28 February 2011 was a memorable date for me and the kids, as this was the day my wife Ee Ran retired from her job at the bank. Yes, left work for good. Clocked out for the last time. Cashed in the chips, so to speak. And she is not even at the usual retirement age of 55! She has worked a good 10 years and now has the choice whether to work or not to. Now, she spends most of her time doing yoga and hanging out with our two boys. The younger one who is now only 13 months is probably too young to wonder why his mummy is home all day long? While the older one is probably glad that mummy drops and picks him up from school everyday (and not me cos I am always late!).
A lot of our friends think that she is able to retire young because of my high paying job! no such luck I am afraid, as you all know in corporate Malaysia, the pay is not that fantastic especially if compared to Singapore or HK!Some think that she would have to take a "pay cut" in order to be able to stay at home. That's not very much fun in my opinion, especially if you are used to having your own income for such a long time.
No, the answer is none of the above. The truth is not that we are better than anybody else but we decided a few years ago to replace her income through investing in rental properties. And that the cash flow from those little bread and butter properties would pay her every month instead of the bank. When I look back it wasn't all that long ago when we had zero properties in our names. But right after April 2008, I started investing - initially with the advise of my friend Raymond. And I never looked back: from there we built up a portfolio of rental units by leveraging on both our incomes. It didn't really take that long to put it all together; from start to end, it probably took us 3 years. And a lot of the time was spent waiting around for the land office to approve the land transfers as they are all leasehold properties. But once all that was done, and we rented out the units, the cash flow started coming in. The hard work of searching for the right properties, negotiating and arranging financing probably took a solid 1.5 years. Not all that long if you think about it.
I am telling this you story because all I did was follow some simple principles which I have outlined in this blog. And with a lot of good fortune, perseverance, and God's favor, it all came together this year. If we can do this, so can anyone.
Retirement is about choice -having the choice whether to work or not to work. You decide. And I always believe it is a function of cash flow and not number of years. So, now that the missus is free, I have to work doubly hard to retire I guess. Which means focusing on acquiring more positive cash flow properties.
Happy investing!
Chris
copyright Chris Gan@2010, www.breadnbutterproperty.blogspot.com
2 comments:
Hi Chris, I would wondering you bought the houses with very minor bank loan? in 3 years time, your wife could be able to retire and start to have positive passive income which mean your cash flow in downpayment and repayment back to bank is fantastic good. How many flats you have now in order to have that enjoyment of early retirement? Thanks . Regards, Anna
On the contrary: we bought the flats with as much loan as we could get. This was before BNM implemented the 70% margin rule for 3rd property onward.So, we were pretty fortunate.
If you read my old postings you will be able to read what we did, which basically was to:
- buy below market value, finance 100% of it by the bank,and
- made sure that the rental income was far greater than the monthly installment.
That way, positive income is generated every month. And at the same time, our equity is increasing (as the monthly repayment includes principal repayment as well as interest to bank).
How many? it really depends on how much each property can generate in terms of positive cashflows. In our case as each unit generates between RM200 to RM300 extra/mth I will leave you to figure out how many you will need to retire? If you have rentals that can generate more positive cashflow, you would probably need fewer units than us.
All the best
Chris
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