Once upon a time, the apartment or house we bought is considered an asset.
This fact is easily bore out if you enquire on the property your parents or grandparents have paid and its valuation now. Please do it without giving the impression you are eyeing their property before their “departure” – least you get written off from the will… Hey! Don’t blame me!
The arrival of the great salesman in the form of Robert Kiyosaki came along and correctly offered the alternative view of using cash flow as a better guide to determining what should be an “asset”.
Guess what? Some people’s pendulum now moved from the extreme right to the extreme left.
I scratch my head whenever I read comments that we should not count our place of residence as part of our net worth or consider it as an asset if it’s not rented out…
I wonder how these people value companies they invest in? Do they exclude the land and buildings the company owned if these assets are not leased out?
And I thought this will make a great asset play if the book values on its land and buildings are woefully out of whack with today’s market value… Potential sell and lease back to unlock their “asset” values?
If you bought a private property during the phase 1 launch, and discovered that the price has increased by 5 to 10% during phase 2 and 3 launches, would you feel a little bit smug about your “smart” investment?
How would you feel if the developer drops the price instead in the subsequent launches? In Shanghai, the irate early buyers smashed the developer’s showroom… It would not happen here as we are more “disciplined”. But I am sure there will be a litany of complaints - our 2nd national pastime after window shopping.
And if we have a new government, and the new HDB policy is to sell new flats at cost plus. How would you feel if the new BTOs (Build-To-Order) flats are priced at 50% less than the one you bought 5 years ago? Stranger things have happened; never say never!
Why the strong emotions if the property we owned is not an “asset”?
The little lies we tell ourselves…