space, it used to be like that, but I now make it more usable. The whole thing is driving towards increasing the yield. Then that gets reflected in the valuation. 

Troy: Sounds really more chim, a lot more chim than a residential property. 

Maureen: Yeah. So it’s a, it’s a business.

Reggie: Yeah. It’s a business. And there are so many elements. I think we can go on and on. But there’s one question I want to ask. It’s like, you know, through this discussion, you know, like the last two episodes, we keep talking about capital gains, equity, capital gains, equity. But when we’re talking about commercial, it’s like, yield and yield and yield. It’s always about rental yield. Does that mean that I can conveniently not care about equity upside? 

Maureen: No, it’s the same thing. It’s just that in commercial property, the valuation of the commercial property is much more sensitive with the rental yield. That means I can get higher valuation of my commercial property if the yield is great. Whereas a residential property… in fact, we test it with one of my friend’s unit before. I increased his rental yield for residential. We did some co-living ’cause he owns the place. We increase the rental yield to I think 5% or 7%. Well, one of the number, cannot remember, so it was quite good, but the impact on the valuation is minuscule. It’s good that he has the rental, but in Australia, for example, the rental yield does impact the valuation of residential in Australia because first it’s landed property.

And then it’s also seen as a form of business inside residential, people are willing to pay for it, whereas in Singapore, not really. Yeah. But commercial property, which is why we like to own shop houses, we can have different usage and then I can increase the valuation and then I can sell it at a higher price.

Reggie: Ah, okay. I’m seeing it. So essentially you see commercial, industrial property, like a business, you go and you engineer a business out of this thing, the higher the yield  you can squeeze out of this space, it will reflect in your property’s ultimate selling price, the valuation. 

Maureen: Correct. Now the valuation increment is much more obvious in non-strata commercial.

So that means like, let’s say B1, even if I increase the valuation, the proportional increase in the price is not as much as if this increment was to happen in a landed shop house, for example, where I actually own the land, not just a strata unit inside. 

Reggie: Okay. So are there some things that people can do to, you know, enhance their industrial  property? I know this is super case by case, depending on where you are, who is your target audience, but are there some underlying principles? 

Maureen: The general strategy that is being employed by a lot of people these days is obviously leasing out the place in smaller parcel. So the old principal, whether it’s residential or commercial is the same.

If you carve up a smaller place, you lease out to people. People will have to pay a higher PSF for that smaller space, right. Versus a larger space. So generally in industrial B1 these days, people would just carve it up into  smaller parcel, make it look nice because remember AEI is about aesthetic and functional, right?

So aesthetic make it look nicer, functional carve it up smaller, make the per PSF worth more, then try to lease it up. But then, there are other things that one may be able to do. But then I think if I say it, your audience will either fall asleep or the mind will boggle. 

Reggie: Very technical?  

Maureen: Yeah.  Correct.

Reggie: Okay, yeah, I get it. 

Maureen: Yeah. So I think, B1 is still highly regulated — all of Singapore’s property are highly regulated.

So there are certain guidelines and things which is beyond the scope. Yeah. 

Reggie: Okay. Okay. That’s cool, man. Like if people want to learn about these things, we can discuss it another time and you know, oh, there’s so much to learn, my God. Okay, cool. Yeah. That’s all for me. Any other questions from you guys?

Troy: Now we finally know why the mainstream people would just look at residential property instead of industry and commercial property. 

Yeah. And mind you, the bank’s assessment of things are always very indicative because they’ve got a huge team of research and various things, right.

So when you come to them with a residential property and I’m talking worldwide, right. If it falls within like the norm where mass market would want it, so not like not especially smallapartment that a developer has just decided to carve up, so to sell it to you. But if it’s what the normal population would buy, bank generally likes that because they’re seen as quite stable, right. Residential property. 

I just need to put tenant in, then the cash flow will start to happen and it’s good. Versus commercial, which is seen as high risk. So they like commercial property, bank. If it has got very strong revenue. Rental. If you can tell the bank that, hey, this one has very strong rental or it’s  it’s being rented to a very reputable company. They love it. Especially for long period of time. 

Reggie: Okay, so all you guys need to go out and find your McDonald’s franchise, but yeah, thanks. Thanks for sharing. I think we’ve learned a lot. It’s good enough for today. So much more coming, right. Next few episode, we’re going to talk about what to buy, what’s the price, you know, when to sell it, what’s the ultimate plan, and so many things coming up.

So we’ll see you guys again. Bye!

Troy: Hey, thanks for taking time to tune in today. I hope you’ve learned a little bit more about property investing today. If you feel like you have benefited from this podcast, do share this with your loved ones and also do follow us on all our socials and join our community Telegram group and tell us what you are interested to know about next. Everything is in the description below. Have a great day ahead, guys. And always remember: when we are better prepared, the next opportunity is just around the corner. See you next week! 

That wraps up another episode of The Coconut Avenue. We hope you took something away from this discussion. It was really heavy for me.

My brain was like running at full speed, trying to digest what is being discussed. I had to hear it the second time to better understand it, because they were all very foreign to me. So after listening to this episode for the second time, my takeaways that industrial and commercial properties are managed like an active business. While residential properties are managed more passively. 

There are so many reasons why retail investors generally avoid industrial and commercial properties. Okay, even though you might potentially get a higher yield in industrial and commercial properties, but it requires a lot of homework in choosing the right unit in the right location.

And also you really need to have the skills to create demand for the unit la. Like what Maureen has said, it’s not just about reducing your rental price because there are macro factors like economic factors involved in this as well. So if you want to play with the big players, the big boys in the market, you got to up your game.

So for me, if I ever invest in properties in the future, I know I would just stick to residential properties. Less headache la. What about you? Let me know how you think. What questions do you have after listening to this episode? And what are the things you want to know more about? Let us know in our Telegram group.

Thanks for tuning in today. I hope you have a great day, a great week ahead, take care, and I’ll see you next week.