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drbubb

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  1. How do banks appraise property prices? Certainly banks will look at developer prices. But unless the developer will buyback (through a Put option) the developer's price for a new property is not really relevant. What matters to the bank is HOW MUCH CAN THEY SELL the property for, if the loan goes into default. The price is likely to be far below the price of a brand-new property; partly because if may be in less than pristine condition. And also because the bank will not have access to the powerful marketing machines of the developer. Typically, a bank will look at : + Comparable prices of similar properties sold in the secondary market. They bank may have these figures from other foreclosure sales of similar properties. And they may have recently financed similar properties and seen the prices at which they were purchased + The cash flow potential of the property. Obviously, the higher the rent, the more the property is worth - assuming the rent is at market rates, and the property will maintain its condition and rent-ability. A one-off above market rental which is not repeatable is unlikely boost the value of a property. A good argument can be made, that you only need to know THREE MAIN numbers to value a property: + RENT, at fair market level, and the + COSTS, like association fees and property taxes to be borne by the owner + INTEREST RATES, for someone who might buy the property With this information, you can calculate a Valuation, where the property will cover the Interest costs on a notional 100% Let me give an example. (This could be a Studio unit at an Avida property) Suppose you know a (newish) property can be Rented at P24,000, with Costs of P2,000 for monthly association dues + P8,000 of annual property taxes, and prevailing Interest Rates are 7.0%. The first thing to ask is what Maximum size Loan* could be made, where this property would support all the interest costs. Here is how to calculate this: Annual Net Income = Annual Rent ( 24k x 12= 288k ) - Costs ( 2k x 12= 24k + 8k = 32k) = 288k - 32k = 256 k per annum 100% Loan Size = Net Income (256k pa) / Interest rate ( 0.070) = 256/ 0.070 = P 3,657 k That value, of P 3.66 Million might be a starting point in valuing the property If a buyer were confident that rents were headed higher, or interest rates would fall, then he.she might pay more ===== *Why a Maximum Size Loan, which assumes 100% of the property is financed with a loan? In real life, this is unlikely, since most banks would be reluctant to go beyond a 60-70% Loan. Here's why: many sophisticated investors will be willing to Buy a property if it has a positive cash flow, but may be reluctant to buy, if the property has a negative cash flow. If a property's Net Rent can cover a 100% Loan, then any Equity that is invested will help to insure that the property will pay itself off
  2. "The MATHematics of property prices" I have wanted to tackle this subject for sometime, and this section on Philippines property is the right place to do it. There is so much nonsense spoken about property prices, that maybe someone needs to explain in detail the mathematics of property price evaluations. In PH there seems to be a common misconception that Property Developers set property prices. Well, this is partly true, since developers do set the prices for the New properties that they build and sell. The problem is: the prices on new properties are only relevant for the developers. Individual owners can rarely achieve the same price, It is common for a person who owns a new or almost new property to find that he needs to offer a 25-30% discount to “developer prices” to find a buyer. And sometimes, in a rush sale to a cash buyer, the price achieved might be an even bigger discount than this. Why do developers get higher prices? I believe that there are three main reasons: + Developers have their own “marketing machines”: All the major developers have big & well-oiled marketing machines, that find buyers using tactics like passing out brochures at shopping malls, and hiring marketing staff with firm sales quotas, and sending them on foreign trips. These teams are good at finding new buyers who may not be fully aware of other purchase opportunities beyond what the developers are offering. They also seek out Filipinos overseas, and prospective foreign buyers who may see no other opportunities, other than those offered in the brochures. + Credibility, & buyer ignorance: The marketing teams can help to find buyers who may be totally unaware of the relative bargains available in the secondary market. And unlike more mature markets like HK and SG, it is not easy to discover what are the actual transaction prices available in the secondary market. There are very few agents operating out of estate agencies on the street near large new condos, And Partly to avoid too many questions from Tax authorities, sellers may be reluctant to report actual selling prices. And there is nothing like a MLS (Multiple Listing Service) to give buyers a clear picture of what is available from those who want to resell their properties + Developer financing Many Filipinos lack sufficient capital to buy for cash, and may find it tough to get bank loans for purchasing property. And when they do get loans for secondary market purchases, loans provided can be lower rate of advance, and at higher interest rates. Thus, the only way that many can buy is on an instalment basis. Developers have geared their property sales that way. Once you talk to a seller you might meet at a mall, they will very quickly start talking to you about how much the monthly instalment is for pre-sale property. If you are a cash buyer seeking the lowest possible price, you may find the discounts for cash buyers are small, way less than you would expect based on prevailing interest rates. This seems to be designed to force buyers into supporting the fiction that developers high prices, are the real market price. Will banks provide bigger loans for new properties? Here is a little-known secret that I recently uncovered: Many developers will provide a PUT option to the banks when they finance a new property. If the loan is in default, the bank may agree to buyback or resell the property at a price which will allow the bank to escape without a loss. (I do not yet know, if this is only offered to tie-in banks: ie SM for BDO, Ayala for BPI, etc.). Anyway this practice explains why a bank may be willing to provide a larger loan for a new property, than they would for exactly the same property purchased through the secondary market. How do banks appraise property prices? (Discussed in the Next Section)
  3. Good news coming? ... REIT rules to be released by July THE Securities and Exchange Commission (SEC) said it can release guidelines on the issuance of real estate investment trusts (REITs) as early as July, without changing the minimum public ownership (MPO) requirement. The commission is set to conduct another round of public discussions this month to finalize the qualification requirements of a REIT fund manager, which is one of three provisions that has dissuaded property players from issuing such a product. “Kung wala masyadong tanong on the rules… by July finalize na (If there are not many questions on the rules… by July, we can finalize it),” SEC Commissioner Ephyro Luis Amatong told BusinessWorld on the sidelines of the 3rd Asia Pacific REIT Investment Summit in Parañaque on Tuesday. Mr. Amatong said there is a pending issue regarding how much interest a fund manager can have in a REIT. The fund manager is tasked to implement the investment strategies of the REIT, oversee and coordinate its property acquisition, leasing, and operational and financial reporting, among others. Rule 6 of the Implementing Rules and Regulations of Republic Act No. 9856 or the REIT law states that a fund manager must be independent of the REIT, its promoters, or sponsors. “Nakalagay sa batas ay independent, but I think what it really meant was external, na yung fund manager ay hiwalay from the REIT…so pwede naman palang may ownership stake yung REIT or yung sponsor in the property (Under the law, it says the fund manager should be independent, but I think it meant that it should be separate from the REIT… So it can have an ownership stake, the REIT or the sponsor in the property),” Mr. Amatong explained. However, the rules that are being readied by July will still include the 40-67% MPO for REIT vehicles, against the 33% requirement that property players have said is the ideal public ownership level. Mr. Amatong said the SEC decided to iron out the rule on REIT fund managers first since it was a concern for all industry players, whereas some companies are already comfortable with the existing MPO requirement. “Ang lumalabas, may mga willing to comply with the MPO. Pero the issue of the property manager, issue siya for all. So inuna namin kasi applicable to all, lahat gusto may stake sila in the property manager or the fund manager (It turns out, there are some who are willing to comply with the MPO. But the issue on the property manager, it’s an issue for all. So we prioritized that, everyone wants to have a stake in the property manager or fund manager),” he said. With the amendment for the rule on REIT fund managers, Mr. Amatong is optimistic that the country will see the first REIT issuance this year. Ayala Land, Inc. (ALI) said last April that it is preparing a REIT offering where it could raise about P25-26 billion within the year. This comes a decade after the REIT law was enacted in 2009. Mr. Amatong also said that “about one or two” companies have already expressed interest that in conducting a REIT offering with the current MPO requirement. Aside from issues on the REIT fund manager and high MPO requirement, property players were previously concerned with the 12% tax on the transfer of real properties once they place their assets in a REIT. This rule however has been removed following the passage of the Tax Reform for Acceleration and Inclusion Act last year. https://www.bworldonline.com/reit-rules-to-be-released-by-july/
  4. MUX chart ... update: Last $1.69 +4.97%
  5. OILIES Bottoming Together Again? BPT, USO, OIH .... update : 10d : $16.04 -0.25%, $11.25 +4.07%, $13.80 +2.22% : 10d : $16.04 -0.25%, $11.25 +4.07%, $13.80 +2.22% ==
  6. OILIES Bottoming Together Again? BPT, USO, OIH .... update : 10d : $16.04 -0.25%, $11.25 +4.07%, $13.80 +2.22% : 10d : $16.04 -0.25%, $11.25 +4.07%, $13.80 +2.22% ==
  7. TOP REASONS TO LIVE AT THE RISE 1. Rise has well designed units, mostly 28 sqm 1BR with 18 elevators, 50% more than Air Residences next door 2. Great location near top companies and jobs on Ayala Avenue 3. Rise itself will be amenity-rich , like Shangrila’s hotels and residences 4. Rise is above a very nice mall, with great dining & shopping. Also near the malls of Air and Ayala North Exchange 5. Area nearby is gentrifying fast, bringing new jobs, new restaurant choices and other attractions (see below) 6. Transport options on Ayala Ave, and Gil Puyat. Plans underway to add subways stop at/near Fire Station * Yuchenko museum, 3 minutes away in RCBC Tower * Easy walk to Ayala Ave, and to Greenbelt mall, mostly on a covered walkway, protected from rain * Circuit is also walking distance and will provide performance & entertainment options * A new Mapua business school is being constructed halfway to Circuit
  8. SOXX Bellwether & IWM, SPY IWM- etc ... SPY : 3mIwm+ go FL 10d F LT: sw : VIX : VIX-etc : ==
  9. xx / SPY : 3mIwm+ go FL 10d F LT: sw : xx
  10. ESV bouncing (to resistance) - Almost $1 off the Lows ESV-etc ... 10d: $7.37 +$0.46, +6.66% vs. OIH-$13.80, +2.22%, USO-$11.25, +4.07% Bought : ESV-Jan.$5c at $2.46. closed at $2.80-3.10= $2.95 mid, +19.9%
  11. drbubb

    Impeach Trump? Or Jail Hillary?

    President Trump Mocks Pathetic Democrat Impeachment Protests: ‘Almost Nobody Showed Up’ “This is a huge distraction and will only help Donald Trump get elected.” Steve Watson | Infowars.com - June 17, 2019 Comment President Trump mocked Democrats Sunday over poor turnouts to protests that were organised by the left wing radical group MoveOn.org under the banner of ‘#ImpeachTrump: Act to Defend Democracy’. “Yesterday was the Radical Left Democrats big Impeachment day,’ Trump tweeted, adding ‘They worked so hard to make it something really big and special but had one problem – almost nobody showed up.” “Democrat voters want to hear the politicians talking about issues. This is a huge distraction and will only help Donald Trump get elected.” The President added. MoveOn claimed that there were over 140 protests across the country. However, the only gatherings of any note occurred in the liberal strongholds of New York City and California. Footage of the events confirmed turnout was lack luster, with numbers in the low hundreds:
  12. Clinton Email Classified Material Violations Confirmed – State Department ‘Has Assessed Culpability to 15 Individuals’ in ‘Multiple’ Security Violations BREAKING: Clinton Email Classified Material Violations Confirmed – State Department “Has Assessed Culpability to 15 Individuals” by Cristina Laila June 17, 2019 The State Department in a letter to the Chairman of the very powerful Finance Committee, Senator Grassley (R-IA) confirmed Hillary Clinton’s classified material violations. The State Department stated that it has assessed culpability to 15 (unnamed) individuals, some of whom were culpable in MULTIPLE security incidents related to Hillary Clinton’s use of a private server and her mishandling of classified information. “Consistent with longstanding policy, the Department does not release the names of current or former employees participating in the security incident program. However, in the spirit of cooperation, the Department can share with you certain information about the status of the ongoing review. To this point, the Department has assessed culpability to 15 individuals, some of whom were culpable in multiple security incidents. DS has issued 23 violations and 7 infractions incidents under 12 FAM 550. This number will likely change as the review progresses,” Assistant Secretary of Bureau of Legislative Affairs Mary Elizabeth Taylor wrote. Individuals still employed by the State Department will be referred to the Bureau of Human Resources and some may receive disciplinary action…that’s it? “Consistent with the referral policy, for individuals who were still employed with the Department at the time of adjudication, the Department referred all valid security violations or multiple infractions to the Bureau of Human Resources. In reviewing any violation of agency policy including policies regarding the appropriate handling of classified or sensitive information, the Department may consider a broad range of disciplinary or other administrative actions. These may include, depending upon the circumstances, counseling, reprimand, suspension, and/or separation. For example, the Department’s discipline policies for employees are laid out in the Foreign Affairs Manual, 3 FAM 4100, 4300 and 4500, and apply to violations of statutes, regulations, or Department policy as stated in the Foreign Affairs Manual or Handbook, Department Notices or ALDA Cs, or bureau or post policy documents,” Mary Elizabeth Taylor added. The State Department said it “considers any violation of security policies to be a serious matter.” Right, which is why Hillary Clinton was able to use a private server while she was the head of the Department of State where she hid her Clinton Foundation pay-to-play and transmitted classified material — and she’s still not in prison. === First, Look her up! Then, Stretch her neck!
  13. TRUMP VOWS TO DEPORT 'MILLIONS' STARTING NEXT WEEK! ICE BLITZ x
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